The Concrete and Everyday Reality of Financial Subordination in Developing and Emerging Economies

Dr Annina Kaltenbrunner
University of Leeds


This project brings together a group of early career researchers from different disciplines and theoretical backgrounds to investigate the everyday practices and relations through which developing and emerging economies’ (DEEs) subordinate financial integration manifests and perpetuates itself and conditions the structure of capital accumulation. Heterodox economists have long pointed to the structural subordination of DEEs in the global economy. In financial markets this subordination is reflected in persistent external vulnerability and financial instability and severe macroeconomic policy constraints. So far, this literature has largely focused on DEEs’ monetary subordination and investigated broad structural processes and moments of crises and extreme volatility. We still know very little about the specific, everyday financial relations, practices and mechanisms which reflect DEE’s subordinate financial integration and distinctly shape the behaviour of economic agents in these countries. This knowledge, however, has become particularly important in the era of financialisation manifested in the increasingly complex and variegated relations of DEE actors with (international) financial markets. Economic geographers and sociologists have presented excellent work on the spatially and socially variegated financial practices, but are frequently insensitive to the macroeconomic, monetary, and political structures underlying them. This project brings together the concerns with both macro-structure and agency to conceptualise their interaction in structured global financial markets. This is theoretically innovative as it distinguishes explicitly between monetary and financial forms of subordination and develops their conceptual specificity and dynamics interaction. Methodologically, the project proposes a mixed method study to uncover the key international financial relations of Non-Financial Corporations from DEE, as key agents in domestic capital accumulation, and to investigate their potentially subordinate nature in the form of specific constraints, costs and barriers. The immediate outcome of the project will be a working paper and an application to the COST network.

The Research Idea

This interdisciplinary project seeks to make visible the everyday practices and relations through which developing and emerging economies’ (DEEs) subordinate financial integration manifests and perpetuates itself and conditions the structure of capital accumulation. For mainstream economists financial integration largely takes place on an even playing-field. Any negative implications are due to market or state failures which can be corrected through correcting measures. Heterodox economists have long pointed to the structural and persistent subordination of DEEs in the global economy. With regards to international financial integration existing work has predominantly focused on monetary and macroeconomic relations reflected in aggregate economic processes. We still know very little about the specific financial relations, practices and mechanisms which reflect DEE’s subordinate financial integration and distinctly shape the behaviour of economic agents in these countries. Moreover, so far, analytical emphasis has been placed on moments of financial crises and external vulnerability rather than the distinct, everyday financial practices which condition capital accumulation in DEEs. This also means we are rather blind to the underlying class dynamics which both produce and are re-produced by these global financial dynamics (for an exception see Alami, 2018). This project seeks to fill this gap by providing an interdisciplinary investigation into the distinct relations of DEE Non-financial corporations (NFCs), as key agents of domestic capital accumulation, with international financial markets. Uncovering these financial practices has become particularly important in the era of financialisation manifested in the increasingly complex and variegated relations of DEE NFCs with (international) financial markets.


Recently, mainstream macroeconomists have raised the potentially detrimental impact of international financial integration in the form of macroeconomic policy constraints and global financial cycles (e.g. Rey 2013). These negative implications are largely located in varying risk appetites and market failures which can be addressed with the appropriate policy tools, including targeted and temporary capital controls (e.g. Korinek 2011). Consensus still exists that all countries are on an even playing-field and overall benefit from financial integration. Heterodox scholars, in particular those in the tradition of Latin American Structuralists and Dependency Theory, have long pointed to the structural subordination of DEE in the global economy. So far this literature has mainly focused on trade and foreign direct investment. One exception is the small but growing interdisciplinary literature on DEEs’ subordinate position in the global currency hierarchy and its implications for domestic asset prices, macroeconomic policy making, and domestic financialisation (e.g. Bonizzi, 2017; Alami, 2018a, 2018b; Kaltenbrunner and Painceira, 2018; Koddenbrock forthcoming;  Powell, 2013). So far, these studies have primarily focused on DEEs’ subordinate monetary relations and have neglected the specific financial practices, relations and behaviours which constitute this structural subordination. Moreover, the emphasis has been on constraints on policy makers and macro-financial phenomena rather than the everyday practices which constrain and shape capital accumulation in DEE. The interdisciplinary literature on financialisation has given detailed insights into these new financial practices and behaviours, but has paid insufficient attention to both the monetary and globally structured basis of financialisation (Christophers, 2015).

