The reregulation of capital flows in Latin America: assessing the impact of post-neoliberal governments

Abstract

This article assesses the impact of post-neoliberal governments on the level of capital controls in 17 Latin American countries for the period between 1995 and 2017. Contrary to administrations led by other left-of-center parties, especially the ones affiliated to the Socialist International, I contend that post-neoliberal parties, affiliated to the São Paulo Forum, opted to reregulate capital flows for three main reasons: increasing macroeconomic policy autonomy, favoring their constituencies, and/or giving concreteness to the rhetoric against financial and foreign interests. After proposing a new capital controls index and estimating a time-series cross-section model, I find that post-neoliberalism has been associated with an increase in the level of controls. Besides this main conclusion, I also find that larger financial sectors contribute to counteracting the reregulation of capital flows by post-neoliberal governments.

Post-neoliberalism and capital flow management in Latin America: assessing the role of social forces

“…As expected, once in power, almost all post-neoliberal parties deployed new crossborder restrictions, decreasing the level of financial openness of their respective countries (Fernandez et al 2016). From a Polanyian perspective, this initiative can be interpreted as both a 10 reaction to the 1990s capital account liberalization and an attempt to protect society from destabilizing capital movements (Silva 2021).…”