Economic crisis, global financial cycles, and state control of finance: public development banking in Brazil and South Africa

Natalya Naqvi

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In the aftermath of recent crisis, national governments across the global south increasingly see state ownership and control of finance as a vital public policy tool. What explains variation in state control of finance in the wake of crisis? Interventionist policies can elicit disinvestment or exit threats from private financial actors if they limit profitability. When disinvestment threats are credible, policymakers may rule out reform for fear of devastating economic consequences. I argue that the credibility of disinvestment threats is conditioned by two key variables, the resilience of the national economy to capital flight, which affects the level of damage capital flight will inflict, and global financial liquidity, which can be used to undercut domestic disinvestment threats. These arguments are developed through comparative case studies of cross-national and over-time variation in the scale and scope of public development banking in Brazil and South Africa in the wake of the 2008 crisis.

Keywords: economic interdependence; global finance; globalization; political economy; state sovereignty; third world (search for similar items in EconPapers)
JEL-codes: F30 G00 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2023-06-30
New Economics Papers: this item is included in nep-fdg and nep-his
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Published in European Journal of International Relations, 30, June, 2023, 29(2), pp. 283 - 318. ISSN: 1460-3713

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:115781

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