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The financialisation-offshoring nexus and the capital accumulation of U.S. nonfinancial firms

Author

Listed:
  • Tristant Auvray

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

  • Joel Rabinovich

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

Abstract
The financialisation of the nonfinancial corporation has drawn the attention of many scholars who have identified two channels by which financialisation happens: a higher proportion of financial assets compared to nonfinancial ones and a higher amount of resources distributed to financial markets. One of the consequences of this is the decrease in investment. Parallel to financialisation, many nonfinancial corporations have also engaged in an internationalization of their productive activities, organizing them under global value chains. Surprisingly, the intersections between the literature on financialisation and the literature on global value chain are still underdeveloped, although, for example, offshoring may also explain the decrease in investment of nonfinancial firms. This paper fills this gap using panel regressions for U.S. nonfinancial corporations between 1995 and 2011. We find evidence that both offshoring and financialisation are determinants to the decrease in investment and that financialisation occurs mainly for firms belonging to high offshoring sectors.

Suggested Citation

  • Tristant Auvray & Joel Rabinovich, 2017. "The financialisation-offshoring nexus and the capital accumulation of U.S. nonfinancial firms," CEPN Working Papers 2017-02, Centre d'Economie de l'Université de Paris Nord.
    • Handle: RePEc:upn:wpaper:2017-02
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    3. Adam Leaver & Keir Martin, 2021. "‘Dams and flows’: boundary formation and dislocation in the financialised firm," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 403-429, December.
    4. Joel Rabinovich, 2018. "The financialisation of the nonfinancial corporation. A critique to the financial rentieralization hypothesis," CEPN Working Papers hal-01691435, HAL.
    5. Kaldor, Yair, 2022. "Financialization and Fictitious Capital: The Rise of Financial Securities as a Form of Private Property," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 54(2), pages 239-254.
    6. Cédric Durand & Wiliiam Milberg, 2020. "Intellectual monopoly in global value chains," Review of International Political Economy, Taylor & Francis Journals, vol. 27(2), pages 404-429, March.
    7. Tristan Auvray & Cédric Durand & Joel Rabinovich & Cecilia Rikap, 2020. "Financialization's conservation and transformation: from Mark I to Mark II," Working Papers hal-03079425, HAL.
    8. Joel Rabinovich & Niall Reddy, 2024. "Corporate Financialization: A Conceptual Clarification and Critical Review of the Literature," Working Papers PKWP2402, Post Keynesian Economics Society (PKES).
    9. Cédric Durand & William Milberg, 2018. "Intellectual Monopoly in Global Value Chains [Monopolisation intellectuelle dans les chaines globales de valeur]," CEPN Working Papers hal-01850438, HAL.
    10. Ryan Woodgate, 2023. "Offshoring via vertical FDI in a long-run Kaleckian Model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 46(1), pages 32-64, January.
    11. Sophie van Huellen & Fuad Mohammed Abubakar, 2021. "Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 227-252, April.
    12. Reddy, Niall, 2024. "“Downsize And Distribute” Or “Merge And Monopolize”? A Critique Of Corporate Financialization Theories," SocArXiv 2zy5h, Center for Open Science.
    13. Tristan Auvray & Cédric Durand & Joel Rabinovich & Cecilia Rikap, 2021. "Corporate financialization’s conservation and transformation: from Mark I to Mark II," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 431-457, December.
    14. Joel Rabinovich & Rodrigo Perez Artica, 2020. "Cash holdings and the financialisation of Latin American nonfinancial corporations," Working Papers hal-02474321, HAL.
    15. Joel Rabinovich, 2017. "The financialisation of the nonfinancial corporation. A critique to the financial rentieralization hypothesis," CEPN Working Papers 2017-22, Centre d'Economie de l'Université de Paris Nord.
    16. Lee, Woocheol, 2022. "Domestic Share of Value-Added and the Development of Production Capabilities of Local Firms within Global Value Chains," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(2), pages 81-99, June.
    17. Daniele Tori & Özlem Onaran, 2022. "Financialisation and firm-level investment in developing and emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(4), pages 891-919.
    18. Joel Rabinovich & Rodrigo Perez Artica, 2020. "Cash holdings and the financialisation of Latin American nonfinancial corporations," CEPN Working Papers hal-02474321, HAL.
    19. Cahen-Fourot, Louison, 2020. "Contemporary capitalisms and their social relation to the environment," Ecological Economics, Elsevier, vol. 172(C).
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    21. Niall Reddy & Joel Rabinovich, 2022. "Debunking the short-termist thesis in financialization studies: Evidence from US non-financial corporations 1998 – 2018," Working Papers PKWP2227, Post Keynesian Economics Society (PKES).

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    More about this item

    Keywords

    Financialisation of the non-financial corporation; Global value chain; Offshoring; Investment;
    All these keywords.

    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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