International financialisation, developing countries and the contradictions of privatised Keynesianism

This paper contributes to the understanding of the impact of international financialisation on developing countries. It is generally understood that developing economies are part of the global financialisation process, as exporters of goods to ‘debt-led’ economies and as recipient of foreign capital inflows. This paper argues that a key process connecting these two aspects has been ‘privatised Keynesianism’, the policy regime that sustained financialisation in advanced economies by promoting low interest rates and asset appreciation. A consequence of this regime is to induce pressure on global financial institutions to look for returns and profits in the developing world. Such a mechanism represents a fundamental connection between the developing countries and financialisation at the global level, beside the spread of financial liberalisation. In the post-crisis environment, this connection remains strong and has become even more dangerous for developing countries.