Financing Development in the Financial Globalization: Revisiting Old Challenges in a New Context

  • Davide VillaniEmail author
  • Nicolás Hernán Zeolla


The growth in the international financial markets during the past decades produced several transformations of the world economy. In Latin America, these changes have been reflected in the increase in magnitude and volatility of financial flows (both banking and capital markets) and the expansion of the capital market-based financing for firms. The chapter revisits Latin American structuralist vision on international capital flows and how this topic has been addressed by the more recent contributions from the so-called New Latin American Structuralism. By distinguishing between the domestic and international spheres, we analyze the continuity and discontinuity between new structuralism, traditional structuralism, and mainstream regarding, on the domestic side, development of banks and supervision of domestic interest rates, and on the international side, international loans and capital movements.


  1. Allen, F., and D. Gale. 1997. Financial Markets, Intermediaries, and Intertemporal Smoothing. Journal of Political Economy 105 (3): 523–546.CrossRefGoogle Scholar
  2. Amsden, Alice H. 1987. The Paradigm of Late Industrialisation. Political Economy. Studies in the Surplus Approach 3 (2): 133–159.Google Scholar
  3. ———. 1989. Asia’s Next Giant. New York: Oxford University Press.Google Scholar
  4. Baker, G.P., M.C. Jensen, and K.J. Murphy. 1988. Compensation and Incentives: Practice vs. Theory. The Journal of Finance 43 (3): 593–616.CrossRefGoogle Scholar
  5. Bhattacharya, Amar, Mattia Romani, and Nicholas Stern. 2012. Infrastructure for Development: Meeting the Challenge. Centre for Climate Change Economics and Policy Grantham Research Institute on Climate Change and the Environment Policy Paper.Google Scholar
  6. Bielschowsky, R. 1998. Cincuenta años del pensamiento de la CEPAL: textos seleccionados. Santiago: Fondo de Cultura Económica/CEPAL. Vol. I, introducción.Google Scholar
  7. Bresser-Pereira, L.C. 2009. From Old to New Developmentalism in Latin America. In The Handbook of Latin America Economics, ed. J.A. Ocampo and J. Ros. Oxford, UK: Oxford University Press.Google Scholar
  8. ———. 2012. Structuralist Macroeconomics and the New Developmentalism. Revista de Economia Política 32 (3): 347–366.Google Scholar
  9. Broner, F., T. Didier, A. Erce, and S.L. Schmukler. 2013. Gross Capital Flows: Dynamics and Crises. Journal of Monetary Economics 60 (1): 113–133.CrossRefGoogle Scholar
  10. Cardoso, Fernando H., and Enzo Faletto. 1979. Dependency and Development in Latin America. Berkeley: University of California Press.Google Scholar
  11. Castells, Manuel. 1992. Four Asian Tigers with a Dragon Head: A Comparative Analysis of the State, Economy and Society in the Asian Pacific Rim. In State and Society in the Pacific Rim, ed. Richard Appelbaum and Jeff Henderson. London: Sage Publications.Google Scholar
  12. Cavallo, E., B. Eichengreen, and U. Panizza. 2016. Can Countries Rely on Foreign Saving for Investment and Economic Development? Review of World Economics 51: 1–30.Google Scholar
  13. Chang, Ha Joon. 2011. Hamlet Without the Prince of Denmark: How Development Has Disappeared from Today’s ‘Development’ Discourse. In Towards New Developmentalism: Market as Means Rather Than Master, ed. Shahrukh Rafi Kahn and Jens Christiansen. Oxon: Routledge.Google Scholar
  14. Chang, H.-J., H.-J. Park, and C.G. Yoo. 2001. Interpreting the Korean Crisis: Financial Liberalization, Industrial. Policy and Corporate Governance. In Financial Liberalization and the Asian Crisis, ed. H.-J. Chang, G. Palma, and D.H. Whittake. Basingstoke: Palgrave Macmillan.CrossRefGoogle Scholar
