Finance in the Developing World: Debt, credit and financialization in the Global South
Credits: 3 ECTS
Since the end of the Bretton Woods Regime, the diffusion of financial liberalization reforms around the globe has increased the exposure of developing countries to systemic risks associated with economic crises that originate in “capitals of capital.” As the 2008 Global Financial Crisis has shown, the magnitude of the risk was particularly large in emerging markets that exhibited greater interconnectedness to international trade, investment and financial flows. Meanwhile, the aggregation of these economies to the global financial system shows a great deal of variation. Some scholars argue that the experience of countries in the Global South is best characterized as a dependent or subordinate financialization due to their lack of monetary independence. Recent debates on financialization in developing market economies further highlight the terms of unequal exchange that these countries are embedded in, where international capital flows steered by powerful financial actors and transnationalized banks have a major impact on economic growth performance. As a result, many of these countries have become increasingly sensitive to international market volatilities. This course explores the implications of these dynamics on economic and political development trajectories of developing areas. In doing so, the modules put a special emphasis on their diverse experiences in financialization in historical perspective. Three key questions guide our focus: How do these economies navigate the post-crisis monetary policy environment? What kind of implications do these dynamics have on economic growth in these countries? How do the policy choices of decision-makers influence the political regime trajectories?