Peripheral Economies Research Articles

Updating the Center-Periphery Relationship in the Light of the Financialized Capitalism: the case of the Brazilian subordinate financialization

The article aims to show how financialization intensifies the subordination of peripheral economies in relation to the central ones, focusing on Brazil. Financialization is defined as a systemic pattern of wealth, driven by financial liberalization after the collapse of Bretton Woods. The integration of peripheral economies into this hierarchical global market of currencies and financial assets occurs unequally, with peripheral countries attracting speculative capital through high interest rates and deregulation. The article analyzes the process of financialization in Brazil since the 1980s, proposing a periodization that reveals how Brazil’s economic structure consolidated a specific type of financialization.

The center-regions relations as a basis for countering external constraints on Russia's economic development

Subject. The article is devoted to acceleration of economic development of Russia as a country in transition. Objectives. The study aims to present the author's vision of conceptual approaches to organization of the economy of the country and regions on an innovative basis, in conjunction with the improvement of center-regional relations as a factor of economic and political development. Methods. The methodological basis of the research is the problem consideration in the context of the theory of peripheral economy of capitalism, and works of domestic and foreign scientists on the development of conceptual foundations for accelerating the development of countries and their regions adapting to the world economy. Results. I substantiated and presented the concept of accelerated development as an alternative to the concepts of catch-up and advanced development, reflected in the literature. The paper unveils shortcomings of the models of center-regional relations tested in the post-Soviet period, which inhibit economic development, and offers a model of reconciliation of interests and a mechanism for transition to new center-regional relations. Conclusions. The scientific research results and proposed approaches to stimulating the acceleration of economic growth in Russia and its regions can be used in the updated process of reforms on economic and social development.

The Dutch Disease of the Euro Area Peripheral Member States

ABSTRACT This study analyzes explanations identified in the literature for the subpar economic performance of the so-called peripheral member states of the Euro Area since the mid-1990s, comparing it to those of the core, catch-up, and financial hub member states. It argues that a key factor in the peripherals’ malaise was a financial Dutch disease-like mechanism, as the adoption of the euro led to large and sustained capital inflows. This resulted in a structural shift in the productive structure of peripheral economies away from technologically advanced manufactured goods, which are characterized by higher productivity growth. Consequently, peripheral member states specialized in non-tradable sectors, and in low-technology and labor-intensive tradable goods and services sectors, which largely explains the peripherals’ low economic growth, low productivity growth, and growing macroeconomic imbalances. Furthermore, this study argues that the economic underperformance of catch-up member states can also be explained by a financial Dutch disease mechanism.

Digitalization of the Alternative Tourism Marketspace: Evidence from an EU Peripheral Economy

Digitalization of the Alternative Tourism Marketspace: Evidence from an EU Peripheral Economy

Autonomous demand and economic growth in Mexico (1993–2019): theory and empirics in a small, open and peripheral economy

Highlighting the role of autonomous components of demand in shaping the long-run growth path of the economy, the Sraffian supermultiplier (SSM) has attracted increasing attention. This paper aims to empirically test some implications of this model for a small, open and peripheral economy such as Mexico. After presenting the theory and evidence on the SSM, we review the recent literature on growth in Mexico. We present some stylized facts along with the decomposition of growth of the Mexican economy for the period 1993–2019. Then, using a VECM we assess both the short-run adjustment as well as the long-run relations between autonomous demand and output, confirming that the two variables move in step in the long run. Lastly, we compute Impulse Response Functions (IRFs) to evaluate the dynamic effect of a shock in autonomous demand on GDP, providing evidence that an expansion of autonomous demand produces a positive, persistent and statistically significant effect on the level of GDP. As a result, we show that the SSM is a valid framework to assess economic growth even in a small, open and peripheral economy.

Exchange-rate regime and sectorial profitability in a small open economy: evidence from Argentina’s recent experience

This paper studies, both theoretically and empirically, tradable ( T ) and non-tradable ( N ) profit rates dynamics in a small, price-taker peripheral economy under foreign exchange controls and parallel exchange rates (ER). Using a state-space econometric representation of the Argentine economy for the period 2016–2023, we found evidence to support three main hypotheses derived from the theoretical models. First, an official exchange rate depreciation increases tradable goods profit rates but has no short-term effect on non-tradeable goods profitability. Second, the rise of the parallel exchange rate increases sector N ’s profit rate but has no effect on T ’s. Moreover, this effect depends on the magnitude of the ER gap in a positive, but non-linear way. Third and finally, over sufficient time, both profit rates tend to influence each other, through the action of competition. This means that, eventually, and increase (depreciation) in the official exchange rate exerts its influence on sector N ’s profit rate; while, if sufficiently persistent and big enough, a rise in the financial ER ends up affecting sector T ’s profit rate too.

