Financialization goes South: Foreign capital flows and financial accumulation in emerging markets

Has global financial integration allowed firms in the so-called “Global South” to profit from financial activity? Financialization researchers have either neglected these countries and the international economic order in general or neglected firm-level dynamics, a broad sample of emerging markets, and a theoretical and historical explanation for this trend. I attempt to fill these gaps using data on all non-financial corporations across 31 emerging market economies to answer this question. To theorize and explain the recent historical origins of this process in a more sociological and global lens, I draw on the work of Giovanni Arrighi. My results show that financial inflows, but not outflows, increase financial accumulation in Global South firms—specifically short-term investments and cross-border lending. Moreover, nearly all financial income is generated by the largest firms. These results help explain how financial power undermines development in the Global South yet simultaneously empowers local economic elites who benefit from financial integration.