The Role of Financial Capital in The Relationship Between Latin America and Industrialized Countries

This paper determines the existence of subordination dynamics between the center-periphery through the import of Foreign Direct Investment (FDI) from industrialized countries during the models of Import Substitution Industrialization (ISI) and financial globalization throughout the 20th century in Latin America. For this, its general characteristics, origin, objectives and use in both models are contrasted through an imperialist theoretical framework, approximating FDI to the concept of financial capital and its respective classification between industrial and banking capital. Thus, similarities were found related to the positive shock that was expected on the domestic market and the foreign sources that provided its financing while there were differences such as the restrictive role of the government that was later more flexible and the use for industrial activities that, subsequently, was extended to commercial and financial activities. Therefore, it can be affirmed that the dynamics of subordination between the center-periphery worsened in the second half of the twentieth century because, during the ISI, there were restrictive government filters in defense of the fulfillment of the objectives, in contrast to the financial globalization that increased bank indebtedness and instability in the economic, social, and political context.