GEG WP 2018/139 State directed credit in a world of globalised finance: Developmental policy autonomy and business power in Bolivia

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After years of placing faith in the markets, we are seeing a revival of interest in statist economic policy across the world, particularly with regards to finance. How much policy autonomy do previously liberalised developing counties still have to conduct activist financial policies, where the state intervenes directly in the process of credit allocation, despite the constraints posed by economic globalisation? Using Bolivia as a ‘least likely’ case, drawing on over fifty key informant interviews, this paper argues that even small peripheral countries with open economies can reassert state control over finance, under certain conditions: 1. An increased availability of low-conditionality external financing; 2. A developmentalist ideology among the policymaking elite, and; 3. A decline in the structural and instrumental power of business, which in Bolivia, was the result of popular mobilisation, strategic state action to increase public ownership and control of investment, and division between private sector groups.