International finance, the state and capital accumulation: Mexico in comparative perspective

This study finds that the internationalization of capital markets tends to divert national resources away from long term industrial investment. In contrast to arguments that the globalization of finance and the foreign borrowing it facilitated "strengthened the state," evidence from Latin America indicates that international financial integration encourages short term financial activity and capital flight which limits state capacity to foster national industrial development.;Whether or not such macro-economic policy tools are available to governments intent on harnessing the benefits of international financial integration to national industrial development depends on the historical and institutional development of state-society relations. This dissertation argues that the state and capital are overly aggregate units of analysis in seeking to explain the political origins of macroeconomic policy. Macroeconomic policy patterns, which mediate the impact of international financial markets on national economies, are shaped by interest coalitions--policy networks or currents--formed by particular state agencies, sectors of the bourgeoisie, labor and other economic actors. These competing coalitions span state and society including both state actors and representatives of social groups.;Mexico's experience with international financial markets suggests that private financiers are key actors in the macro-policy process, tending to favor policies which--in the context of international financial integration--lead to capital flight and short term financial activity at the expense of long term investment in industry. The Mexican case shows that where history has institutionally linked private financiers with other actors favoring similar policies, the predominant macroeconomic policy pattern is likely to be one which does not limit the negative impact of international financial interdependence on industrialization efforts. As in the Brazilian case, if private bankers are institutionally linked to economic actors with varying interests or if a strong opposing policy current is organized, the predominant policy pattern will be more likely to harness the forces of international financial markets to national industrial growth. (Abstract shortened with permission of author.).;Analysis of Mexico in comparative perspective suggests that developing country governments can mitigate the potentially negative aspects of financial interdependence with certain macro-economic policies. These include: flexible exchange rates with controlled convertibility, domestic financial regulation to reduce market imperfections and encourage counter-cyclical lending, progressive tax policy and selective protection.