Hosting State Capital? Ideational change and the increasing political contestation of foreign state-led investment in Europe.

How do host states react to the rise of foreign state-led investment in the world economy? Comparative capitalisms (CC) research tackled this analytical challenge by analyzing foreign state investment as a potential source of patient capital for coordinated and mixed market economies (CMEs and MMEs). However, this patient capital framework cannot explain the recent surge of protectionist sentiments across the spectrum of capitalist varieties. In this paper, we argue that this surge of protectionism on the national level can be explained through a framework that takes the globalized nature of foreign state investment seriously. Globalization created the opportunity for states to rise as global owners, which shifts the perceptions of policy-makers away from being a source of patient capital towards questions of national security and economic sovereignty. In order to substantiate this argument, we study the shift in perceptions among policy-makers in a coordinated and a liberal market economy, Germany and the UK. We use document analysis and interviews with policy-makers to conduct a process tracing study which unpacks the policy processes in both countries from the Global Financial Crisis of 2008 to today. Despite being two most dissimilar cases, both states show a similar outcome in increasingly rejecting foreign state investment on the ground of national security reasons. This result speaks to broader developments within globalization studies, where globalization is shifting from being a potential source of investment to a potential source of threat for national security.