External finance, subordinated financialisation: a reflection on Argentina’s currency flights in the last three decades

Abstract

Abstract We use the example of Argentina to argue that the changing characteristics of developing countries’ financial integration may have reinforced the old dynamics of subordination and reliance upon external finance where large firms, foreign and domestic, engage in practices that allow for securing their surplus abroad in precious hard currency. Financial practices and openness have allowed these firms to navigate through the multiple interconnections between financial and productive spheres, resulting in extraordinary profits, which have been systematically remitted abroad, political and trade cycles notwithstanding. We find that rather than setting against investment and financial speculation, financialisation in Argentina highlights that both capital and exchange market volatility have also been triggered by industrial investment and the subsequent financial re-investment of profits in the international markets. We conclude with policy recommendations to attempt to lessen the effect of monetary subordination and capital dependence.