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Emerging Markets in a Shi ing

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David Bassens
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Emerging Markets in a Shifting Global

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Geography Compass 6/6 (2012): 340–350, 10.1111/j.1749-8198.2012.00500.x

Emerging Markets in a Shifting Global Financial

Architecture: The Case of Islamic Securitization in the
Gulf Region
David Bassens*
Geography Department, Ghent University

Abstract
Given major geo-economic shifts in the wake of the global financial crisis, this paper sets out to
review major debates in the field of geographies of emerging markets (EM). Observing lingering
implicit assumptions about the undirectionality behind the emergence of EM discourses and prac-
tices, the paper argues that contemporary processes of South-South and South-North investment
call for a ‘decentred’ view on EM integration. Such a decentred framework allows us to research
whether geographical shifts in the world of global finance indeed imply a fundamental shift the
nature of its practices. In this paper, I therefore explore the case of Islamic securitization in the
Gulf Region, which constitutes a veritable geo-economic hinge in a shifting global economy.
Here, I argue, bilateral negotiation processes take place between vectors of global finance such as
investment banks on the one hand, and EM client firms and Islamic banks on the other hand, in
order to find a viable context-sensitive financing solution. While this case acknowledges the blos-
soming plurality of global finance, the paper concludes with the view that this plurality is never-
theless mainly reproducing existing power configurations within the global financial architecture.

1 Introduction
After centuries of Western economic dominance the rules of the global economic game are
being re-written as South-South connections create a new dawn for the world economy.
(HSBC 2011, p. 10)
‘Dubai, Shanghai and Mumbai, or goodbye’ is one of the sayings that investment bankers like
to use these days. The reason for it is rather obvious: no one wants to be left out of the so-
called new Silk Road. (The World Bank 2008)
While emerging markets (EM) have been around since at least two decades, the above
quotes from HSBC’s latest EM report and the World Bank illustrate that perceptions of
their rapid growth have recently been complemented by crisis-time perceptions of a more
fundamental long-term geo-economic shift. In this reorienting global financial architec-
ture, a new ‘Silk Road’ emerges according to HSBC’s Chief Economist Stephen King,
strengthening myriads of South-South connections, while Sovereign Wealth Funds
(SWFs) from the Gulf region act as ‘white knights’ as they inject capital in crisis-ridden
European and American financial institutions. Both quotes suggest that geo-economic
power is indeed shifting to produce a multipolar world beyond the dominance of Euro-
American financial institutions that typified the Washington Consensus.
This paper then questions whether such geographical shifts indeed imply a fundamental
shift in the nature of global finance. On the one hand, the current proliferation of EM
underscores the fact that money and knowledge do not (and did not) flow unidirectionally
from developed to emerging markets, and that global finance is increasingly permeated by

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 Islamic Securitization in the Gulf Region 341

