Global Finance Meets Neorealism: Concepts and a Dataset (SWP 59)

How might one conceptualize the international political dimensions of money and finance? As the world moves from a post-Cold War “unipolar moment” toward the greater uncertainty associated with multipolarity – or bipolarity/multipolarity – the zero-sum aspects of economic resources may take on heightened significance in national calculations. The paper proposes five national financial characteristics that sovereign governments sometimes wield as power capabilities: the country’s (1) position as an international creditor, (2) home financial market attractiveness, (3) currency strength, (4) international debtor presence, and (5) leverage in global financial governance. A new dataset on the global monetary and financial powers of states (GMFPS), covering 180 countries and 27 indicators from 1995 to 2013, constructs indices for four state financial power concepts, and also provides an updated overall material capabilities index. After profiling the US, Britain, Germany, Japan, and China, we suggest a recurring, although not inevitable, financial life cycle of major powers.