The liberalization of financial markets and emerging economies after the 2007-2008 crisis

Abstract

This article seeks to assess, in light of the 2007-2008 crisis, the relevance of the main assertions that aim to support, directly or indirectly, financial liberalization as a required structural condition for economic development. From this perspective, links among the process of development of financial markets, emerging market economies’ crises and the ongoing crisis are studied. With hindsight, it seems that the monetary and financial crises of the 1980s—2000s during the process of liberalization and opening up (international integration) in emerging economies do not obviously rest on the structural fragilities that would lie in their backwardness. Those crises could rather be related in a relevant way to the functioning of liberalized economies. This assertion is supported by the assumption that financial instabilities are the result of endogenous problems of financialized and globalized economic systems more than the natural outcome of the difficulties of transition of some economies towards the so-called efficient market economy.