Freedom and Finance: Democratization and Institutional Investors in Developing Countries. By Mary Ann Haley. New York: Palgrave, 2001. 200p. $68.00

Abstract

The political economy of the rise, influence, and impact of institutional investors on the development policies of states has been seriously undertheorized in the disciplines of political science and economics. Mary Ann Haley's pathbreaking book, Freedom and Finance joins a range of works in the past decade that have sought to reverse this negligence by investigating the political implications of the ascendancy of portfolio investment in the developing world. Haley provides a useful overview of the political efforts of nation-states, multilateral institutions, investment banks, and money managers to pry open markets in societies otherwise starved for capital. This cooperation between political and private sector elites favored schemes that offered opportunities to investment banks and money managers, based for the most part in the United States, Western Europe and Japan, to expand their purchases of stocks, bonds, and various securities options in the developing world. In this context, she argues that institutional investors, including large-scale corporations such as investment banks and money managers of pension and mutual funds, have consolidated their economic power to the point of exercising political influence over governmental policies in the lessdeveloped world.