Home > Result and Research > How to conceptualise Financialisation in Developing and Emerging Economies?: Unanswered Questions on Financialisation in Developing Economies

How to conceptualise Financialisation in Developing and Emerging Economies?: Unanswered Questions on Financialisation in Developing Economies


The discussions of the processes behind the growing importance of finance, financial transactions and financial motives, as well as the sustainability of the financial systems, have been located in the critical political economy debate of financialisation and neoliberalism (Crotty, 2003Epstein, 2005Fine, 2013Lapavitsas, 2013Palley, 2016Sawyer, 2013Stockhammer, 2004).

The analysis of financialisation in developing and emerging economies (DEEs) is relatively novel (Bonizzi, 2013). It is rooted in earlier discussions about the risks of financial globalisation and liberalisation (Akyuz & Boratav, 2005Barbosa-Filho, 2005Crotty & Lee, 2005Frenkel & Rapetti, 2009Grabel, 2003O’Connell, 2005Palma, 1998Taylor, 1998), including the Latin American Structuralist literature on the hegemonic role of the US dollar and its financial and monetary implications for DEEs (Belluzzo, 1997Braga, 1997Fiori, 1997Miranda, 1997Tavares, 1997); the debate on capital account liberalisation and capital market integration (Cohen, 1996Rodrik, 1998Stiglitz & Ocampo, 2008Strange, 1994); and the Minsky-inspired currency and boom bust dynamics of financial crisis in developing economies (Arestis & Glickman, 2002de Paula & Alves, 2000Dymski, 1999Kregel, 1998Schroeder, 2002).

Recently, a literature has emerged which looks more directly at the financialisation of DEEs. One strand of this literature has focused on its international dimension, particularly the ability of both foreign and domestic actors to exploit interest rate differential and exchange rate volatility and the political economy implications of such a process (Hardie, 2012Kaltenbrunner, 20102015Kaltenbrunner & Painceira, 2009Powell, 2013). This aspect of DEE financialisation is associated with, and reinforced by, the capital flows dependency of many DEEs, which demands appropriate economic policies that guarantee and contribute to generate attractive financial returns (Becker, Jäger, Leubolt, & Weissenbacher, 2010Medialdea, 2013). Indeed, a key issue in this literature is the extent to which DEE governments have been compelled to provide liquidity to financial markets, as financial investors have a significant influence on the domestic currency, weakening central banks exchange rate management and contributing to exchange rate volatility (Datz, 2008G. Epstein & Yeldan, 2008Kaltenbrunner, 20102015Kaltenbrunner & Painceira, 2015Painceira, 2010, 2011; Papadatos, 2009). This is closely associated with growing national public debt, which has been understood as a core feature of financialisation in DEEs, as government bonds are used to mitigate and protect the country against investor speculation, usually by accumulation of foreign exchange reserves and their use as hedge mechanism (Alves, 2017; Correa, Vidal, & Marshall, 2012Ertürk, 2003Hardie, 2012Painceira, 20092010).

Another strand of the literature has sought to map the financialisation phenomena encountered in the Anglo-Saxon core onto DEEs. For example, empirical evidence has been used to show the transformation of non-financial corporations (NFCs), i.e., their shift from being primarily involved in real sector activities to becoming financial actors themselves. The debate draws attention to the costly efforts to increase shareholder value, which induces NFCs to decrease productive investments, which negatively affects employment and wages, and increases their vulnerability to (international) market conditions (Araújo, Bruno, & Pimentel, 2012Correa & Vidal, 2012Demir, 2007Farhi & Borghi, 2009Kalinowski & Cho, 2009Karwowski, 2012Powell, 2013Rossi, 2013Seo, Kim, & Kim, 2012Tan, 2014). Further, the literature shows that NFCs in DEEs have also started to rely on long-term bond issuance rather than bank borrowing (Becker et al., 2010Kaltenbrunner & Karacimen, 2016; Lee, 2012; Powell, 2013Rethel, 2010). Related analyses have examined financialisation in DEEs from the perspective of changes in the financial sector, such as the entry of foreign banks in DEEs and the adoption of practices found in financialised developed countries, in particular, lending to individuals for mortgages and consumption and the creation of new tradable financial securities based on these cash flows (Ashman, Fine, & Newman, 2010Cho, 2010dos Santos, 2013Gabor, 2010Karwowski, 2012Lapavitsas, 2009Sagemann & Reese, 2011Aitken, 2014Mawsdley, 2017).

