From deregulation and crisis to finance for economic development

Abstract

For many decades, strong financial deregulation not only failed to generate conditions for sustained economic growth, but it also completely extinguished the possibilities for development throughout the entire world. Despite successful experiences of economic development that followed the strategy of channeling a nation’s economic surplus to the real economy through long-term financing in order to sustain economic activity and employment, this strategy was abandoned. From this perspective the authors argue that neoliberalism has failed. In the face of the inability of entities such as the International Monetary Found and the World Bank, regional financial initiatives have sprung forth in Latin America and Asia. The authors criticize the limitations of such entities not only for their insufficiency, but also for their lack of democratic vision. As such, it is indispensable to adopt a regulation that avoids the irregularities to which the international financial system succumbed.