The Focus

The rise of DEEs has been one of the most fundamental changes to the global economy in recent years. In 2010, for example, China has become the world’s largest exporter. Despite their rising economic power, DEEs remain in a subordinate position in global financial markets, which shapes and constrains domestic economic actors’ opportunities and exposes them to vulnerabilities. The clearest manifestation of this are the recurrent bouts of financial instability and crisis (increasingly unrelated to their domestic economic conditions). For example, China’s unexpected devaluation in 2015 led to an unprecedented capital outflow and drop in foreign exchange reserves (CNBC, 2015), and more recently, Turkey and Argentina have experienced severe financial instabilities on the back of changing US monetary policy and a strengthening US dollar. But even in ‘normal’ times, domestic economic actors in DEEs, are faced with the consequences of DEEs’ structural financial subordination. There is therefore a need to understand and inquire into the the everyday financial practices which may be less visible, but persistently condition capital accumulation in DEEs and cement their subordinate position in the global economy. It is only when we have a detailed understanding of how financial markets work, and how NFC in DEEs engage with them, we can make concrete proposals for change. This is particularly important for DEE NFCs given their crucial role in capital accumulation and the recent changes in their relations with financial markets in the context of financialisation (Kaltenbrunner and Karacimen, 2016).

Theoretical Novelty

This project brings together a team of interdisciplinary scholars (heterodox economics, international political economy, and economic geography) to investigate the concrete reality of DEE financial subordination and conceptualize the interaction between (macro)structure and agency in global financial markets. Heterodox scholars have largely focused on making visible and theorizing the fundamental and persistent market structures which condition public and private agency in DEEs. The theoretical framework has been one of monetary hierarchies drawing on both Post Keynesian and Marxist authors. These authors have paid little attention to the specific financial relations and practices which are both shaped by and sustain these macro-structures. Political economists have highlighted the important role of public agents, but have been rather mute on the specific practices of private actors. Economic geographers and economic sociologists present excellent work on the spatially and socially variegated financial practices on different scales, but are frequently insensitive to the macroeconomic, monetary, and political structures underlying them. Through the interdisciplinary encounter the project brings together the concerns with both macro-structure and agency to conceptualize their interaction in structured global financial markets. Theoretically, this provides several innovations: First, the project distinguishes explicitly between monetary and financial subordination, delineates their characteristics,, and conceptualises their interaction. Second, by doing so, it further highlights the macro-structures underlying financial behaviour and, third, shows that rather than only macroeconomic and political structures, monetary subordination is also the outcome of specific financial structures, relations and practices which both perpetuate but also shape the distinct form of monetary subordination.


To identify and describe the subordinate financial relations and practices at the core of the project, the participants will engage in detailed mixed-method studies. Economics, including heterodox economics, is largely dominated by quantitative methods. These methods are useful to study broad causal relationships, but they are unable to identify and describe the complex economic relations underlying economic outcomes and structures. The use of qualitative methods to investigate specific financial practices and relations is established practice in other disciplines, such as economic geography and critical international political economy. This project integrates these methods from other disciplines into its inquiry and proposes the conduct of selected semi-structured pilot interviews with financial market participants and subsidiaries of DEE NFCs in London (Bonizzi, Kaltenbrunner and Powell), Frankfurt (Koddenbrock), and Luxembourg (Alami). The main aim of the interviews is to identify the key economic relations, financing practices and asset choices of DEE NFCs in international financial markets and the specific constraints, costs and barriers which they encounter by doing so. These interviews will be triangulated with both financial market data (e.g. financial flows from the BIS) and company data (e.g. balance sheets; annual reports) to draw a comprehensive picture of the key international financial relations of these companies.