the practices and discourses of EM actors (see e.g. Haberly 2011). On the other hand, the
on-going crisis illustrates that global finance is being reproduced from leading International
Financial Centres (IFCs), which are (still) mostly located in ‘developed markets’. The
paper argues that both observations can be read as evidence for the maturing plurality of
global finance, which, especially since the crisis, is marked by a growing tension between
its nature as set of border-crossing practices and discourses on the one hand exported from
IFCs in ‘developed’ markets such as London and New York, and its emanation of more
localized values, conceptions, ideologies, and practices carried by actors working from
‘emerging’ IFCs on the other hand. Especially in a rapidly-shifting global financial archi-
tecture, I argue, this then calls for a reconceptualization of EM approaches that present a
more ‘decentred’ view on EM integration as a continuous dialogue with financial actors,
institutions, and political elites in these places, which is leading to plural outcomes (see also
Pollard and Samers 2007).
Given their sensitivity to transformative multisited, relational, and multiscalar processes
that typify EM integration, this is a project for which geographers are well placed to con-
tribute to. In economic geography in particular there is a growing literature on the finan-
cialization of economies in which such an approach can be framed (e.g. Engelen 2008;
French et al. 2011; Pike and Pollard 2010). While the meanings of this term are mani-
fold, there is a consensus that financialization can be understood as the growing influence
of financial practices and discourses that constitute ‘the market’ over actors (individuals or
households) and institutions (such as firms, but also governments). Understanding finan-
cialization processes has become crucial for analysing contemporary economic geographies
since over the last three decades – namely since the 1980s, which heralded the start of an
era of financial deregulation – economies and societies have been gradually ‘colonized’ by
financial or market logic. In this context, however, financialization is often (implicitly)
equated with the spreading of an Anglo-American finance-driven accumulation regime,
which is marked by shareholder capitalism and is underpinned by the growth of financial
innovations such as securitization that have been gestated in Wall Street or The City.
Most of the literature’s attention, then, has gone to what happens when such practices
and discourses are introduced in ‘developed’ markets, detailing for instance their growing
influence in continental Europe (Clark and Wójcik 2007). Especially now that financial-
ized economies in Europe and America are in crisis, I argue that it is valuable for eco-
nomic geographers to look at potentially ‘alternative’ economic and financial spaces. By
taking a ‘decentred’ stand this paper shows that also emerging economies are undergoing
deeply transforming processes of financialization, which are underpinned by potentially
different social and cultural motivations, which in turn may lead to different outcomes.
Focusing on the Gulf Region, the paper draws on the case of ‘Islamic’ securitization,
which is gaining ground fast with investors that wish to avoid taking conventional debt
and issue bonds in a Shari’a-compliant way. As will be illustrated by the discussion of an
stylized analytical scheme, the issuance of Islamic bonds or sukuk involves multiple decen-
tred networks of financial actors, institutions and associated services firms operating from
EM and mainstay IFCs ⁄ OFCs alike, who are engaged in a process of negotiation to shape
the desired financial product. The remainder of the paper is structured as follows. Each of
the following three sections deals with a specific set of questions posed by seminal studies
of geographies of EM: Section two will focus on the discursive construction of EM; sec-
tion three will deal with the discussed consequences for countries rebranded as EM, and
section four will review the existing literature on EM market practices. Section five will
then turn toward the actual case of Islamic securitization in the Gulf region – a region
that is a crucial geo-economic hinge in a shifting global financial architecture as a source

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342 Islamic Securitization in the Gulf Region

of huge energy resources and excess liquidity. The final section wraps up with a discus-
sion of the potential of such on-going integration processes for producing a more multi-
polar world undergirded by a shifting global financial architecture.

2 The ‘Emergence’ of Emerging Market Discourses

Following the steady growth of EM investment since the 1980s, geographers have been
studying the subject from at least three perspectives. A first set of questions has addressed
their discursive construction. So, what are ‘emerging markets’? On the one hand EM are
said to represent territorial objects, ‘places’, which are mostly national economies. On the
other hand, EM as a category can also refer to the financialization of new sectors such as
carbon markets (Knox-Hayes 2009) or the emergence of niches that promote ‘alternative’
forms of finance (e.g. Islamic finance, see Bassens et al. 2010a). Although intimately
related, the existing literature has mainly focused on transformation of entire economies
into EM categories.1 So, while EM have a ‘tangible’ dimension since they refer to spe-
cific places, products, and practices, they are just as much about discourse. This implies
that they are in essence socially constructed entities no different than developed markets,
which equally reflect specific geo-historical contexts and cultures and are drawn up by
the perceptions, discourses, and practices by communities of financial actors (Fligstein and
Dauter 2007, Knorr Cetina and Preda 2005).
The specific discursive construction of EM, then, has been generally understood against
the wider canvas of a global financial architecture under the banner of the Washington
Consensus, which aligned the interests of ‘developed’ economies in general, and the Uni-
ted States in particular, to import capital to finance growing budget deficits with the
wishes of global finance capitalism that longed for free capital movement (Soederberg
2002). While most of the capital has traditionally flowed between developed economies
themselves, low returns on investment at home made that, roughly since the 1990s, capi-
tal was increasingly directed into developing nations, where high-growth figures were
promising high yields. Increasingly since the 1980s, free capital movement allowed global
capital flows to be switched and channelled by financial actors, such as investment banks
and a variety of investment, pension, and insurance funds operating from IFCs. These
actors started to marshal their networks to arbitrage multiple regulatory environments and
seek profits by pouring capital into ⁄ out of geographical locations (Clark and Wójcik
2007). For the receiving economies themselves, however, such an evolution more than
often induces crises due to an increased reliance on short-term debt, exposure to capital
flight, cross-border contagion, and a weakened political autonomy (Soederberg 2002).
Grounded in political, ideological, and economic hegemonies of the Washington Con-
sensus, EM started to reproduce earlier dichotomizations of developed versus developing
nations, Global North versus Global South, or West versus East. In the process, develop-
ing countries were transformed into specifically geographically-bound investment catego-
ries named ‘emerging markets’. So doing, the emergence of EM projects a unidirectional
process of an ever-expanding, rearticulating financial architecture in which new markets
are constantly incorporated. As explained by Sidaway and Pryke (2000) institutions in the
developed world have acted as key actors in the construction of EM. Particularly the
International Finance Corporation, the commercial arm of the World Bank has played a
seminal role by being the first to design a list of emerging markets in 1987 (Lavelle
2000). This list, called the emerging markets database, although supplemented by categoriza-
tions drawn up by commercial investment banks, has served as a key benchmark for
investment in EM. Consequently, EM quickly became common language in the wider

