Financial Liberalization and Structural Change: The Brazilian case in the 2000s

Resumen

From a Minsky-Kregel approach, this paper discusses the relationship between financial integration and structural change. The motivation for this investigation is because the opening of the Brazilian economy in the 1990s did not generate a structural change in the direction of increasing the weight of higher-technological sectors in the manufacturing industry. In theoretical terms we assume that financial liberalization in developing countries induces the loss of importance of the industrial sector in the productive structure, leading to an early deindustrialization process. In addition, it increases the external fragility and reduces the scope for developing countries to implement long-term economic policies to increase their potential output. In our econometric exercise applied to the Brazilian economy in the 2000s it has been observed that financial integration and dependence on foreign savings, captured by an international liquidity proxy and dummy variables to incorporate the external financial instability in the period studied, reduced the share of Brazilian industry in GDP.