International financialization and the contradictions of privatized Keynesianism.

This paper contributes to the understanding of the impact of international financialization on developing countries. It is generally understood that developing economies are part of the global financialization 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 “privatized Keynesianism”, the policy regime that sustained financialization 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 developing countries and financialization 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.