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 Islamic Securitization in the Gulf Region 343

financial media such as the Financial Times, The Economist, and others, which also pro-
duced their own imaginaries and categorizations that started to influence investment
behaviour of brokers and fund managers in leading IFCs. By 2000, the International
Finance Corporation’s database was sold to the rating agency Standard and Poor’s, which
further disseminated EM categorizations in the day-to-day practices of financial actors.

3 The ‘Gaze’ of the Markets

A second vantage point in the EM literature has dealt with the consequences of the trans-
formation of countries into EM. Indeed, this rebranding allowed them to access global
capital circuits, but this charter was never granted unconditionally. The work by Gearoı́d
Ó Tuathail on the Chiapas revolt in Mexico was fundamental in understanding the con-
struction and power of such EM discourses over capital-receiving countries. According to
Ó Tuathail (1997), EM are constructed simulations, which he considers as ‘hyperreal’
(Baudrillard 1994), that is as being draped over reality, but which nevertheless have a very
tangible impact on real life actions, perceptions, and decisions. This is because the EM
‘hyper reality’ – supported by the geofinancial panopticon as Ó Tuathail calls the amalgama-
tion of financial media, market analysts, and rating agencies, and the likes – exerts very
real power over the politics of emerging economies, especially in countries that depend
on foreign capital. In the post-cold war era he describes, the geofinancial panopticon
constitutes a hegemonic imagination working to produce (re)visualizations of global space
in line with the interests of global finance capital through constantly altering geographical
imaginations that include ⁄ exclude countries, cities, and markets. Feeling the gaze of the
panopticon on the national political scene, Mexican political elites had boosted the image
of Mexico as an attractive site for international capital and this eventually made Mexico
into a ‘‘debt-financed and ideologically self-fulfilling simulation’’ (Ó Tuathail 1997,
p. 305). This aligned with the needs of American mutual funds which were looking to
invest money abroad, since returns were low in US markets and baby-boomers were
looking for an alternative way to finance their pensions (see also Clark 2000). Mexico’s
emergence as an EM was thus crucially supported by the Washington Consensus and the
increased financialization of developed economies themselves.
Witnessing the rebranding of developing countries such as Mexico into EM, Sidaway
and Pryke (2000) interpret the discursive construction of emerging markets as a continua-
tion of earlier colonial imaginaries. The emergence of EM involves processes of ‘Other-
ing’, reflected in discourses that highlight the ‘difference’ of these places with respect to
‘the West’. As such they observe that EM discourses (re)produce orientalist dichotomiza-
tions of the developed West versus the un(der)developed, or the ‘emerging’ Global South
that have characterized modernization theory and post-cold war developmentalism. EM
discourses normatively depict the Global South as being ‘different’ and ‘incomplete’ in
light of the properties of the West. Paradoxically, this ‘Otherness’ also serves as a means
for neo-colonial subordination, since it encourages investors from the West to venture in
EM reap the benefits of investment in these markets, and empowers the mediating finan-
cial elites that are able to bridge their self-tailored mental distance to these markets. By
categorizing economies along a emerging-developed market axis, a unidirectional and tel-
eological paradigm of capitalist expansion is reproduced, in which EM are somehow con-
sidered to be mere passive recipients of exogenous market logic. Indeed, reminiscent of
the gazing power discussed by Ó Tuathail (1997), other geographers have noted that EM
discourses and practices have the power to normalize, discipline, and reward EM actors
by rolling out specific governance frameworks from a distance. As was argued by Lee

