Luxembourg's specialisation as a financial centre within the global value networks of investment funds

Sabine Dörry

No 2012-40, LISER Working Paper Series from Luxembourg Institute of Socio-Economic Research (LISER)

Abstract: Ruptures like the recent global financial crisis are inherent elements of our global ‘securitised’ financial system. Re-regulations and the maturing of the financial industry have led to re-organisation processes within the industry with far-reaching implications on international financial centres (IFCs). Surprisingly, little is known about the IFCs’ localised organisational nature, social, and structural power relations. Despite the controversy about ‘tax heavens’, empirical evidence suggests that IFCs without an economic hinterland have developed strong local competencies and competitive advantages besides regulation aspects. Although dependent on foreign national economies, their specialisation capacitates them to offer finance-related services to a favourable cost-benefit ratio. The IFC Luxembourg seems to exemplify such a case. It has specialised in administrating a particular type of securities: (cross-border) investment funds. The paper does not only employ the GPN approach on finance but also innovatively links it with social network approaches, suggesting a new perspective to analysing locally anchored practices and dynamics in order to better understand ‘the global’ of today’s financial system.

Keywords: international financial centre; global value chains; global production networks; social networks; social capital; investment funds; Luxembourg (search for similar items in EconPapers)
JEL-codes: G15 O16 P16 R11 R51 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-12
New Economics Papers: this item is included in nep-net and nep-ure
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