The power of small states is not measured in absolute numbers, but in their ability to navigate global markets with agility. This is one of the lessons emerging from the paper "Business-Government Networks in Small States: The Emergence and Evolution of the Luxembourg Global Mutual Fund Industry, 1945–1988," by Valeria Giacomin (Bocconi University) and Matteo Calabrese (a Bocconi postdoc at the Free University of Berlin), published in Business History Review. The study employs the case of Luxembourg to explain a broader phenomenon: how close relationships between political and economic elites can foster trajectories of specialization in small states. The Grand Duchy, now second only to the United States for size of mutual fund assets under management, has become a strategic hub for European and global finance since the 1960s, despite (or perhaps thanks to) its small size. "Our goal was not to propose policy models, but to understand what enables certain small states to sustain competitive advantage over time," explains Valeria Giacomin, Assistant Professor of Business and Global History. "Luxembourg offers an interesting case of 'managed intimacy,' where personal relations and cohesion between public and private actors contribute to regulatory sophistication and financial attractiveness."

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