The role of elites in the co-evolution of international financial markets and financial centres: The case of Luxembourg

This article investigates the co-evolution of Luxembourg's financial centre with influential developmentson a macro scale since the late 1950s and employs insights from the evolutionary approaches ofregional path creation and dependence. Framing the narrative from a historical perspective, thiscase study illustrates how a unique conjuncture of local conditions and intentional decision makingby a small group of influential individuals in Luxembourg embraced and exploited the new opportunitiesof the internationalizing financial markets, thus forming the birth of Luxembourg's financial economy.The article argues that only the role of the elite during this time makes the creation of Luxembourg'sfinancial centre plausible, whilst Luxembourg's continuing financial path has been accompanied by achanging composition of previously local and often individualistic elite. The changing conditions ofglobalization have brought a new type of elite to the fore, in particular the organized power oflarge banks, which continue to reshape Luxembourg's institutional environment in different ways.The fundamental shift in power between Luxembourg's financial and political interest groups hasalso spawned increasingly complex interlinkages between institutional architectures across differentgeographical scales. By strengthening the conceptualization of the particular role of agency, this articleadds knowledge to the prevailing concepts of (regional) path dependence in general and to the contingentdevelopment in financial centres in particular.