The above reflects a rising interest in the issue of DEE financialisation, its manifestations, drivers and implications. However, despite this rising interest, many questions still remain unanswered. For example, what, if any, are the specific features of financialisation in DEEs? Can domestic public debt (Alves, 2017; Painceira, 2009) or high interest rates (Becker et al., 2010) or a subordinate aspect (Powell, 2013) be such a feature? What is the link between DEEs’ specific financialisation features and their ‘real’ international integration into international production networks? Does mapping the phenomena encountered in the Anglo-Saxon core onto DEEs overlook the structural differences of these economies and, therefore, their different financialisation practices and features? Also, can financialisation processes be compared between DEEs? What are the roles of different institutions, policies and indeed locational factors in shaping these processes? Can the notion of “variegated financialisation” be helpful in these respects (Brown et al, 2017Lai and Daniels, 2017)? Similarly, is financialisation driven rather by international factors or by autonomous domestic political economy processes (Lai and Daniels; 2017, Lapavitsas, 20092013Lapavistas and Powell, 2013)? Empirically, is it possible to delineate financial development and deepening from financialisation in DEEs, and to what extent can it be quantified (Karwowski and Stockhammer, 2017)?



Aitken, R. (2010). Ambiguous incorporations: microfinance and global governmentality. Global Networks10, 223–243.

Akyuz, Y., & Boratav, K. (2005). The Making of the Turkish Financial Crisis. In G. A. Epstein (Ed.), Financialization and the world economy. Cheltenham, UK; Northampton, MA: Edward Elgar.

Alves, C. C. (2017). Stabilisation or Financialisation? Examining the Dynamics of the Brazilian Public Debt (PhD thesis). SOAS, University of London, London.

Araújo, E., Bruno, M., & Pimentel, D. (2012). Financialization against Industrialization: a regulationnist approach of the Brazilian ParadoxRevue de La Régulation. Capitalisme, Institutions, Pouvoirs.

Arestis, P., & Glickman, M. (2002). Financial crisis in Southeast Asia: dispelling illusion the Minskyan wayCambridge Journal of Economics26, 237–260.

Ashman, S., Fine, B., & Newman, S. (2010). The Crisis in South Africa: Neoliberalism, Financialization and Uneven and Combined DevelopmentSocialist Register47.

Barbosa-Filho, N. H. (2005). International Liquidity and Growth Fluctuations in Brazil. In G. A. Epstein (Ed.), Financialization and the world economy. Cheltenham, UK; Northampton, MA: Edward Elgar.

Becker, J., Jäger, J., Leubolt, B., & Weissenbacher, R. (2010). Peripheral Financialization and Vulnerability to Crisis: A Regulationist PerspectiveCompetition & Change14, 225–247.

Belluzzo, L. G. (1997). Dinheiro e a transfiguração da riqueza. In M. da C. Tavares & J. L. Fiori (Eds.), Poder e dinheiro: uma economia política da globalização (pp. 151–193). Editora Vozes.

Bonizzi, B. (2013). Financialization in Developing and Emerging CountriesInternational Journal of Political Economy42, 83–107.

Braga, J. C. de S. (1997). Financeirização global: o padrão sistêmico de riqueza do capitalismo contemporâneo. In M. da C. Tavares & J. L. Fiori (Eds.), Poder e dinheiro: uma economia política da globalização (pp. 195–242). Petropolis: Editora Vozes.

Brown, A., Spencer, D.A., and Veronese Passarella, M., 2017. The extent and variegation of financialisation in europe: a preliminary analysisRevista de economía mundial, 46, pp. 49–70.

Cho, H. (2010). South Korea’s Experience with Banking Sector Liberalisation. Amsterdam: The Centre for Research on Multinational Corporation.

Cohen, B. J. (1996). Phoenix Risen: The Resurrection of Global FinanceWorld Politics48, 268–296.

Correa, E., & Vidal, G. (2012). Financialization and Global Financial Crisis in Latin American CountriesJournal of Economic Issues (M.E. Sharpe Inc.)46, 541–548.

Correa, E., Vidal, G., & Marshall, W. (2012). Financialization in Mexico: trajectory and limitsJournal of Post Keynesian Economics35, 255–275.

Crotty, J. (2003). The Neoliberal Paradox: The Impact of Destructive Product Market Competition and Impatient Finance on Nonfinancial Corporations in the Neoliberal EraReview of Radical Political Economics35, 271–279.

Crotty, J., & Lee, K.-K. (2005). The Causes and Consequences of Neoliberal Restructuring in Post-Crisis Korea. In G. A. Epstein (Ed.), Financialization and the world economy. Cheltenham, UK; Northampton, MA: Edward Elgar.