  15. Chang, Ha Joon, Hong Jae Park, and Chul Gyue Yoo. 1998. Interpreting the Korean Crisis: Financial Liberalisation, Industrial Policy and Corporate Governance. Cambridge Journal of Economics 22 (6): 735–746.CrossRefGoogle Scholar
  16. Chenert, H.B., and C. Strout. 1966. Foreign Assistance and Economic Development. American Economic Review 56: 679–733.Google Scholar
  17. Chenery, H.C., and M. Bruno. 1962. Development Alternatives in an Open Economy: The Case of Israel. Economic Journal 72: 79–103.CrossRefGoogle Scholar
  18. Claessens, S., M.A. Kose, and M. Terrones. 2010. Business and Financial Cycles in Emerging Markets. IMF Working Paper.Google Scholar
  19. Culpeper, Roy, Stephany Griffith-Jones, and Daniel Titelman. 2016. Multilateral Development Banks. In Global Governance and Development, ed. Jose A. Ocampo. Oxford: Oxford University Press.Google Scholar
  20. Diamand, Marcelo. 1973. Doctrinas Economicas, Desarrollo E Independencia. Buenos Aires: Paidos.Google Scholar
  21. Diamand, M., and N. Crovetto. 1988. La estructura productiva desequilibrada y la dobre brecha. Buenos Aires: Instituto Torcuato Di Tella Centro de Investigaciones Económicas.Google Scholar
  22. Eatwell, J., and L. Taylor. 2005. Finanzas globales en riesgo. Un análisis a favor de la regulación internacional. Buenos Aires, Argentina: Siglo xxi.Google Scholar
  23. ECLAC. 2015. Financing for Development in Latin America and the Caribbean: A Strategic Analysis from a Middle-Income Country Perspective. Santiago, Chile: United Nations, ECLAC.Google Scholar
  24. ———. 2017. Inclusion Financiera PyMES, Noviembre 8.
  25. Epstein, G. 2005. Financialization and the World Economy. Northampton, MA: Edward Elgar Publishing.Google Scholar
  26. Fajnzylber, F. 1990. Industrialización en América Latina: de la ‘caja negra’ al ‘casillero vacío’: Comparación de patrones contemporáneos de industrialización. Cuadernos de la CEPAL, no. 60, Santiago de Chile.Google Scholar
  27. Ferraz, J.C., and L. Ramos. 2017. Promovendo inclusão financeira através práticas inovadoras de bancos de desenvolvimento para apoiar a desenvolvimento social e produtivo e a mudança estrutural com ênfase especial nas empresas de menor porte da América Latina. Rio de Janeiro: CEPAL, Divisão de Desenvolvimento Econômico.Google Scholar
  28. Fischer, Stanley. 1998. Capital Account Liberalization and the Role of the IMF. Should the IMF Pursue Capital-Account Convertibility? (No. 207). International Economics Section, Department of Economics Princeton University, 1–10.Google Scholar
  29. Fisher, Andrew M. 2009. Putting Aid in Its Place: Insights from Early Structuralists on Aid and Balance of Payments and Lessons for Contemporary Aid Debates. Journal of International Development 21: 856–867.CrossRefGoogle Scholar
  30. Frenkel, R. 1983. Mercado financiero, expectativas cambiarias y movimientos de capital. El trimestre económico 50: 2041–2076.Google Scholar
  31. Ffrench-Davis, R. 2010. Macroeconomics for Development: From “Financierism” to “Productivism”. Cepal Review 2010 (102): 7–26.CrossRefGoogle Scholar
  32. Frenkel, R., and M. Rapetti. 2008. Five Years of Competitive and Stable Real Exchange Rate in Argentina, 2002–2007. International Review of Applied Economics 22 (2): 215–226.CrossRefGoogle Scholar
  33. ———. 2014. The Real Exchange Rate as a Target of Macroeconomic Policy. Rethinking Development Strategies after the Financial Crisis – Volume I: Making the Case for Policy Space.Google Scholar
  34. Furtado, Celso. 1970. Economic Development of Latin America. Cambridge: Cambridge University Press.Google Scholar