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344 Islamic Securitization in the Gulf Region

(2003), the construction of EM not only involves processes of ‘Othering’, but also pro-
cesses of ‘disothering’, namely by rolling out market doctrine and norms by which these
EM are measured and evaluated. For instance, the representation of Eastern European
countries as emerging markets illustrates the construction of new geographical imagina-
tions of Europe, which are used as a means to normalize these places after a communist
experience and roll out neoliberal marketization (Smith 2002). It is therefore an interest-
ing question whether and how the current growth of South-North and South-South
investments are challenging and cross-cutting existing emerging versus developed market
categorizations.

4 Studying Emerging Markets in a Shifting Global Financial Architecture

A third and final set of questions has dealt with the actual practices of financial actors that
work in the EM business. Here the central focus has been on how knowledge on EM is
produced, since ‘‘behind the power of the market hides a multitude of actors, analysts,
strategists, economists, and portfolio managers who constitute a veritable epistemic com-
munity with its own dynamic of opportunity and constraint’’ (Santiso 1999, p. 307).
From the perspective of EM actors, a key factor behind EM investment is the aim to
diversify investment portfolios with assets that go beyond developed markets in order to
diminish investment concentration, and hence mitigate investment risk. EM, however,
are also incomplete, risky, and characterized by imperfect knowledge. In order to make
investment decisions, then, financial actors such as EM fund managers need to construct
knowledge. This knowledge is produced both at a distance and via face-to-face contact
with the capital-receiving firms. Knowledge production at a distance draws on a veritable
day-to-day bombardment of information provided by financial information providers
(Bloomberg, Reuters), rating agencies (Moody’s, Fitch, Standard & Poor’s), international
organizations (IMF, OECD), central banks, finance ministers, and private economic intel-
ligence institutions (Institute of International Finance, Economist Intelligence Unit, and
Business Monitor) (Santiso 1999). Furthermore, financial actors are also highly sensitive
for popular discourses and representations in influential financial media such as The Econ-
omist, The Financial Times, The Wall Street Journal, and others, which together can
make or break financial crises (French et al. 2009).
The multitude of information sources, however, does not reduce the importance of
knowledge networks stretching out to EM in order to gather first-hand information and
to obtain knowledge that goes beyond ‘scientific’ quantitative investment analysis based
on models and numbers (Sidaway and Bryson 2002). Studies of geographies of EM prac-
tices have thus confirmed the importance of financial actor-networks extending into these
new places and the crucial advantages of co-presence and proximity. In practice EM
actors offset uncertainties and knowledge imperfection by operating from well-connected
environments such as IFCs, which explains the paradoxical logics of increased centraliza-
tion in a limited number of hubs as the global financial architecture expands (Sassen
2001). However, as the case of Singapore shows, linking-up The City to brokers in EM
environments themselves is just as crucial to tap into social, cultural, and legal networks,
which would otherwise remain unavailable (Lai 2006). Financial practices thus not only
benefit from agglomeration, they are also crucially dependent on networks of knowledge
and expertise. Financial geographers have therefore advocated a networked, relational,
and complementary understanding of IFCs, understanding IFCs in light of their insertion
in global flows of people, knowledge, and capital, instead of a mere focus on hierarchical
attribute-based data such as stock market capitalization, headquarter locations, etc.

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 Islamic Securitization in the Gulf Region 345

(Faulconbridge 2004). Such a network perspective is valuable in studies of markets and

