This article discusses the politics of capital mobility in dollarized Latin American economies. Building upon the Polanyian notion of double movement and the international financial subordination research program, I contend that the ideology of the governing party and the strength of popular mobilization still contribute to policy variegation in capital flow management even at the bottom of the global currency hierarchy. The case studies on Ecuador and El Salvador since the late 2000s provide support for this argument. In both countries, administrations led by post-neoliberal left-wing parties tightened capital flow management, while their right-wing successors gave a new impulse to capital mobility. However, these regulatory cycles varied according to the strength of popular pressures. In Ecuador, where social movements had a strong mobilizational capacity, post-neoliberal governments deployed encompassing capital controls, while their right-wing successor had to follow a gradualist approach in their liberalizing agenda. In El Salvador, on the other hand, given the relative weakness of the bottom-up pressure, post-neoliberal administrations pursued a targeted macroprudential approach, while the right-wing successor faced little resistance to implementing a radical neoliberal agenda that included even the adoption of bitcoin as legal tender alongside the United States dollar.

This article considers why Brazilian industrial policies have varied across sectors since the mid-1990s. It relies on a Polanyian-inspired framework to propose that the strength of counter-movements against corporate welfare shapes the sector-specific capacity of policy makers to exert state discipline over business interests and diverges from neoliberal scripts of industrial policy making. The authors use prototypical case studies on the automotive, animal protein and pharmaceutical sectors to support their argument. In the automotive industry, the continuous pressure from powerful and cohesive labour unions led to the emergence of a neo-corporatist sectoral regime that was characterized by a tripartite policy design and encompassed conditionalities. In the case of animal protein, the lack of bottom-up pressure culminated in a disembedded neoliberal sectoral regime, in which business owners received almost unconditional benefits, turning industrial policies into corporate welfare. Finally, in the pharmaceutical industry, the combination of diffuse societal demands and unions with intermediate relevance led to an embedded neoliberal sectoral regime that combined selective conditionalities with some space for non-business participation in policy design.

This article aims to discuss to what extent populist parties with opposite ideological backgrounds have differed in their policies towards inherited external financial liberalization (EFL). Building upon a comparative case study centred on Argentina under Kirchnerism (2003-15) and Hungary under Viktor Orbán (since 2010), I conclude that both experiences led to a partial EFL reversal. However, reflecting their opposite ideological underpinnings, each subtype of populism opted to restrict a different dimension of EFL. Argentina's left-wing populism re-regulated cross-border capital flows, harming financial operators, foreign investors and primary exporters through capital controls and export surrenders. These interventionist capital account regulations were needed to shield expansionary macroeconomic policies that attended the interests of subordinate socioeconomic strata, fuelling the tension with financial markets and domestic economic elites. Conversely, Hungary's right-wing populism focused on the ownership structure of the banking sector, aiming to redistribute assets from foreign to domestic private banks and improve the credit conditions for native capitalists. In this case, even when resorting to macroeconomic heterodoxy, the maintenance of fiscal balance and price stability retained support from both foreign investors and domestic business groups, mitigating tensions derived from financial nationalism.

Comparison of the paths of two countries with developmental regimes led by left-of-center parties, Chile and Mexico, shows that the democratic regime, Chile’s, had better social indicators than its authoritarian counterpart at the price of slower industrialization.

This article discusses why Latin American post-neoliberal parties have varied in their strategies of capital flow management. In brief, I propose that two complementary channels favor the pursuit of heterodox strategies: high degree of pressure from popular sectors that push for an immediate macroeconomic reorientation, and strategic allies among economic elites that mitigate the credibility losses associated with this decision. The comparative case-study on Argentina under Kirchnerism (2003-2015) and Brazil under the Workers’ Party (2003-2016) provides support for this argument. In the former case, the ruling party had to address the demands from strong and autonomous unions and social movements, while counting on a strategic alliance with domestic manufacturing producers. In the latter, conversely, the governing party lacked strategic allies among economic elites and could overlook the agenda of weak and subordinate popular organisations. In other words, both popular and elite channels favored the adoption of a heterodox strategy of capital flow management by Kirchnerism, while neither of them did in the case of the Workers’ Party. In Argentina, the option for heterodoxy also contributed to the repoliticisation of capital flow management by returning the visibility of this policy issue and impelling policymakers to go beyond technocratic discourses.

