Delinking through Integration: A Dependency Analysis of Regional Financial Integration

Abstract

This article analyzes regional financial institutions’ emergence in Latin America and East Asia, and their implications for the current formation of the world economy. We evaluate the performance of the Chiang Mai Initiative, the Latin American Reserve Fund, and the Bank of the South (BOS), and their potential to prevent financial crises and promote sustainable economic development in the periphery. Using dependency theory, including A.G. Frank’s delinking theorization, we analyze the BOS. Can these alternative financial institutions effectively undermine the Bretton Woods organizations’ hegemony? Assuming the new financial blocs are among anti-systemic movements in the world economy, do they suggest prospects for building counter-hegemonic formations? Thus we can analyze regional financial integration from the dependency theory perspective, with special attention to Frank’s contributions. Analysis ignoring the world economy’s dependency dynamics could not explain the periphery’s growing forces of regional integration, or explore how far regional arrangements challenge and reshape the existing world order.