finance, because of its multiscalar and multisited approach, and since it allows to concep-
tualize and to analyse channels of information, knowledge, standards, and governance dis-
semination bilaterally across developed-emerging market categorizations.
In general, however, the three strands of EM literature have been remarkably underde-
veloped in two significant ways. First, studies of actor-networks have predominantly
focused on financial elites working for Euro-American financial firms (e.g. Beaverstock
1996). Second, networks stretching out to EM have been mainly read as channels for a
unilateral dissemination of ‘global’ finance practices originating in Euro-American markets.
Hebb and Wójcik (2005), for instance, discuss how the power to discipline, for instance
by withholding investments, actually transforms the (potentially) deprived economies
towards the wishes of global finance. They use the metaphor of the ‘global institutional-
investment chain’ to describe the structure of standard setting processes in emerging
economies under the influence of institutional investment decisions, and the role of the
various actors and institutions that support this process. Even though they identify this as
a multisited process and draw attention to the agency of EM and developed markets
alike, they implicitly suggest that the process is in itself unidirectional since the ultimate
decision power is in the hands of the foreign investing institution. Ultimately, then, the
chain describes a mechanism by which EM standards will converge with the demands of
the institutional investor. As EM illustrate, however, knowledge production is also sup-
ported by close interaction between financial elites operating from the leading IFCs and
EM actors themselves, who engage with global financial markets. Evidently, through such
interactions existing power asymmetries in favour of global financial elites are reproduced.
Nevertheless, the social, cultural, and legal environments of emerging markets also
empower ‘local’ elites, who act as gatekeepers who mediate access to local assets. While
EM integration certainly involves the implementation of exogenous governance standards
that also typify developed markets, this does, as the next section on Islamic securitization
will illustrate, not imply that the underlying processes remain uncontested or naturally
leads to homogenization.

5 Islamic Securitization in the Gulf Region

The Gulf Region – comprising Bahrain, Kuwait, Qatar, U.A.E., Saudi Arabia, and Oman
– has since long been a crucial hinge in the global economy as one of the world’s largest
oil-exporting regions. Even though geographers have studied the financialization of oil
markets (e.g. Labban 2010; Zallik 2010), work on finance in Gulf markets is surprisingly
limited given the sheer amount of oil-money that pours through the region. Lately, a
range of studies has identified the rising geo-economic power of oil-related SWFs, which
can be considered crucial financial actors in Gulf markets (Clark et al. 2010). Far less,
however, has been said about the emergence of Gulf markets as ‘emerging markets’ – that
is as receivers of capital – even while Gulf cities such as Abu Dhabi, Manama, Doha,
Dubai, Riyadh, and others are emerging as spaces of global financial capitalism.
Finance in the Gulf Region is increasingly governed by standards and norms that go
beyond ‘global’ standards, and are geared towards preserving ‘Islamic’, but equally global,
socio-cultural values and practices – in this case those embodied by the Shari’a and its
numerous interpretations (Bassens et al. 2011a; Pollard and Samers 2007). Here so-called
Shari’a scholars play a crucial ‘gatekeeping’ role, since only they have the authority to
qualify financial transactions as Shari’a-compliant (Bassens et al. 2011b), which means that
finance should shun interest, uncertainty in contracts, and speculation. Roughly since a

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346 Islamic Securitization in the Gulf Region

decade, ‘conventional’ bond markets are seeing growing competition from Islamic bond
markets. Since their introduction in the Gulf, sukuk markets have been growing at a
steady pace since the turn of the new millennium and in 2009 equalled US$136 billion
of outstanding debt (IIFM 2010). In practice, assemblages of regional Islamic banks and
global investment banks securitize project finance receivables (often in real estate or infra-
structure) as sukuk, which are then sold over-the-counter, that is between financial insti-
tutions themselves, or via national and international stock exchanges. Underneath the
issuance of sukuk thus lays a wealth of actor and institutional networks that support the
securitization process. Via these networks vectors of ‘global finance’, such as investment
banks and their elites, engage more directly with local demand for finance.
Drawing on a number of influential Gulf sukuk issuances such as the Emaar Sukuk
Limited issued in February 2011 by Dubai-based property-developer Emaar on the
London Stock Exchange (http://www.londonstockexchange.com/specialist-issuers/
islamic/emaar030816-prospectus.pdf), Figure 1 introduces an analytical framework
through which the complex geographical networks that underpin the securitization pro-
cess can be mapped. As can be read from the stylized scheme, securitization involves a
multitude of actors, who operate at multiple scales, and who perform a range of specific
actions that revolve around three roles. First of all, the securitization process itself involves
the cooperation of the client (the asset originator, for instance an institution involved in
Gulf real estate markets) and the structuring team of one or more investment banks. The
structuring itself involves the origination or identification of assets on the balance sheet of
the originator, which are then bundled and sold to a separate legal entity called a special
purpose vehicle (SPV), which is usually based at offshore locations such as the Bahamas,
the Channel Islands, or the Cayman Islands. The SPV then issues investment notes,
which can be sold to end-investors. Securitization also involves close interaction with
global law firms, which provide advice on the legal contexts that are crosscut by the
chain. Second are the networks that link the securitization products to the end-investors.
This usually happens either via the intermediation of an international stock exchange,
where the LSE is a popular choice for Gulf issuers, or in over-the-counter-markets, via
the underwriting and brokerage activities of the arranging investment banks themselves.
At this point, rating agencies such as Standard and Poor’s, Moody’s, Fitch, or others
screen the products and provide a rating. Third are a range of management functions that

Fig. 1. Stylized analytic scheme of the securitization process.