  35. Glassman, Jim. 2011. The Geo-Political Economy of Global Production Networks. Geography Compass 5 (4): 154–164.CrossRefGoogle Scholar
  36. Griffith-Jones, S., and G. Cozzi. 2016. The Roles of Development Banks. In Efficiency, Finance, and Varieties of Industrial Policy, ed. Noman A and Stiglitz J. E. New York: Columbia University Press.Google Scholar
  37. Griffith-Jones, Stephany, David Griffith-Jones, and Dagmar Hertova. 2008. Enhancing the Role of Regional Development Banks. G24 Discussion Paper Series 50.Google Scholar
  38. Kim, June-Dong, and Sang-In Hwang. 2000. The Role of Foreign Direct Investment in Korean Economic Development: Productivity Effects and Implications for the Currency Crisis. In The Role of Foreign Direct Investment in East Asian Economic Development, ed. Takatoshi Ito and Anne O. Krueger. Chicago: University of Chicago Press.Google Scholar
  39. Kindleberger, C.P. 1973. The Formation of Financial Centers: A Study in Comparative Economic History. Massachusetts, MA: MIT Press.Google Scholar
  40. Kose, M.A., E.S. Prasad, and A.D. Taylor. 2011. Thresholds in the Process of International Financial Integration. Journal of International Money and Finance 30 (1): 147–179.CrossRefGoogle Scholar
  41. Lane, P.R., and G.M. Milesi-Ferretti. 2007. The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970–2004. Journal of International Economics 73 (2): 223–250.CrossRefGoogle Scholar
  42. Magud, N.E., C.M. Reinhart, and K.S. Rogoff. 2011. Capital Controls: Myth and Reality – A Portfolio Balance Approach. National Bureau of Economic Research (No. w16805). Cambridge, MA: National Bureau of Economic Research.Google Scholar
  43. McKinnon, R.I. 1964. Foreign Exchange Constraints in Economic Development and Efficient Aid Allocation. The Economic Journal 74 (294): 388–409.CrossRefGoogle Scholar
  44. ———. 1973. Money and Capital in Economic Development. Washington, DC: Brookings Institution Press.Google Scholar
  45. ———. 1993. The Rules of the Game: International Money in Historical Perspective. Journal of Economic Literature 31: 1–44.Google Scholar
  46. Milberg, W. 2008. Shifting Sources and Uses of Profits: Sustaining US Financialization with Global Value Chains. Economy and Society 37 (3): 420–451.CrossRefGoogle Scholar
  47. Minsky, H.P. 1990. Money Manager Capitalism, Fiscal Independence and International Monetary Reconstruction. The Future of the Global Economic and Monetary System, 209–218. Budapest: Institute for World Economics of the Hungarian Academy of Sciences.Google Scholar
  48. Neftci, S.N. 1998. FX Short Positions, Balance Sheets and Financial Turbulence: An Interpretation of the Asian Financial Crisis. SCEPA Working Papers 1998–18, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.Google Scholar
  49. Neira Burneo, S. 2016. Inclusión financiera de las pymes en el Ecuador. Santiago: CEPAL, Oficina de Financiamiento para el Desarrollo.Google Scholar
  50. Obstfeld, M., K.S. Rogoff, and S. Wren-lewis. 1996. Foundations of International Macroeconomics. Cambridge, MA: MIT Press.Google Scholar
  51. Ocampo, J.A. 2003. Capital Account and Countercyclical Prudential Regulations in Developing Countries. In From Capital Surges to Drought, ed. R.F.-D.-J. En, 217–244. London: Palgrave Macmillan.CrossRefGoogle Scholar
  52. ———. 2010. Time for Global Capital Account Regulations. Economic and Political Weekly 45: 32–35.Google Scholar
  53. ———. 2012. The Case for and Experience with Capital Account Regulations. In Capital Account Regulations for Stability and Development: A New Approach, ed. K. Gallagher, S. Griffith-Jones, and J.A. Ocampo.Google Scholar
