The World Makes the Money Go Round

A Conversation with Kimberly Kay Hoang, Ph.D.


What drives the flow of investment capital across the globe? Who are the people that need to come together to make it all happen?

Kimberly Kay Hoang, Ph.D., associate professor of sociology and the College at the University of Chicago, studies emerging markets in Southeast Asia - including real estate. “Economists do a great job of telling us how much money flows in and out of countries and where it comes from, and lawyers do a great job telling us what laws enable and constrain movement of money across borders. As a sociologist, I was really interested in the people. Who is making these decisions, and what kinds of challenges and obstacles do they face making them?”

Hoang is writing a book tracing the flow of global capital from investors around the world. One of the questions that motivates this project, she says, is “how different investors navigate local markets differently when they're constrained by different local and international laws - in particular, where the assumption is that there's widespread corruption.”

Hoang spent about 18 months living between Vietnam, Myanmar, Singapore, and Hong Kong, studying “the relationship between the formal and informal economy and the role the informal economy plays in shaping relationships of trust that help to move capital through the formal economy.”

In Western economies, investors tend to focus more on strategic investments, but for early-stage investors in emerging Southeast Asian markets, “a lot of it has to do with the relationships that you're able to build on the ground with local political and economic elites. In frontier markets, you tend to see regional investors who go into really diverse sectors of the economy.” An understanding of the local market is essential. “I write about what I call heterogeneous state-market relationships, where every investment is different; the investment laws are vague, leaving each bureaucrat to interpret the law differently.”

She studied investors in various stages of investment and found that these early-stage investors typically work in the $1 million to $5 million range, with family-run businesses or small enterprises. The investors help the firms put into place processes of professionalization, Hoang says. “They put together a board of directors and they separate personal finance from business finances.” As a business matures, she says, it can attract more Western and Japanese investors. “A lot of Western investors are constrained - in the U.S. context, it would be by the Foreign Corrupt Practices Act - and they really want to make sure that things are cleaned up before they come in.”

Hoang, who plans to publish the book in the near future, has interviewed more than 300 people and continues to present her research not only to academic audiences, but also to industry professionals, including at the CCIM Global Conference this past October. “I'm interested in putting together a story of circuits of global capital and what kinds of people have to come together in order to make money move around the world.”


Sarah Hoban

Sarah Hoban is a business writer based in Chicago.

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CIRE November/December 2018 Cover