Risky Investments How Local and Foreign Investors Finesse Corruption-Rife Emerging Markets

• Published in: American sociological review Vol. 83; no. 4; pp. 657 - 685
• Main Author: Hoang, Kimberly Kay
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA Sage Publications, Inc 01.08.2018; SAGE Publications; American Sociological Association
• Subjects: Access to Information; Corruption; Disclosure; Economic development; Economic sociology; Emerging markets; Foreign investment; Global local relationship; Globalization; Investors; Law; Legality; Markets; Opacity; Patronage; Proximity; Public officials; Real estate; Research subjects; Risk management; Social networks; Sociology; State-local relations; Strategies; Transparency; Vietnam; development; law; economic sociology; emerging markets; globalization
• ISSN: 0003-1224; 1939-8271
• DOI: 10.1177/0003122418782476

How do investors enter and navigate markets where there is a general lack of access to information and where the law is open to interpretation? Drawing on interview data with 100 research subjects in Vietnam’s real estate market, this article makes contributions to the literatures of economic sociology and development. First, looking at a diverse set of local, regional, and global investors, I theorize how market actors pursue different strategies to manage risky investments based on their proximity to state officials. Investors’ proximity depends on four processes: legal/regulatory, social ties, cultural matching, and stage of investment. Second, I highlight how multiple state–market relations can coexist within the same state. Investors’ varying levels of proximity to government officials shape their relationship with the state as one of patronage (predatory), mutual destruction (mutual hostage), or transparency (developmental). Heterogeneous state–market relations help account for the persistence of foreign direct investment in markets that display both a great deal of corruption and a great deal of legality and transparency.