  54. ———. 2013. Balance of Payments Dominance: Its Implications for Macroeconomic Policy. Initiative for Policy Dialogue Working Paper Series. New York: Columbia University.Google Scholar
  55. Ocampo, J.A., and J. Ros. 2011. The Oxford Handbook of Latin American Economics. Oxford: Oxford University Press.CrossRefGoogle Scholar
  56. Ocampo, J.A., S. Spiegel, and J.E. Stiglitz. 2008. Capital Market Liberalization and Development. In Capital Market Liberalization and Development, comp. J.A. Ocampo and J.E. Stiglitz, 1–48. Nueva York, EEUU: Oxford University Press on Demand.CrossRefGoogle Scholar
  57. Orhangazi, Ozgur. 2008. Financialisation and Capital Accumulation in the Non-Financial Corporate Sector: A Theoretical and Empirical Investigation on the US Economy: 1973–2003. Cambridge Journal of Economics 32: 863–886.CrossRefGoogle Scholar
  58. Ostry, M.J.D., M.S. Qureshi, M.K.F. Habermeier, D.B. Reinhardt, M.M. Chamon, and M.A.R. Ghosh. 2010. Capital Inflows: The Role of Controls. Washington, DC: International Monetary Fund.Google Scholar
  59. Pasinetti, Luigi L. 1981. Structural Change and Economic Growth: A Theoretical Essay on the Dynamics of the Wealth of Nations. Cambridge: Cambridge University Press.Google Scholar
  60. Pérez Caldentey, E., and D. Titelman. 2014. Macroeconomics for Development in Latin America and the Caribbean. International Journal of Political Economy 43 (1): 65–91.CrossRefGoogle Scholar
  61. Pérez Caldentey, Esteban, and Matias Vernengo. 2012. Heterodox Central Bankers: Eccles, Prebisch and Financial Reform in 1930s. University of Utah Department of Economics, Working Paper No: 2012–04.Google Scholar
  62. Prasad, E.S., R.G. Rajan, and A. Subramanian. 2007. Foreign Capital and Economic Growth. Cambridge, MA: National Bureau of Economic Research (WP 13619).CrossRefGoogle Scholar
  63. Prebisch, Raul. 1963. Hacia Una Dinamica Del Desarrollo Latinoamericano. Mexico City: Fondo de Cultura Economica.Google Scholar
  64. ———. 1969. La Inversion Privada Extranjera En Desarrollo Latinoamericano. Washington, DC: Unión Panamericana.Google Scholar
  65. ———. 1973a. La Cooperacion Internacional En La Politica de Desarrollo Latinoamericana. Santiago de Chile: ECLAC.Google Scholar
  66. ———. 1973b. Problemas Teoricos Del Desarrollo. ECLAC.Google Scholar
  67. ———. 1991. Raul Prebisch. Obras 1919 – 1948. Vol. II. Buenos Aires: Fundacion Raul Prebisch.Google Scholar
  68. Rhee, Young Whee, Bruce Ross-Larson, and Garry Pursell. 1984. Korea’s Competitive Edge: Managing the Entry into World Markets. Baltimore: Johns Hopkins University Press.Google Scholar
  69. Riedel, James. 1988. Economic Development in East Asia: Doing What Comes Naturally? In Achieving Industrialization in East Asia, ed. Helen Hughes. Cambridge: Columbia University Press.Google Scholar
  70. Rodrigues Bastos, F., H. Kamil, and B. Sutton. 2015. Corporate Financing Trends and Balance Sheet Risks in Latin America (n. 10/15). Washington, DC: International Monetary Fund.Google Scholar
  71. Rodrik, D. 1998. Who Needs Capital-Account Convertibility? Essays in International Finance 207: 55–65.Google Scholar
  72. Ross, S.A. 1973. The Economic Theory of Agency: The Principal’s Problem. The American Economic Review 63 (2): 134–139.Google Scholar
  73. Samber, Florencia. 2012. El Papel de Raúl Prebisch En La Creación Del Banco Central de La República Argentina. Estudios Criticos Del Desarrollo 2 (3): 133–157.Google Scholar
  74. Sao Paolo School of Economics. 2010. Ten Theses on New Developmentalism. Sao Paolo: Getulio Vargas Foundation. Available at
  75. Shaw, E. 1973. Financial Deepening in Economic Development. New York: Oxford University Press.Google Scholar