Datz, G. (2008). Adaptable Agendas: Private Creditors and the Politics of Debt in Emerging Markets. In J. Robertson (Ed.), Power and Politics After Financial Crises: Rethinking Foreign Opportunism in Emerging Markets (2008 edition, pp. 82–101). Basingstoke England ; New York: AIAA.

de Paula, L. F. R. D., & Alves, A. J. J. (2000). External Financial Fragility and the 1998-1999 Brazilian Currency CrisisJournal of Post Keynesian Economics22, 589–617.

Demir, F. (2007). The Rise of Rentier Capitalism and the Financialization of Real Sectors in Developing CountriesReview of Radical Political Economics39, 351–359.

dos Santos, P. L. (2013). A cause for policy concern: the expansion of household credit in middle-income economiesInternational Review of Applied Economics27, 316–338.

Dymski, G. (1999). Asset Bubbles and Minsky Crises in East Asia: A Spatialized Minsky Approach. Research Paper, Department of Economics, University of California-Riverside.

Epstein, G. A. (2005). Financialization and the world economy. Cheltenham, UK; Northampton, MA: Edward Elgar.

Epstein, G., & Yeldan, E. (2008). Inflation targeting, employment creation and economic development: assessing the impacts and policy alternativesInternational Review of Applied Economics22, 131–144.

Ertürk, I. (2003). Governance or financialisation: The Turkish caseCompetition and Change7, 185–204.

Farhi, M., & Borghi, R. A. Z. (2009). Operations with financial derivatives of corporations from emerging economiesEstudos Avançados23, 169–188.

Fine, B. (2013). Financialization from a Marxist PerspectiveInternational Journal of Political Economy42, 47–66.

Fiori, J. L. (1997). Globalização, hegemonia e império. In M. da C. Tavares & J. L. Fiori (Eds.), Poder e dinheiro: uma economia política da globalização (pp. 87–147). Editora Vozes.

Frenkel, R., & Rapetti, M. (2009). A developing country view of the current global crisis: what should not be forgotten and what should be doneCambridge Journal of Economics33, 685–702.

Gabor, D. (2010). (De)Financialization and Crisis in Eastern EuropeCompetition & Change14, 248–270.

Grabel, I. (2003). Averting crisis? Assessing measures to manage financial integration in emerging economiesCambridge Journal of Economics27, 317–336.

Hardie, I. (2012). Financialization and Government Borrowing Capacity in Emerging Markets. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.

Kalinowski, T., & Cho, H. (2009). The Political Economy of Financial Liberalization in South Korea: State, Big Business, and Foreign InvestorsAsian Survey49, 221–242.

Kaltenbrunner, A. (2010). International Financialization and Depreciation: The Brazilian Real in the International Financial CrisisCompetition & Change14, 296–323.

Kaltenbrunner, A. (2015). Financial integration and exchange rate determination: a Brazilian case studyInternational Review of Applied Economics29, 129–149.

Kaltenbrunner, A., & Karacimen, E. (2016). The Contested Nature of Financialization. In T. Subasat (Ed.), The Great Financial Meltdown: Systemic, Conjunctural or Policy-Created?Cheltenham, UK: Edward Elgar Publishing Ltd.

Kaltenbrunner, A., & Painceira, J. P. (2009). New Forms of External Vulnerability: Brazil in the Global Financial Crisis (RMF Discussion Papers No. 15). London: SOAS, University of London.

Kaltenbrunner, A., & Painceira, J. P. (2015). Developing countries’ changing nature of financial integration and new forms of external vulnerability: the Brazilian experienceCambridge Journal of Economics39, 1281–1306.

Karwowski, E. (2012). Financial Operations of South African Listed Firms: Growth and Financial Stability in an Emerging Market Setting. Presented at the III Conferência Internacional do IESE – “Moçambique: Acumulação e Transformação num Contexto de Crise Internacional,” Moçambique.

Kregel, J. A. (1998). Yes, “It” Did Happen Again: A Minsky Crisis Happened in Asia (Economics Working Paper Archive No. wp_234). Levy Economics Institute.

Lapavitsas, C. (2009). Financialisation Embroils Developing Countries (RMF Discussion Papers No. 14). London: SOAS, University of London.

Lapavitsas, C. (2013). Profiting without Producing: How Finance Exploits Us All. London ; New York: Verso Books.

Lapavitsas, C. and Powell, J., 2013. Financialisation varied: a comparative analysis of advanced economies. Cambridge Journal of Regions, Economy and Society, 6 (3), 359–379.

