Financial subordination of peripheral emerging economies: a Keynesian–Structuralist approach

Abstract

This paper aims to contribute to a more in-depth discussion of the financial subordination of peripheral emerging economies (PEEs) by connecting financial asymmetry with productive asymmetry. For this purpose, it sets out a Keynesian–Structuralist approach to the financial subordination of PEEs, and to the center–periphery relationship applied to the process of international financial integration. To that end, the paper shows that productive and financial asymmetries are related to each other, that is, they are ‘two sides of the same coin’: PEEs which have low-complexity productive structures and are commodity exporters tend to be much more volatile – that is, they are more subject to the boom and bust of the commodity cycle and the liquidity cycle – and therefore are more financially subordinated than PEEs which have more complex productive structures and are exporters of manufactured goods.