Calibrating Ukraine’s Growth Model: How Can Ukraine Emulate Poland’s Growth?

This study provides a comparative analysis of the economic growth paths of Ukraine and Poland from a growth‑model perspective and determines how to calibrate Ukraine’s growth model to converge with Poland’s booming economy. The methodology comprises an approach to operationalizing growth models for GDP growth decomposition into “import‑adjusted” demand components, drawing on national input‑output data from 2000 to 2019. I found that from 2000 to 2003, both European economies relied on a combination of exports and domestic consumption. Expanded trade integration and an FDI boost after Poland joined the EU in 2004 spurred the Polish growth model’s shift to a distinctively export‑led, FDI‑driven strategy with accelerated GDP growth rates. In Ukraine, in the wake of the great financial crisis, I identified a transition to a consumption‑led growth model that, along with a declining investment component of aggregate demand, led to fading growth rates. An analysis of sectoral contributions to GDP growth revealed that avoiding deindustrialization in Poland underpinned the country’s export‑led strategy, unlike Ukraine, which underwent a key sectoral shift from manufacturing to a commodities‑based orientation after 2008. Both these economies demonstrated a high level of integration into global value chains, focusing on labor‑intensive manufacturing and services, but Poland has outperformed Ukraine in terms of share of high value‑added exports, which increased after EU accession. Following the Polish pattern, I propose that Ukraine’s growth model should activate the FDI driver of economic growth, upgrading the export structure and moving up value chains to unlock the country’s growth opportunities. The study represents the first comparison of Ukraine’s and Poland’s economic growth paths that traces the changes in dominant final demand components and macro‑sectors in the two countries’ economic growth profiles. This paper contributes to the comparative political economy literature on the growth models of peripheral economies, providing insights that can inform policies for growth model transformation.

The relevance of post-Keynesian macroeconomics for middle-income economies

PurposeThis paper, based on the 2022 Master Class delivered at the 50th National Economic Meeting organized by ANPEC, discusses how post-Keynesian macroeconomics and New Developmentalism complement each other to understand middle-income economies' development in financial globalization. It summarizes my academic reflection about the advance in post-Keynesian thinking to develop macroeconomics for peripheral middle-income economies.Design/methodology/approachAs part of this reflection, I first bring up the idea of a developmental convention and, next, how peripheral financialization impacts the elaboration of this convention. Given the asymmetric configuration of the international financial system and the context of hierarchical currencies, I discuss the challenge of overcoming underdevelopment in peripheral economies. The post-Keynesian macroeconomics and advances in the structuralist debate provide the analytical tools to understand how peripheral economies develop virtuous or vicious growth cycles. At the end of the paper, I present some comments on the stagnation of the Brazilian economy.FindingsThe growth strategy with foreign savings does not provide the conditions for middle-income economies to operate with sufficient economic policy autonomy to promote productive transformation. To this end, a developmental convention should replace the neoliberal convention that has dominated since the 1970s.Originality/valueThe dynamics of peripheral, middle-income economies, often influenced by international liquidity flows, are a crucial area of study. This research underscores the importance of understanding these dynamics, as it forms the basis for economic policy recommendations. The paper also highlights the inadequacy of the growth strategy with foreign savings in the current configuration of the international financial system, emphasizing the need for middle-income economies to operate with greater economic policy autonomy to foster productive transformation.

Does one (unconventional) size fit all? Effects of the ECB’s unconventional monetary policies on the euro area economies

This paper assesses the macroeconomic impact of ECB’s unconventional monetary policies (UMPs) in the euro area. We show that: (i) the relevance of the transmission channels has changed over time, with portfolio re-balancing becoming more important than the signalling effect after June 2014; (ii) there exists a substantial heterogeneity in the transmission to core and peripheral economies. By leveraging on these findings, we identify UMP shocks in a time-varying SVAR with “dynamic” restrictions and we quantify the macroeconomic impact of ECB’s measures via counterfactual analyses. We find that, absent those measures between 2014 and 2018, output growth would be on average 0.27 pp lower in peripheral countries, whereas inflation would drop on average by 0.2 pp in core economies.