Lai, K.P.Y. and Daniels, J.A., 2017. Financialization of Singaporean Banks and the Production of Variegated Financial Capitalism. In: B. Christophers, A. Leyshon, and G. Mann, eds. Money and Finance After the Crisis: Critical Thinking for Uncertain Times. Wiley-Blackwell, 217–244.

Lee, J.-Y. (2012, October). Financialization and Transformation of the East Asian Economies. IIPPE Working Paper No 12, SOAS, University of London.

Mawdsley, E. (2018). Development geography II: FinancializationProgress in Human Geography42, 264–274.

Medialdea, B. (2013). Brazil: an economy caught in a financial trap (1993-2003)Revista de Economia Política33, 427–445.

Miranda, J. C. da R. (1997). Dinâmica financeira e política macroeconômica. In M. da C. Tavares & J. L. Fiori (Eds.), Poder e dinheiro: uma economia política da globalização. Editora Vozes.

O’Connell, A. (2005). The Recent Crisis – and Recovery – of the Argentine Economy: Some Elements and Background. In G. A. Epstein (Ed.), Financialization and the world economy. Cheltenham, UK; Northampton, MA: Edward Elgar.

Painceira, J. P. (2009). Developing Countries in the Era of Financialisation: From Deficit Accumulation to Reserve Accumulation (RMF Discussion Papers No. 4). London: SOAS, University of London.

Painceira, J. P. (2010). The Financial Crisis of 2007–09 and Emerging Countries: The Political Economy Analysis of Central Banks in the Brazilian and Korean EconomiesCompetition & Change14, 271–295.

Painceira, J. P. (2011). Central banking in middle income countries in the course of financialisation : a study with special reference to Brazil and Korea /. SOAS, University of London.

Palley, T. I. (2016). Financialization: The Economics of Finance Capital Domination. London: Palgrave Macmillan.

Palma, G. (1998). Three and a half cycles of ‘mania, panic, and [asymmetric] crash’: East Asia and Latin America comparedCambridge Journal of Economics22, 789–808.

Papadatos, D. (2009, February 15). Central Banking in Contemporary Capitalism: Monetary Policy and its Limits. RMF Discussion Papers No. 5, SOAS, University of London.

Powell, J. (2013). Subordinate financialisation: a study of Mexico and its non-financial corporations (PhD). SOAS, University of London, London.

Rethel, L. (2010). Financialisation and the Malaysian Political EconomyGlobalizations7, 489–506.

Rodrik, D. (1998). Has Globalization Gone Too Far? Challenge41, 81–94.

Rossi, J. (2013). Hedging, selective hedging, or speculation? Evidence of the use of derivatives by Brazilian firms during the financial crisisJournal of Multinational Financial Management23, 415–433.

Sagemann, B., & Reese, P. (2011). The Great Subprime Credit Crisis and its Impact on Eastern Europe. In J. Jungmann & B. Sagemann (Eds.), Financial crisis in Eastern Europe: road to recovery. Wiesbaden: Gabler.

Sawyer, M. (2013). What Is Financialization? International Journal of Political Economy42, 5–18.

Schroeder, S. K. (2002). A Minskian Analysis of Financial Crisis in Developing Countries. SCEPA working paper series., New York.

Seo, H. J., Kim, H. S., & Kim, Y. C. (2012). Financialization and the Slowdown in Korean Firms’ R&D InvestmentAsian Economic Papers11, 35–49.

Stiglitz, J., & Ocampo, J. A. (Eds.). (2008). Capital Market Liberalization And Development. Oxford ; New York: Oxford University Press, U.S.A.

Stockhammer, E. (2004). Financialisation and the slowdown of accumulationCambridge Journal of Economics28, 719–741.

Strange, S. (1994). States and markets. London; New York; New York, NY: Pinter Publishers ; Distributed in the USA and Canada by St. Martin’s Press.

Tan, J. (2014). Running out of steam? Manufacturing in MalaysiaCambridge Journal of Economics38, 153–180.

Tavares, M. da C. (1997). A retomada da hegemonia norte-americana. In M. da C. Tavares & J. L. Fiori (Eds.), Poder e dinheiro: uma economia política da globalização. Editora Vozes.

Taylor, L. (1998). Capital market crises: liberalisation, fixed exchange rates and market-driven destabilisationCambridge Journal of Economics22, 663–676.

via Unanswered Questions on Financialisation in Developing Economies

Categories: Result and Research
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: