Foreign direct investment in the context of global value chains and subordinate financialisation
the Brazilian experience
DOI:
https://doi.org/10.23925/1806-9029.37in.2(68)74187Keywords:
Global Value Chains, Subordinate Financialisation, FDI flows, Brazilian experienceAbstract
This paper aims to discuss the dual character of the Foreign Direct Investment (FDI) flows in emerging and developing economies, more specifically in the Brazilian economy. From the perspective of economic development of those economies, the international economic integration is paramount. In the last decades, there has been an expansion of the Global Value Chains (GVCs) leading by the large Multinationals companies. Those chains have been crucial in shaping economic integration of those economies. In the last decades, FDI flows have been the key driver for development in emerging economies and for the configuration of the value chains around the global economy. On the other hand, international capital flows have been crucial to shape the international financial integration and to define the domestic financial conditions in emerging economies. This process of financial integration of emerging and developing economies can be denominated Subordinate Financialisation. Firstly, based on the Marxist Political Economy, this paper analyses critically GVCs from the perspective of the economic integration of emerging economies and shows that international monetary integration of those countries has assumed a subordinate character. By taking the Brazilian experience, this paper shows the speculative character of the FDI flows, leading by Multinational companies, in the context of Global Value chains and Subordinate Financialisation. It is shown that these FDI flows have had similar behaviour of the short-term capital flows and the FDI inflows have increasingly relied in Tax heaven jurisdictions. Finally, paper highlights that such dynamic has happened in other emerging economies.
References
AGLIETTA M. & BRETON R. (2001) Financial systems, corporate control and capital accumulation, Economy and Society, 30(4): 433-466.
ARRIGHI G. (1994) The Long Twentieth Century: Money, Power and the Origins of our Times, London: Verso.
BECKER J., J. JÄGER, B. Leubolt and R. Weissenbacher (2010) Peripheral financialization and vulnerability to crisis: A regulationist perspective, Competition & Change 14(3-4): 225-247.
Bank of International Settlements (2021) Changing patterns of capital flows. CGFS Papers No 66. Available at: https://www.bis.org/publ/cgfs66.pdf. (Accessed: January 25 2023)
BCB (2022) Direct Investment Liabilities Position, Time Series. Available at https://www.bcb.gov.br/en/statistics/specialseries. (Accessed: February 3 2023).
BCB (2022a) Balance of Payments, Time Series. Available at https://www.bcb.gov.br/en/statistics/specialseries. (Accessed: February 2 2023).
BOYER R. (2000). "Is a Finance-Led Growth Regime a viable Alternative to Fordism? A preliminary Analysis." Economy and Society 29 (1): 111-145.
BRENNER R. (2004), New Boom or New Bubble, New Left Review, 25, pp. 57–102.
BRENNER R. (2006) The Economics of Global Turbulence, London: Verso Books.
DUMENIL G. & Levy D. (2004) Capital Resurgent, London: Harvard University Press.
Economic Commission for Latin America and the Caribbean (ECLAC) (2022) Foreign Direct Investment in Latin America and the Caribbean, (LC/PUB.2022/12-P), Santiago.
Fine B. (2010) Locating Financialization, Historical Materialism, 18, 97-116.
GEREFFI, G. (2001). Shifting governance structures in global commodity chains, with special reference to the internet. American Behavioral Scientist, 44 (10), 1616-1637.
HUIZINGA H., LAEVEN, L. and NICODÈME, G. (2006) Capital structure and international debt shifting, No 263, European Economy - Economic Papers 2008 - 2015, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission. Available at: https://ec.europa.eu/economy_finance/publications/pages/publication_summary560_en.htm
(Accessed January 6 2023)
KALTENBRUNNER, A. and PAINCEIRA, J.P. (2014) Developing countries’ changing nature of financial integration and new forms of external vulnerability: the Brazilian experience, Cambridge Journal of Economics, Vol. 39(5), 1281-1306.
LAPAVITSAS C. (2009) Financialised Capitalism: Instability and Financial Expropriation, Historical Materialism, 17 (2): 114-148.
LAPAVITSAS C. (2013) Profiting Without Producing: how finance exploit us all, Verso, London.
MAGDOFF, H. and SWEEZY, P. (1972) The Dynamics of U.S. Capitalism, New York, Monthly Review Press.
MAGDOFF, H. and SWEEZY, P. (1987) Capitalism and the Distribution of Income and Wealth, Monthly Review, 39 (5), 1-16.
MCNALLY, D. (2009) From Financial Crisis to World Slump: Accumulation, Financialization, and the Global Slowdown, Historical Materialism, 17 (2), pp. 35-83.
OECD (2002) Foreign Direct Investment for Development; Maximising Benefits, Minimising Costs. Overview. Available at: https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf
(Accessed: January 23 2023).
OECD/WTO/World Bank (2014) Global value chains: challenges, opportunities, and implications for policy file. Available at: http://www.g20.utoronto.ca/2014/Global%20Value%20Chains%20Challenges%20Opportunities%20and%20Implications%20for%20Policy.pdf. (Accessed: January 30 2023).
PAINCEIRA, J. P. (2022). Financialisation in Emerging Economies: Changes in Central Banking. London: Routledge.
PAINCEIRA, J. P. (2011) Central Banking in Middle Income Countries in the Course of Financialisation: A Study with Special Reference to Brazil and Korea, PhD Dissertation, SOAS, University of London.
PAINCEIRA, J. P. (2009) Developing Countries in the Era of Financialisation: From Deficit Accumulation to Reserve Accumulation in Lapavitsas, C. (ed) Financialisation in Crisis, Leiden, Brill.
PAINCEIRA, J. P. and A. SALUDJIAN (2021), Latin American international integration and global value chains: what changed after 2008 global financial crisis, in Levy-Orlik N., Bustamante-Torres J. & L. P. Rochon (dir.), Capital Movements and Corporate Dominance in Latin America: reduced growth and increased instability, Cheltenham, Edward Elgar, New Directions in Post-Keynesian Economics, p. 175-192.
POWELL, J. (2013) Subordinate Financialisation: a Study of Mexico and its Non-Financial Corporations, PhD Dissertation, SOAS, University of London.
QUENTIN, D. & CAMPLING, L. (2017). Global inequality chains: integrating mechanisms of value distribution into analyses of global production. Global Networks, 18(1), 33–56.
RODRIGUES, J., Santos, A. C. and Teles, N. (2016) Semi-peripheral financialisation: the case of Portugal, Review of International Political Economy, 23, 480-510.
SELWYN, B. (2019) Poverty chains and global capitalism. Competition and Change, 23 (1), 71–97.
SOTIROPOULOS, D., MILIOS, J. and LAPATSIORAS, S. (2013) A Political Economy of Contemporary Capitalism and its Crisis: Desmystifying finance, London: Routledge.
TØRSLØV T., WIER L. and ZUCMAN G. (2022) The Missing Profits of Nations, The Review of Economic Studies. Available at: https://doi.org/10.1093/restud/rdac049. (Accessed: January 30 2023).
UNCTAD (2013) Global Value Chains and Development; Investment and Value Added in the Global Economy; A preliminary analysis, Available at: https://unctad.org/system/files/official-document/diae2013d1_en.pdf. (Accessed: December 15 2022).
UNCTAD (2022a) Global foreign direct investment rebounded strongly in 2021, but the recovery is highly uneven January 19th, 2022. Available at: https://unctad.org/news/global-foreign-direct-investment-rebounded-strongly-2021-recovery-highly-uneven. (Accessed: January 20 2023).
UNCTAD (2022b) World Investment Report (2022) International tax reforms and sustainable investment. Available at: https://unctad.org/system/files/official-document/wir2022_en.pdf. (Accessed: January 25 2023).
WIER L. & G. ZUCMAN (2022) Global profit shifting, 1975–2019, NBER. Available at: https://www.nber.org/system/files/working_papers/w30673/w30673.pdf. (Accessed: January 15 2023).
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Research & Debate Journal of the Postgraduate Program in Political Economy
This work is licensed under a Creative Commons Attribution 4.0 International License.
