Brazil: an economy caught in a financial trap (1993-2003)

Vol. 33 No. 3 (2013)

Jul-Sep / 2013
Published July 1, 2013

How to Cite

Medialdea, Bibiana. 2013. “Brazil: An Economy Caught in a Financial Trap (1993-2003)”. Brazilian Journal of Political Economy 33 (3):427-45.

Brazil: an economy caught in a financial trap (1993-2003)

Bibiana Medialdea
Professor of Economic Structure at Universidad de Valladolid.
Brazilian Journal of Political Economy, Vol. 33 No. 3 (2013), Jul-Sep / 2013, Pages 427-445


In the early 1990s, Brazil entered a financialized economic dynamic in which short-term financial valorization generated by the issuing of guaranteed public debt overshadowed the entire economy. This article analyzes Brazilian economic processes between 1993 and 2003, in particular the bi-directional relationship with external vulnerability, erratic international financing behavior and how State actions to obtain and maintain these resources fostered financialization. As a result, the entire economy became enmeshed in a self-perpetuating trap in which financial activity was predominant over economic activity.

JEL Classification: O11; O16.

Keywords: Financialization financial rent-seeking public debt external dependence financial vulnerability