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 Islamic Securitization in the Gulf Region 347

see to the registration of the investors and the servicing of the cash flow to the investors
(usually performed by an investment bank), and the management of the SPV – a task per-
formed by dedicated trust companies. Most of the above-discussed services are fee-based
and result in attractive remunerations for the financial actors involved.
Notwithstanding this skewed remuneration distribution, the agency behind securitiza-
tion processes is clearly not only in the hands of investors, investment bankers or other
‘global’, albeit often European or American, business services firms. Different from EM
funds, which basically decide to invest or divest in a certain firm or region based on an
array of virtual or first-hand information, investment banks engaging with structured
finance are more deeply involved in the integration process, through finding an apt solu-
tion that fits the financing needs of EM firms or governments. As such, securitization
networks can work as channels for the bilateral transmission of socio-culturally informed
financial practices and discourses. In the process of securitization, for instance, it appears a
‘toolkit’ of techniques, expertise, and ideologies is transferred and adapted to fit the needs
of new legal, cultural, or political contexts (Aalbers et al. 2011; Bassens et al. 2012; Wain-
wright 2009). As a result, a set of more direct processes is occurring that lead to head-on
negotiation regarding techniques at the spot, and to more long-term adaptation of busi-
ness practices and discourses. The outcome of such processes is inevitably plural. On the
one hand it can be read as a process of hybridization, in which practices and discourses of
‘global finance’ mix and mingle with context-specific values and conceptions. On the
other hand, such negotiation processes also continue to involve an assertion of exogenous
discourses and practices in Islamic securitization markets. Theoretically speaking these so-
called sukuk are investment notes, which are structured as equity since they reflect partial
ownership in a number of assets from which a cash flow originates. In practice, however,
sukuk structures are mostly replicating conventional interest-based debt products. This
means that Islamic securitization is also geared towards guaranteeing the functioning of
global financial institutions within emerging markets, while reproducing forms of global
finance that have been conceived in leading IFCs such as The City of London and Wall
Street (Leyshon and Thrift 1997).

6 Concluding Remarks: Towards a Multipolar World?

There is, however, one important political-geographical difference between 1997 ⁄ 98 and
2007 ⁄ 08. The same Western financial institutions that were packing their coffers and withdraw-
ing from East Asia 10 years ago are now being rescued with recapitalisations by Asian sovereign
funds […] The Asian state-controlled financial institutions that have already become major cred-
itors of the US government are now becoming major owners of private US and other Western
financial institutions. The political geography of finance is changing for good. (Wójcik 2009,
p. 259)

As argued in the above quote, the global financial architecture has changed fundamentally
in the wake of the recent crisis. The crisis is making abundantly clear that geo-economic
power is increasingly being decoupled from the US and Europe as global finance is disci-
plining its geo-historical homelands, especially now that the power to shape the geogra-
phies of capital flows is fleeing the hands of Euro-American financial elites and
institutions. Meanwhile SWFs in emerging economies are building global asset portfolios
on the back of huge trade surpluses with ‘developed’ economies (Behrendt 2008). The
above suggests that a geo-economic power shift is currently materializing, that the Euro-
American dominance over the global financial project might be waning for the first time

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348 Islamic Securitization in the Gulf Region

