Catch-Up Financialization: Sovereign Wealth Funds in Comparative Perspective

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Abstract

This paper argues that financialization is something that states do, not simply something that happens to them. Tracing the organizational evolution of two large sovereign wealth funds, Singapore's Temasek Holdings and Abu Dhabi's Mubadala Investment Company, I identify a process of what I call "catch-up financialization": a sustained, state-led effort to embed state-owned organizations in global financial markets from a position of strength. Today, both funds manage portfolios of just under USD $350 billion spanning diverse geographies and sectors, and are counted among the largest SWFs in the world.

Dominant accounts of financialization illuminate how deregulation, shareholder revolts, and credit expansions drove financial transformation in the advanced economies. Studies of financialization in the global south treat it as something that acts upon states, whether through IFIs, transnational professional networks, or new forms of imperialism. Yet these perspectives leave crucial questions unaddressed. How do states enter an already-established global financial field as latecomers? Why and how do specific state organizations transform themselves to participate in and leverage global finance?

Catch-up financialization addresses this gap. It is not only about accumulating financial assets but about entrenching financial logics as governing principles of economic decision-making, such as portfolio management, risk-adjusted returns, standardized valuation practices, and professional investment norms. And like other forms of catch-up development, it unfolds through active organizational transformation rather than the unfolding of market forces.

I argue that catch-up financialization was driven by three organizational mechanisms: portfolio rationalization, organizational experimentation under conditions of political protection, and financial professionalization. Together, these mechanisms operated through professional elites positioned between state power and global finance, allowing Temasek and Mubadala to selectively adopt financial techniques while simultaneously pursuing national development objectives. In doing so, this paper reveals a new form of late development in which state goals are achieved through, not despite, financial logics.

Author

• Rohan Advani, University of California-Los Angeles