From vulnerability to stability? Latin American strategies to govern financial subordination

Recent research emphasizes the destabilizing impact of macrostructural constraints on financial stability in less advanced economies. This article extends these findings by investigating how financially subordinate countries manage the adverse effects of financial globalization. It argues that policy expertise is crucial for crafting risk-mitigating policies. While neoliberal and developmental expertise emphasize macrostructural factors, it foregrounds the significance of evolutionary expertise. This often-overlooked expertise enhances policymakers’ capacity to develop effective policies. It addresses risks arising from microstructural interactions involving different maturities and currencies on balance sheets of various financial actors. A most-similar design, using Argentina and Chile, is employed to trace how policy expertise informs monetary, financial, and foreign exchange policies. Drawing on document analyses (1980–2019) and interviews, it demonstrates how differing interpretations of financial historicity, positionality, and actors influence policymaking. The findings underscore the relevance of expertise as a critical resource for less advanced economies to protect against financial crises.