The Argentine economy through the lens of an adapted Mundell–Fleming model for small open peripheral economies

The Argentine economy through the lens of an adapted Mundell–Fleming model for small open peripheral economies

Global Accumulation & Gendered Class Exploitation: Theory and Evidence from the Garment Industry During the Covid Pandemic

The paper conducts a gendered class analysis of the impact of the Covid pandemic on the global garment industry to explain the coproduction of retailers’ profits in the core, as measured by higher retailer markups, and the biopolitical control over the minds and bodies of women working on production lines via exploitation and oppression (wage-theft, intensification, violence) in the Global South. The paper proposes the concept of an SRT-augmented rate of exploitation to distinguish between necessary and surplus labor performed at two sites, that of the factory as well as the household. The framework demonstrates how, in the aftermath of supply-chain shortages, gendered forms of absolute & relative surplus-value became critical to retailers’ markups at the cost of immiserating working-class women in peripheral capitalist economies. We posit the ‘housewife proletarian’ as negotiating two crises, a crisis of accumulation at the factory and a crisis of care-labor at home, and show how a dynamic interaction of these twin crises led to increased violence and oppression against women at both sites. We then draw upon a host of empirical sources from recent quantitative/qualitative surveys to explore how working women reported these experiences themselves. The paper concludes by arguing that zooming into these differences, as well as similarities, across peripheral economies can not only improve our understanding of how victims of gendered class exploitation subjectively experienced the transformed biopolitics of manufacturing in the aftermath of the pandemic, but can also enrich our general understanding of SRT as a theory of under-development by unearthing the structural relations of violence between monopsonic power and gendered class exploitation.

Putting wage growth back on the table: Labour incorporation, political exchange, and wage-boosting policies in advanced peripheral economies

Growth model scholarship posits that wage-led growth has become increasingly difficult to achieve in advanced capitalist economies since the demise of Fordism. The constraints to the pursuit of policies compatible with wage-led growth strategies could be expected to be particularly stringent in peripheral economies, which often rely on price-sensitive exports, suppression of domestic demand, and labour disempowerment to compete in global markets. Yet, empirical experience shows that even advanced peripheral economies that adopted export-led growth strategies have successfully implemented policies intended to raise wages and expand social transfers. How to explain the emergence of such wage-boosting policies in the context of advanced peripheral, export-oriented economies? Drawing on the cases of Israel, Poland, and Spain since the Great Recession, we identify one common mechanism accounting for this unexpected outcome: the contingent political incorporation of organized labour through a cross-class political exchange in the coalition supporting a country’s growth strategy. We identify two scope conditions that enable the implementation of such policies in unlikely contexts. Domestic political instability, coupled with a contingent relaxation of prior economic constraints, leads governing parties of both left and right orientation to activate political exchange with unions, resulting in the implementation of diverse policies boosting household income. These policies also increase the role of domestic consumption as a key growth driver. Nonetheless, the depth and durability of such changes remain conditioned. The findings develop our understanding of the role of, and structural limits to, organized labour’s agency to promote wage growth in advanced peripheral economies.

Leftist governments, distributive strategies, and the politics of balance of payments-constrained growth in Chile and Uruguay

Leftist governments in peripheral economies have usually faced problems fulfilling their distributive mandate. Because of their inability to earn foreign exchange to pay for imports or service their debt, these governments often ended in epic balance of payments crises and renounced their electoral programs while embracing stabilization and fiscal austerity. This reflects the fact that economic growth and distribution in peripheral economies are fundamentally balance-of-payments-constrained. How can we understand variation in the form of distributive strategies advanced by left parties in government if they are subject to balance of payments constraints? And how can we understand the emergence of different growth models within those constraints? This article contributes to understanding the politics of peripheral growth models by studying the variation in left government distributive and growth strategies in the context of balance-of-payments (BoP) constrained growth. While the BoP constraints are real and challenging and the push for monetary and fiscal responsibility has been blunt, we argue that the extent to which governing left parties build linkages with grassroots and subordinated groups, and extant institutional architectures, allow spaces for political agency that leftist governments can use to pursue distinct distributive and growth strategies. In turn, these strategies allow for diverse ways of managing the macroeconomic implications of the BoP constraints.

