Quotation Smet, Koen. 2016. The Financialisation of Multinational Companies in Natural Resource Industries. African Review of Economics and Finance Conference, Kumasi, Ghana, 11.08.-12.08.


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Abstract

Since the 1990 three major developments occurred within the natural resource industries. First, in a rather short time period resource prices display major changes. Second, in the same period state-owned-enterprises and parastatals emerged to become global players within these industries. Third, within these industries a concentration of capital and market power occurred due to multiple mergers and acquisitions (M&A). To understand and analyse these developments a framework, which draws on critical political economy, is introduced. By combining the debate on rent theory with the discussion on financialisation, i.e. capital accumulation based on fictitious capital, following insights are attained. On the one hand, M&A are partially a response to the increasing influence of financial actors on natural resource markets. Simultaneously, the financial sector induced a change in the corporate governance of MNCs towards the principle of share-holder value. Moreover, the conflict between extractive companies and natural resource owners (i.e. nation states) over the distribution of rents gained weight due to increasing prices. Strategic M&A allowed MNCs to enhance their bargaining position and secure access to resource reserves. On the other hand, it is characteristically for the companies of natural resource industries to follow an accumulation strategy based on fictitious capital. Precisely their access and control of material and immaterial resources defines the long-term success of these enterprises. By means of M&A, this access and control is secured, which supports their possibility to extract surplus-profits based on rents. Therefore, recent developments in natural resource industries are only a limited expression of a general, macroeconomic financialisation.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Financialisation of Multinational Companies in Natural Resource Industries
Event African Review of Economics and Finance Conference
Year 2016
Date 11.08.-12.08.
Country Ghana
Location Kumasi

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People
Smet, Koen (Details)
Organization
Institute for Institutional and Heterodox Economics IN (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
1807 Economic geography (Details)
5300 Economics (Details)
5309 Foreign aid (Details)
5325 Political economics (Details)
5335 Political economic theory (Details)
5344 Foreign trade (Details)
5611 Urban and regional analysis (Details)
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