THE DIVERSITY OF CONVERGENCE: STATE AUTHORITY, ECONOMIC GOVERNANCE AND THE POLITICS OF SECURITIES FINANCE IN CHINA AND INDIA
This dissertation explains contrasting patterns of financial reform in China and India. It focuses on ?securitization? ? the structural shift from credit-based finance (banking) to securities-based finance (stocks and bonds) ? as a politically consequential phenomenon in comparative and international political economy. The analysis revises common theories of the developmental state ? theories derived from Gerschenkron?s emphasis on directed-credit and the state?s role in capital formation ? in light of securitization?s growing global importance in the last twenty years. Contrasting responses to securitization are explained using international and domestic variables including the profile of a country?s exposure to the world economy, the distributional coalition supporting the state and the prevailing structure of property rights. At a theoretical level, the dissertation highlights the political consequences of securitization for state authority in the economy, arguing that directed-credit; 1) enhanced state discretion in the management of distributional coalitions; 2) facilitated the perpetuity of poorly specified property rights; and 3) mitigated the consequences of the country?s position with respect to external trade and investment. Empirically, the research presented here demonstrates that China and India responded differently to the process of securitization, contrary to the expectations of globalization theories that identify finance as a domain in which international forces favoring convergence should be strongest. The thesis also shows that, in contrast to the scholarly depiction of China?s authoritarian system as superior to India?s democracy in the reform process, in the area of finance, Indian and Chinese reform patterns are mirror images: reform with substantive change in India, reform without substantive change in China. Finally, most scholars viewed China?s massive foreign exchange reserves and world-topping volumes of foreign direct investment as signs of economic strength. This thesis suggests the opposite: that these signs indicate Chinese vulnerability is derived from an ?affliction of abundance.? India, however, made a virtue of its weakness, exploiting the ?advantages of adversity.? With little foreign direct investment, few exports, and (until recently) scant hard currency reserves, India chose to develop world-class securities markets and a rich tapestry of securities governance institutions in order to better mobilize and direct corporate finance and attract hard currency through foreign portfolio investment.
China, India, Finance
dissertation or thesis