Repression and growth in the periphery of Europe: The politics of changing growth regime in Turkey

This study shows that in peripheral economies that are linked into circuits of global capital on unequal terms, attempts to change the core features of an existing growth regime without broader political support intensify externally induced conflict among the ruling coalition. Under these circumstances, a transition to a new demand regime within a short time frame is more likely to take place via authoritarian intervention when the political cost of repression is lower than the cost of redistribution. In developing these points, the analysis builds on evidence from Turkey: following the 2008 global credit crunch, the Justice and Development Party’s (Adalet ve Kalkinma Partisi, AKP) domestic demand-led and credit-fueled growth under dependent financialization has experienced a major crisis. However, the subsequent push to replace this regime with a profit-led model with an emphasis on exports worsened the conflict among the political coalition supporting the party as their preferences over monetary policy began to diverge. A temporary resolution of this deepening rift has been possible by way of an authoritarian intervention under R. T. Erdogan’s presidential bid in 2017–18. By situating the debate on the relationship between growth regimes and political institutions, the study further unpacks the nexus between democratic backsliding, dominant social blocs, and economic growth in the periphery of Europe.

Growth models and social blocs: Taking Gramsci seriously

While the recent extension of the Growth Models perspective to advanced peripheral economies is a laudable endeavor, we argue that the utilization of the social bloc concept needs conceptual refining. We contribute to this debate by drawing explicitly on the writings of Antonio Gramsci. First, we demonstrate that Gramsci differentiated between different forms of state-society complexes in peripheral countries vis-à-vis Western core countries. From a Gramscian perspective, therefore, one might need very different analytical instruments when dealing with the political side of growth models in advanced peripheral economies. Secondly, the widely used notion of intellectual hegemony in civil society—very often associated with Gramsci—refers to the state-society complexes of established capitalist countries and may not necessarily be applied with the same analytical currency in more statist state-society complexes. Our analysis of a variety of Gramscian concepts, which are often overlooked, contributes not only to the study of advanced peripheral economies from a growth model perspective but also to the study of the politics of growth models in general.

Socio-economic vulnerability and deaths of despair in Brazilian counties

Over the past few years, there has been a progressive increase in premature deaths attributable to suicide, drug overdose, and alcohol-related liver disease that impact life expectancy. Regarding the relationship with contextual effects, the evidence is developing, especially in countries with a peripheral economy, as is the case of Brazil. We carried out an analysis aimed at estimating the relationship between socioeconomic insecurity and deaths due to despair in Brazilian cities. We used 5,570 counties' data to create clusters concerning socioeconomic development and then analyzed age-adjusted mortality rates (ASMR) from each of them and compared them using the ANOVA test. Cluster analysis generated two groups of Brazilian municipalities. DoD rates are consistently higher in the group that experiences more deprivation. However, considering differences between 2010 and 2019, the increase in rates was higher in the group with less deprivation experience (48.82 % vs. 39.53 %) We verified an existing gap between the clusters before the beginning of economic stagnation in 2010 The gap between those two groups decreased from 20.58 % (p < 0.001) in 2010 to 14.03 % in 2019 (p = 0.034). The conjuncture of economic crises creates mortality differentials in certain population groups. Also, significant inequalities explain how causes of death from despair affect different subpopulations. Our first approach assessed this assumption, and we could check those differentials at an ecological level. Public policies should focus on reducing the difference in mortality from despair between higher and lower socioeconomic strata.

Human capital and innovation in Uruguayan manufacturing firms

PurposeFirms are the primary producers of innovations, and understanding how these agents acquire, update and manage the knowledge of their employees is central to understanding economic growth. However, in developing economies, technology adaptation plays a critical role in innovation compared to knowledge creation. Thus, this research investigates the role of human capital in innovation at the firm level in the case of a small developing economy, which ranks highly on several human capital dimensions but shows declining levels of investment in advanced human capital development in its manufacturing sector.Design/methodology/approachThis research examines the relationship between innovation and human capital at the firm level in a small peripheral economy. The human capital theory is applied to a firm context to understand variations in innovative behavior depending on the size of manufacturing companies. The effect of several human capital dimensions on product innovation is estimated by applying binomial logistic regression models with firm and time-fixed effects.FindingsThis article contributes to innovation economics and public policy by highlighting that not all dimensions of human capital operate similarly for all companies in the context of developing economies. In such settings, technology adaptation plays a critical role in innovation. While employees' human capital endowments significantly impact small firms in that context, firm-level practices such as internal training are crucial for large companies. Consequently, policymakers should consider that firms' human capital endowments impact their innovative behavior differently to avoid one-size-fits-all policy design approaches in this regard.Originality/valuePrior research on the relationship between human capital and innovation in developing economies was based on a cross-sectional approach. This research's unique panel dataset covering 11-year triennial innovation surveys enabled a modeling strategy that controls for time-invariant unobservable firm characteristics. Three aspects of firms' human capital have been analyzed human capital endowments, internal training and human resource management (HRM) practices for the first time longitudinally in a developing economy, enabling to contrast of empirical findings with policy design.