Work Plan

The award will support the conduct of 15 pilot interviews (7 in London, 4 in Frankfurt, 4 in Luxembourg) between February and April 2019 and the organisation of a one day encounter of the project participants in May 2019 at the University of Leeds. The award complements two other meetings already planned in December 2018 and November 2019. The first encounter will take place at the Workshop on Financialisation in DEEs on the 13th and 14th of December 2018 at Girton College Cambridge. In this first meeting, participants will present initial research on the potential subordinate financial relations of NFCs from DEEs, finalize the case studies, and draw up the research methodology. After the December workshop, the participants will conduct their research and pilot interviews in their respective financial centres drawing on contacts from previous research. The May workshop aims at discussing initial results, identify financial relations and indicators of financial subordination,conduct a first conceptualisation of the link between financial and monetary subordination, and identify further knowledge gaps for investigation. Between May and November 2019 we will will conduct further research, fill the identified knowledge gaps, and draft a working paper and larger grant proposal for submission to the COST action network (see below). During the third workshop at the Max-Planck Institute for the Study of Societies in October 2019 and in cooperation with the ‘Politics of money’ network ( we will seek input on our working paper and draft grant application which will be finalized by December 2019.


After the project, the group seeks to collaborate on joint publications and future funding application. Two concrete outcomes are planned right after the project. First, project participants will present the working paper at several international conferences and workshops and submit it to an interdisciplinary journal. Second, the ISRF award is aimed at creating the material for a larger funding applications which allows the group to conduct more extensive research and integrate more scholars in the research (including aspiring graduate and postgraduate students to continue the tradition of critical scholarship). Concretely, the project participants will draft an application for the COST network (European Cooperation in Science and Technology) with a likely application deadline in November 2019. The Cost network is specifically aimed at supporting interdisciplinary networks and capacity building through meetings, training schools, short-term scientific missions and other networking activities. 50% of the members should come from ‘inclusiveness target countries’ (e.g. Albania, Bosnia, Bulgaria etc.). The concern of this project and its follow-up initiatives, that is the subordinate financial integration of DEEs, would be of particular relevance and importance for these countries. After the submission to COST, the project members will work together towards a larger research grant application from sources such as the ESRC, the Leverhulme Trust, and the Global Challenge Research Fund. This follow-up proposal will explore the issues raised in this application on a larger scale, including a longer dedicated fieldwork period, with NFC and financial market participants from several countries.


Alami, I. (2018). On the Terrorism of Money and National Policy-Making in Emerging Capitalist Economies. Geoforum, 96, 21-31.

Alami, I. (2019). Post-Crisis Capital Controls in Developing and Emerging Countries: Regaining Policy Space? A Historical Materialist Engagement, Review of Radical Political Economics, forthcoming

Bonizzi, (2017) An Alternative Post-Keynesian Framework for Understanding Capital Flows to Emerging Markets, Journal of Economic issues, 51 (1), 137-162

Christophers, B. (2015). The Limits to Financialization. Dialogues in Human Geography, 5(2), 183-200.

CNBC (2015). China forex reserves slump by record $93.9B in August. CNBC Asia-Pacific News. Online Source Available at: (Downloaded: 1st of November 2018)

Kaltenbrunner, A., & Karacimen, E. (2016). The Contested Nature of Financialization in Emerging Capitalist Economies. In T. Subasat (Ed.), The Great Financial Meltdown Systemic, Conjunctural or Policy-Created? (pp. 287-304). Cheltenham: Edward Elgar.

Kaltenbrunner, A., & Painceira, J. P. (2018). Subordinated financial integration and financialisation in emerging capitalist economies: The Brazilian experience. New Political Economy, 23(3), 290-313.

Koddenbrock, K (2018). Money and Moneyness: Thoughts on the nature and distributional power of the backbone of capitalist political economy, Journal of Cultural Economy, forthcoming

Korinek, A. (2011). The new economics of prudential capital controls: A research agenda. IMF Economic Review, 59(3), 523-561.

Powell, J. (2013). Subordinate Financialisation: a Study of Mexico and its Non-Financial Corporations. SOAS, University of London.

Rey, H. (2013) Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence, Presented at 2013 Economic Policy Symposium, Jackson Hole, Federal Reserve Bank of Kansas City