Nick Shaxson ■ The Finance Curse: Britain and the World Economy, new paper
We’ve pointed to a draft of this before, but here is the final published version, in the British Journal of Politics and International Relations, a paper by two TJNers and Duncan Wigan of the Copenhagen Business School. (It’s also available here.)
The abstract goes like this:
The Global Financial Crisis placed the utility of financial services in question. The crash, great recession, wealth transfers from public to private, austerity and growing inequality cast doubt on the idea that finance is a boon to the host economy. This article systematizes these doubts to highlight the perils of an oversized financial sector. States failing to harness natural resources for development led to the concept of the Resource Curse. In many countries, resource dependence generated slower growth, crowding out, reduced economic diversity, lost entrepreneurialism, unemployment, economic instability, inequality, conflict, rent-seeking and corruption. The Finance Curse produces similar effects, often for similar reasons. Beyond a point, a growing financial sector can do more harm than good. Unlike the Resource Curse, these harms transcend borders. The concept of a Finance Curse starkly illuminates the condition of Britain’s political economy and the character of its relations with the rest of the world.
This builds on the original Finance Curse document from May 2013, based on Shaxson’s and Christensen’s extensive work in mineral-dependent countries and in financial centres.
We will store this permanently in our Finance Curse page.