Have Brazil’s capital flows management measures (CFMs) changed after the Global Financial Crisis (GFC)? This article explains Brazil’s CFMs after the GFC as part of a (failed) attempt to gradually move away from embedded neoliberalism. It proposes a Polanyian approach that captures both the change (emphasized by the policy space approach) and the continuity (underscored by the scalar-relational and financialization approaches) underlying Brazil’s CFMs after the GFC. It argues that the change stems from the conflict between different political economy coalitions, while the continuity is rooted in the shared acceptance of major objectives of neoliberalism—capital mobility and financial integration.

This article assesses the impact of post-neoliberal governments on the level of capital controls in 17 Latin American countries for the period between 1995 and 2017. Contrary to administrations led by other left-of-center parties, especially the ones affiliated to the Socialist International, I contend that post-neoliberal parties, affiliated to the São Paulo Forum, opted to reregulate capital flows for three main reasons: increasing macroeconomic policy autonomy, favoring their constituencies, and/or giving concreteness to the rhetoric against financial and foreign interests. After proposing a new capital controls index and estimating a time-series cross-section model, I find that post-neoliberalism has been associated with an increase in the level of controls. Besides this main conclusion, I also find that larger financial sectors contribute to counteracting the reregulation of capital flows by post-neoliberal governments.

Contrary to expectations, the global push for liberalizing reforms during the 1980s and 1990s did not abolish policy diversity in regard to capital flow management. Even though many countries fully opened their capital accounts, there remain several examples of divergence, which go from the maintenance of high levels of capital controls to partial liberalization. Against this background, relying on data from 84 countries between 1995 and 2017, this article uses fuzzy-set qualitative comparative analysis (fsQCA) to shed light on the conditions underlying different capital account regimes. In line with the Polanyian theoretical framework, findings reveal that two kinds of causal paths paved the way for intermediate regimes: the statist path was followed by right-leaning authoritarian regimes that attempted to combine the integration into global markets with the maintenance of control over the domestic private sector; the pluralist path was observed where either manufacturing industries or popular sectors were strong enough to motivate the reregulation of capital flows. Conversely, findings show that extreme regimes such as open and closed ones were associated with homogenous conditions like, respectively, leftist authoritarian regimes and rich democracies with stable economies.

We explore how China's geographically targeted policies impact RMB overseas use individually or in combination. The policies include swap agreements, clearing banks, investment quotas, and direct trading between Chinese renminbi (RMB) and non-USD currencies. Adopting a fuzzy-set qualitative comparative analysis and using Bank of International Settlements cross-country data on foreign exchange markets, we find that institution building has lowered the barriers to international adoption of the RMB. Specifically, for countries economically close to China, high RMB trading is explained by either (i) having a clearing bank in the host market and direct quotations between the RMB and the local currency, or (ii) being a financial center and having access to the Chinese capital market. This combination of policies is explained by the creation of (i) “trading posts” that provide RMB liquidity abroad, and (ii) channels that allow actors to “recycle” offshore RMB funds. We triangulate our results with interviews conducted with senior People's Bank of China officials.

This article relies on a Polanyian-inspired theoretical framework to compare political economy strategies adopted by Brazilian governments after democratisation. Responding to competing interests from the financial sector, the manufacturing industry, and the working class, these governments have chosen between disembedded neoliberal, embedded neoliberal and neocorporatist strategies, facing different challenges and crises. After the short-lived adoption of disembedded neoliberalism in the early 1990s, embedded neoliberal governments were able to conciliate economic liberalisation and orthodox macroeconomic policies with political stability and social cohesion, while compensating the manufacturing industry and the working class for some of their losses. In the late 2000s, however, discontentment within these social groups with regard to insufficient economic growth opened the way for the emergence of neocorporatism, which eased the commitment to liberalisation and macroeconomic orthodoxy in order to expand industrial policies, social protection and labour market regulation. The crisis of neocorporatism, which culminated in the 2016 impeachment, provided a new opportunity for disembedded neoliberalism, putting the interests of the financial sector at the centre of policy formulation.