  76. Stockhammer, E. 2012. Financialization, Income Distribution and the Crisis. Investigación económica (Investigación económica) 71: 39–70.Google Scholar
  77. Summers, Lawrence H. 2000. International Financial Crises: Causes, Prevention, and Cures. American Economic Review 90 (2): 1–16.CrossRefGoogle Scholar
  78. Tarashev, N., S. Avdjiev, and B. Cohen. 2016a. International Capital Flows and Financial Vulnerabilities in Emerging Market Economies: Analysis and Data Gaps. Note Submitted to the G20 International Financial Architecture Working Group, August, BIS.Google Scholar
  79. ———. 2016b. International Capital Flows and Financial Vulnerabilities in Emerging Market Economies: Analysis and Data Gaps. Note Submitted to the G20 International Financial Architecture Working Group, BIS.Google Scholar
  80. Taylor, L., and R. Vos. 2002. Balance of Payments Liberalization in Latin America: Effects on Growth, Distribution and Poverty. Economic Liberalization, Distribution and Poverty: Latin America in the 1990s. Cheltenham, UK; Northampton, MA: Edward Elgar Pub.Google Scholar
  81. Telechea, J.M., and N. Zeolla. 2014. El pensamiento económico latinoamericano del desarrollo y la industrialización: estructuralistas y neoestructuralistas ¿giro o actualización? Revista del CCC, Nro. 21. Available at
  82. Titelman, Daniel. 2006. Subregional Financial Cooperation: The Experiences of Latin America and the Caribbean. In Regional Financial Cooperation, ed. Jose A. Ocampo. Baltimore, MD: Brookings Institution Press.Google Scholar
  83. Tori, D., and Ö. Onaran. 2017. The Effects of Financialisation and Financial Development on Investment: Evidence from Firm-Level Data in Europe (No. 16089). Greenwich, UK: University of Greenwich, Greenwich Political Economy Research Centre.Google Scholar
  84. Torija Zane, Edgardo. 2015. Bancos Centrales ‘periféricos’: El Caso de América Latina. In Estructura Productiva Y Política Macroeconómica, ed. Alicia Bárcena, Antonio Prado, and Martín Abeles. Santiago de Chile: ECLAC.Google Scholar
  85. Vera, C., and D. Titelman Kardonsky. 2013. El sistema financiero en América Latina y el Caribe: una caracterización. Series de proyecto: financiamiento desarrollo. Santiago, Chile: Comision Económica para América Latina (CEPAL).Google Scholar
  86. Vernengo, M. 2005. Technology, Finance, and Dependency: Latin American Radical Political Economy in Retrospect. Review of Radical Political Economics 38 (4): 551–568.CrossRefGoogle Scholar
  87. Wade, Robert. 1988. The Role of Government in Overcoming Market Failure: Taiwan, Republic of Korea and Japan. In Achieving Industrialization in East Asia, ed. Helen Hughes. Cambridge: Cambridge University Press.Google Scholar
  88. ———. 1990. Governing the Market: Economic Theory and the Role of Government in East Asia Industrialization. Princeton: Princeton University Press.Google Scholar
  89. White, Gordon, and Robert Wade. 1988. Developmental States and Markets in East Asia: An Introduction. In Developmental States in East Asia, ed. Gordon White. Basingstoke: Palgrave Macmillan.CrossRefGoogle Scholar
  90. Woyecheszen, S. 2017. Inclusión financiera de la pequeña y mediana empresa en Argentina. Series de proyecto: financiamiento del desarrollo. Santiago, Chile: Comisión Económica para América Latina y el Caribe (CEPAL).Google Scholar
  91. Yu, Tony F. 1997. Entrepreneurial State: The Role of Government in the Economic Development of the Asian Newly Industrialising Economies. Development Policy Review 15: 47–64.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.The Open UniversityMilton KeynesUK
  2. 2.Centre for Studies on Economics and Development/IDAES and CONICETBuenos AiresArgentina

Personalised recommendations