‘in history’, and that a multipolar world in geo-economic terms might indeed be around
the corner (The World Bank 2011).
However, when exploring the case of Islamic securitization one can argue that, while
global finance is rearticulating in EM, the financial ‘system’ itself has not necessarily chan-
ged. First, the articulation of capital flows in ‘emerging’ IFCs is not new, but rather reflects
an ever-changing geography of opportunity and arbitrage. The Gulf region for instance
has at least since the 1970s been a crucial cog in the global financial architecture, when
petrodollars were recycled via ‘conventional’ banks. Second, a new global financial archi-
tecture, which includes EM economies such as China and India into the inner circle of
the G20, has not basically improved the outcome of financial integration for these new-
comers (Soederberg 2002). Being an attractive EM does not directly translate in sustainable
economic development since often the short-term profit interests of investors are radically
different from the long-term development goals of policy makers in the receiving coun-
tries themselves. As was illustrated by the Asian crisis in 1997 ⁄ 1998 money does not neces-
sarily ‘stick’ to EM, and global financial institutions and their elites can easily look for the
nearest exit (Beaverstock and Doel 2001). Equally so, when Dubai was hit by its debt crisis
in November 2009, it faced a wave of branch closures and lay-offs when ‘toxic securities’
originating in the overinflated local real estate market caused rampage on the portfolios of
global investment banks active in the region (Bassens et al. 2010b). Third and finally, geo-
graphical shifts in financial architecture do not necessarily translate into a shift in the nature
of global finance itself. As the case of Islamic securitization illustrates, EM practices involve
an increasing degree of negotiation to make financial techniques and practices work in
changing contexts, for instance when conventional securitization techniques are adapted to
fit the Shari’a. Nevertheless, although this produces plural outcomes in the world of global
finance, such adaptations have largely been formal and hence strongly reproduce ‘conven-
tional’ practices originating in developed markets and their IFCs.
Given these observations, the jury is still out on whether the current rise of emerging
economies actually reflects a Braudelian longue durée shift, or rather a short term global
reshuffle of financial capital. In any case, current geo-economic shifts indicate that the
ever-shifting flowing-like-mercury constellation of global capital flows (Clark 2005) oper-
ates against the backdrop of perhaps more long term patterns of geo-economical hege-
mony and marginalisation (Frank 1998). This does not imply that financial geographies
are causally determined by underlying economic geographies, but rather that both insepa-
rable ‘fields’ constantly interact and co-constitute each other, with states moulding their
territorially-organized regulations to the demands of localized financial actors who are
constantly seeking the opportunities of these changing regulatory constellations. Whatever
their outcome may be, these on-going shifts urge economic geographers to redress the
dominant focus on the Euro-American core in contemporary studies of finance, and
indulge in a more ‘decentred’ look at the multitude of financialization processes that hap-
pen in and stretch out to ⁄ from emerging markets. Given the increasingly worrisome state
of European and American economies after three decades of financialization, the time
feels right for economic geographers to actively engage with such a scientific project and
explore the nature of such ‘alternative’ economic and financial spaces.

Acknowledgement
The views in this paper arose from research funded by the Research Foundation - Flan-
ders Grant No. 3E005811. The author thanks James Faulconbridge and two anonymous
reviewers for their valuable comments on an earlier version of this paper.

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Geography Compass ª 2012 Blackwell Publishing Ltd
 Islamic Securitization in the Gulf Region 349

Short Biography
David Bassens is a post-doctoral fellow of the Research Foundation – Flanders at the
Social and Economic Geography research group at Ghent University. He holds a PhD in
Sciences: Geography (Ghent University), a Master’s degree in Geography (Ghent Univer-
sity) and a Master’s degree in Social and Cultural Anthropology (University of Leuven).
He was formerly employed on a 4-year project entitled ‘Globalization Revisited: The
Relationship between Global Commodity Chains and Urban Networks’. In this context
his research focused on ‘alternative’ world city networks, such as the ones supported by
the fast-growing Islamic financial services sector. Steering away from a ‘Western’ domi-
nance in world city theories, he aimed to add empirical depth to newly arising lines of
research on urbanization and globalization in non-core regions of the world economy,
with a focus on Gulf cities in particular. His current research delves deeper into the Gulf
nexus of financialization, political economy, and globalized urban growth.

Notes
*
Correspondence address: David Bassens, Post-doctoral fellow of the Research Foundation – Flanders, Ghent Uni-
versity, Geography Department, Krijgslaan 281 (S8), 9000 Ghent – Belgium. E-mail: david.bassens@ugent.be.

1
According to the rating agency Standard and Poor’s (2007, p. 6) the term ‘emerging market’ implies that a coun-
try hosts a stock market that is in transition – increasing in size, activity, or level of sophistication. Most often the
term is defined by a number of parameters that attempt to assess a stock market’s relative level of development
and ⁄ or an economy’s level of development.

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