Chapter Seven Developing Countries in the Era of Financialisation: From Deficit-Accumulation to Reserve-Accumulation

This chapter analyses the financialisation by addressing its impact on developing countries. It focuses on the international financial transactions of developing countries since 2000, particularly in relation to the US-economy. The chapter addresses the inter-relationship between international capital-flows, reserve-accumulation and US-financial conditions. It examines theoretical arguments in favour of financial liberalisation in developing countries as well as political-economy critiques of the process. It then recapitulates arguments of Marxist political economy in connection with finance and development, paying particular attention to international finance and its crises, focusing on the role of world-money. The objective is to obtain a fuller theoretical understanding of the swing of developing countries from deficit-accumulation in the 1990s, to reserve-accumulation in the 2000s. It then considers the strategy of international reserve-accumulation which developing countries adopted after the financial crises of the late 1990s. It also discusses the substantial social costs imposed on developing countries by reserve-accumulation. Keywords:capital-flows; deficit-accumulation; developing countries; financial crises; financialisation; Marxist; reserve-accumulation; social costs; US-economy