Third World indebted industrialization: international finance and state capitalism in Mexico, Brazil, Algeria, and South Korea

The past fifteen years have seen two important developments in the international economic system: the rapid industrialization of many less developed countries (LDCs) and their increasing indebtedness to private financial institutions. Massive bank loans have been used to fund industrial growth in many LDCs; international financial markets have replaced multinational corporations as the Third World's most important source of private foreign capital. In four major borrowing countries—Mexico, Brazil, Algeria, and South Korea—the process of indebted industrialization has its roots in the internationalization of finance, the increasing role of the state, and the use of funds raised on the international capital markets to finance industrial development. The results include rapid expansions of LDC industrial production and LDC exports of manufactured products, as well as the formation of an implicit partnership between private financial institutions and state-capitalist elites in the Third World.