Eugenia Correa

Financialization in Mexico: trajectory and limits

This article seeks to contribute to the academic debate regarding financialization, through an analysis of its evolution in Mexico. As we argue, Mexico has been at the forefront of the tendencies and historical events that have defined financialization at the global level. Moreover, Mexico is alone among the worlds largest economies in its continual application of public policies that serve the needs of a financialized economy. The degree to which such policies have been applied and their corresponding results have made Mexico one of the more interesting case studies in the causes and consequences of financialization.

Global financial markets: financial deregulation and crises

Research Institute of the Autonomous University of Mexico, Ciudad Universitaria, Coyaca ́n C:P:04510. Email: alicia K servidor.unam.mx. Her publications include Cincuenta An ̃os de la Deuda Externa and Fin de Siglo y Deuda Externa: Historia sin Fin. Eugenia Correa is Professor of Economics at the same university. Address: Aguayo 66 El Carmen-Coyoacan 04100 México D.F. Email: correa Kservi dor.unam.mx. She has been working for 20 years on themes connected with economic development and the economics of finance. Global financial markets: financial deregulation and crises

Credit and Capital Formation: Lessons of Mexican Migrant Entrepreneurs in the U.S. Financial Crisis

One of the most important elements of financial crises is the credit restriction that follows and the immediate consequences it has on investment and employment. In the post-Keynesian vision, an exit from economic crises frequently requires increased demand, specifically through public expenditure and employment. Furthermore, it requires the exploration of various policies and institutional reforms that could counteract the credit rationing emerging from the first moments of the financial crisis, particularly in regard to the financing of small business. This is one of the principal lessons this paper explores when studying a sample of Mexican immigrant entrepreneurs in three cities in the United States, and their conditions of survival amid the financial crisis.

Supra-National Money and the Euro Crisis: Lessons from Karl Polanyi

Abstract: The paper seeks to examine some of the key features of Karl Polanyi’s ideas explaining the collapse of the pre-Great Depression unregulated market system by using his broad framework of analysis, as developed in The Great Transformation and published over 70 years ago, to explain the present Eurozone crisis. Emphasis is placed on the two key institutions of the pre-Depression era, namely haute finance and the gold standard, as well as his heterodox views on the nature and origin of money to shed light on the evolving crisis within the Eurozone. On the basis of Polanyi’s insights, the paper concludes that the cause of the latter crisis is similar and it lies primarily in the adoption of stateless or supra-national money that is even more restrictive on the behaviour of national authorities than the conditions imposed under the gold standard. The current situation of quasi-permanent austerity in the Eurozone is the inevitable consequence of its monetary architecture, and it will remain a long-term feature of Europe, unless significant institutional changes are put in place to bridge the gap between money and the state.

Financial Deregulation and Capital Flows in Latin American Countries

Latin American (LA) countries have been changing with an increasing new focus on free market philosophy, liberalization and policies that are more open. Ideas on repressed financial markets, and the need to free them with the objective of increasing savings and investment have been at the forefront of debate among the LA political and financial authorities. The history of the last thirty years (since the early 1970s) can be easily summarized under the banner of financial deregulation.

External Constraints on Development in Latin America: Theory and Practice

Abstract In this article, we examine several of the more important aspects of the external constraint, both in terms of history of thought and in economic reality. As we argue, the various branches of Latin American structuralism share several key elements, perhaps the most important being the center-periphery relationship. Part of this relationship is the external constraint, which has been interpreted differently by diverse authors. We also briefly offer our own interpretation of the phenomenon and how it has manifested itself in recent Latin American history.

An Institutional Perspective on International Financial Governance: How Much Has Happened Since the Crisis?

Abstract: This article studies some institutional trends in international financial regulation after the great crisis of 2008. It supports the idea that the largest financial corporations are working to create several components for an international self-regulation. Private firms make up the architecture of this complicated global mechanism, which is backed up by governments. Meanwhile, this built-up mechanism is based on several assumptions about the origins of the great financial crisis and on the capabilities of governments to reach the objectives they are expected to achieve. This article concludes that a new financial crisis will develop, and the “too-big-to-fail” financial corporations are already preparing strategies on resolution regimes.

Provision of Social Costs and the Free Market: A Polanyian Perspective

Abstract: In this article, we analyze at a conceptual level some of the more relevant effects of the neoliberal takeover on the provision of social costs, including employment, health care, and nutrition. Adopting key perspectives of Karl Polanyi and other thinkers, we develop our examination under the seemingly perpetual conflict between markets and social reproduction. We argue that financialization has both expanded market spaces and changed relationships within those spaces. The ever-greater domination of financial markets means that employment has become increasingly more precarious in the strict spaces of the labor market. At the same time, financialization has steadily eroded the social forms that exist outside of formal markets, greatly weakening the mechanisms through which societies can both defend themselves from predatory markets and reproduce themselves with some degree of purpose and hope for the future.

Mexico’s Financial Reforms

Abstract:The North American Free Trade Agreement (NAFTA) is not only an agreement covering tradable commodities; it includes important chapters on services, especially financial services. In addition, NAFTA is also a foundational agreement for investment protection. The free movement of capital and the safeguarding of ownership rights are essential features. This article argues that Mexico’s financial reform in 1989–92 was a precondition for trade and financial liberalization under NAFTA. Thus, the content of this reform is analyzed and compared with the one carried out during the 1970s, which also opened up the financial market. Subsequently, the establishment of financial subsidiaries, and the global financial business model and its consequences on financing, are examined. Although it is not a monetary union, NAFTA does set up a form of financial junction. For Mexico, this junction signifies a global/national funding determination. It is argued that the regionalization of credit is fanciful, since credi...

Budgetary Impact of Social Security Privatization: Women Doubly Unprotected

Abstract: In several developing economies during the 1990s there was a fundamental financial reform of pension systems. This article analyzes the main results of these reforms through a gender approach. Seen as a social reform, pension reforms have maintained a growing uninsured population, with women experiencing relatively greater workplace precariousness and, at the same time, longer lives. The article also centers on fiscal implications, and particularly the transition from a pure public pay-as-you-go pension system that was self-funded and sustainable, to a system in which contributions went to private pension funds, creating a funding gap, which is being filled by the public budget in several current pension schemes. As a financial reform, it has also had several interesting results. Although the private system did not increase coverage and the projected flows, it did produce a constant flow of mandatory and accumulated savings that provide liquidity to domestic financial markets and even external markets. However, this liquidity has not been a factor in increasing the flows of credit to the nonfinancial domestic private sector. Under the conditions of austerity policies, budget cuts in other components of social spending, such as education and especially health care, leave women doubly unprotected.