Navigating the energy transition and industrial decarbonisation: Ghana's latest bid to develop an integrated bauxite-to-aluminium industry

Research on how countries are positioning and ‘greening’ their heavy industries in response to the ‘global energy transition’ has focused on higher-income countries with established heavy industries, rather than lower-income countries with fledgling industries and aspirations to continue expanding them. Our paper responds to this lacuna by examining Ghana's current plans for, and challenges with, developing an integrated bauxite-to-aluminium industry. Adopting a multiscalar political economy approach, and drawing on research methods including documentary analysis and key informant interviews, we argue that Ghana's challenges stem significantly from the mode of its insertion – or subordination – within the global economy. Like other late-developing countries in the global economic periphery, Ghana is struggling to access the latest ‘green’ technologies or devise a strategy for powering its bauxite-to-aluminium industry because of uncertainties in the ‘green’ taxonomies of core economies in the Global North. Nationally, meanwhile, tentative plans to feed Ghana's aluminium industry with relatively ‘green’ hydropower (also Ghana's cheapest electricity source) are provoking pushback because of the trade-offs involved, while other contestations are emerging around expanding bauxite mining into forest reserves. Collectively, these multiscalar challenges may frustrate Ghana's ambitions once more, even though a bauxite-to-aluminium industry could generate significant economic benefits. Ghana's government can overcome some of these issues by consulting meaningfully with domestic stakeholders around the design of an integrated bauxite-to-aluminium industry. However, at an international level, peripheral economies like Ghana need clarity about how particular energy technologies will be classified by core economies moving forwards, and for climate financing and (green) technology transfer pledges to be honoured.

Populist party-producer group alliances and divergent developmentalist politics of minimum wages in Poland and Hungary

In the advanced peripheral economies of East-Central Europe, right-wing populist parties have increasingly politicized the dualism between larger, export-competitive foreign-owned enterprises and smaller, inward-oriented and less productive domestically owned firms. By focusing on the two most-similar cases of right-wing populist governments in the region—namely, Hungary and Poland, this paper documents a striking attempt by Poland’s Law and Justice party to use increases in the minimum wage and social security contributions as a developmentalist tool that should force domestically owned firms to achieve greater efficiency and technological upgrading. In sharp contrast, Hungary’s Fidesz party has systematically compensated minimum wage increases with cuts in employer social contributions and has refrained from assigning developmentalist aims to labor cost increases. Both parties have cultivated a cross-class electoral base and have faced electoral trade-offs in emphasizing minimum wage increases. Yet we argue—and show through a comparative historical analysis—that variation in their policy approaches stems from their distinct, electorally motivated, alliances with influential producer groups and the distinct policy quid pro quos they have struck with those groups, namely, organized labor for Law and Justice and organized business for Fidesz.

Clean energy consumption in newly poverty-relieved villages: Limited adaptability to external shocks

Billions of people lack access to inexpensive clean energy and live in energy poverty. However, exogenous shocks like pandemics or extremely high temperatures can exacerbate such challenges, particularly in newly poverty-relieved villages. We demonstrate empirically how external shocks can weaken newly poverty-relieved villages' ability to use clean energy—in this case, residential electricity consumption. A household electricity consumption dataset in over 700 poverty-stricken villages spanning from January 2016 to June 2020 has been compiled. The results show that there is a significant socioeconomic heterogeneity in the capacity of electricity consumption in poverty-relieved villages. Specifically, electricity consumption in newly poverty-relieved villages has an increasing trend, while areas with a poorer peripheral economy or a greater proportion of poor households show a muted increase. What's more, such an increase in newly poverty-relieved villages is lacking in strength due to their limited adaptability to extreme temperatures, no matter high or low temperatures. Additionally, compared to their counterparts with no pandemic, the growth of electricity consumption in newly poverty-relieved villages significantly decreased during the national COVID-19 pandemic. This study provides insights for policymakers to adjust policy designs to address the limited adaptability of this vulnerable group to clean energy consumption. This paper adds to the policy discussion of the increased costs of electricity generation due to low carbon transition in energy systems, and the urgency for policy to address this issue to avoid social injustice.