After the surge of State ownership in the post-war era, the wave of privatisation in the 1970s and ̕ 80s has instilled, at least in some corners, a perception that State-owned enterprises (SOEs) are inefficient and destined to survive hooked up to a drip of State financial support, wheeled around the world in pursuit of governmental goals. There is a lingering impression that SOEs are more likely to enjoy advantages that immunise them from the invisible hand of the market and potentially be employed as Trojan horses for political ends.
Understanding and addressing these fears is more important than ever. Since 2005, there has been significant growth in the number and size of SOEs. The share of SOEs as a proportion of the world’s largest companies has doubled to over 20% in the last 20 years. Assets held by SOEs are valued at USD 45 trillion, over half of global GDP. SOEs are also increasingly adopting internationalisation strategies, investing in operations outside of their home State. The role of SOEs in the global economy (and particularly as vehicles for outward investment) is therefore attracting significant attention, and becoming a priority for policy-makers. In the post-pandemic anxiety among States to protect strategic/sensitive sectors through investment screening mechanisms, there has been a focus on whether to introduce specific rules for SOE investors.
The purpose of this paper is to consider whether SOEs as international investors represent a special threat that require special rules.