This article evaluates the effects of external financial liberalization on Brazilian macroeconomic performance from 1995 to 2016. Its main contributions are to assess the influence of the global financial cycle on the level of external financial liberalization and to analyse the short- and long-run macroeconomic effects of such liberalization on the performance of a peripheral economy in the global currency hierarchy. Methodologically, the article employs the Markov-Switching Vector Autoregressive and Vector Error Correction models. The results show that the global financial cycle directly affects cross-border financial flows and frames the impact of external financial liberalization on the macroeconomic performance. The article concludes that external financial liberalization has negative macroeconomic effects in the short run and generates a trade-off between stability and growth in the long run.

In light of the global financial cycle (GFC), this paper investigates the effectiveness of monetary policy in Brazil since the adoption of the inflation targeting regime. The theoretical section analyses monetary policy from the New Macroeconomic Consensus perspective, emphasizing the implications of the GFC. It also contrasts central bank theory with the post-Keynesian critique. For the empirical investigation, a Markov-switching vector autoregressive model is estimated from January 2000 to December 2017, combining the common variables from the empirical literature with the proxy for the GFC. The main results suggest that greater financial instability has a direct effect on domestic inflation.

Recent studies have discussed the influence of the global financial cycle on capital flows to emerging and developing countries. This paper evaluates the relationship between the greater degree of financial integration, and macroeconomic performance over the last two decades in Brazil. The literature has highlighted the Brazilian experience as being paradigmatic among emerging countries regarding the relationship between financial integration and regulation of capital flows to deal with boom and bust cycles. Methodologically, we employ a vector autoregressive model with error correction that allows us to evaluate the cointegration between the variables. Our main hypothesis is that a greater degree of financial integration is associated with negative developments in variables such as gross domestic product, country risk, interest rates, and exchange rate volatility. In addition, this study presents a further contribution by observing the existence of the interaction between the consequences of financial integration and the global financial cycle. More specifically, we found that: (i) an increase in the degree of financial integration generates deeper effects in downward periods of the global financial cycle; and (ii) a decline in that cycle generates greater impacts when a higher degree of financial integration is present.

Responding to global events, including the international financial crisis (IFC) and the COVID-19 pandemic, central banks and the monetary regimes in many Latin American countries responded with actions to mitigate the worst impacts. The authors in this book focus on the recent trends of monetary policy in Latin America and analyze how the actions that were taken have affected the economic performance of these countries.

In this book, we provide some contributions that show the most recent approaches showing to which extent economic policies would overcome a sustainable economic development. First, we will review the current situation and the perspectives of development theories and policies. Next, we will show the scope of both demand-side and supply-side policies, when trying to achieve economic development. Finally, we will show several examples of how developing countries from the Latin America area are dealing with the current situation after the economic crisis, in light of the Sustainable Development Goals.

Since the late 1990s, conventional wisdom has been challenged by the increasing instability of the financial markets. In this context, the Global Financial Crisis (GFC), which began in August 2007, and the “Great Recession ” (GR) that followed, led the governments of advanced and emerging countries to adopt countercyclical fiscal and monetary policies, mainly monetary policies, in an attempt to rescue financial and non-financial corporations . Brazil was not an exception. This chapter analyzes the Brazilian credit market during the GR. More specifically, we propose to test the hypothesis that State-owned Banks (SOB) are able to play a positive role in stabilizing aggregate credit, particularly during financial crises. Using two different econometric approaches, Markov-Switching Vector Autoregressive Models (MS-VAR) and Vector Error Correction (VEC) models, we will provide relevant evidence that would suggest that the credit originated in SOB shows countercyclical characteristics, while private banks behave in a typical pro-cyclical manner.