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In the explosion of literature on financialization, there is a much smaller but growing interest in what the phenomenon means for emerging capitalist economies (ECEs). We hold that for agents located in ECEs, the encounter with financialization is from a subordinate position: first, in relation to global production, ECE firms occupy subordinate locations in global production networks, providing cheap labor and raw, or at best, intermediate inputs; Second, in relation to global finance, ECEs are structurally subordinated to ACEs, that is, both trade and the most liquid capital markets are denominated in the currency of ACEs. Subordination in production means firms based in ECEs are able to capture less of the value created than firms higher in the hierarchy and must pay more to hedge macroeconomic risk. In circulation, strategies may emerge in ACEs wherein increased household indebtedness and/or asset market inflation maintain aggregate demand. In finance, ECEs' subordinate position in relation to money and capital markets means that capital inflows are predominantly short-term, seeking financial yields rather than assuming productive risk. The results are continued volatility, external vulnerability and subordination to the currencies of the ACEs, which themselves serve to further deepen domestic financialization. We conclude that, while by no means pre-destined, financialization as experienced in ECEs may serve to further cement their subordinate position in the global structure.

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This paper explores the determinants and implications of the growing allocation of insurance companies and pension funds (ICPF) to emerging markets (EM). The key contention put forward is that liabilities are at the core of the portfolio choice of ICPF, and that this has important consequences for the stability of asset demand. The paper supports this contention with a theoretical framework based on Hyman Minsky, and the results from 22 semistructured interviews with European ICPF executives, investment consultants, and asset managers. It shows that the rising ICPF demand for EM assets has to be analysed in the context of the pressures resulting from structural funding deficits and low yields. EM assets are sought as part of the sector's strategy to increase returns and, given their subordinate integration into a spatially uneven international monetary and financial system, remain not suited to directly meet ICPF's liabilities. This causes ICPF' demand for these assets to be volatile and independent of conditions in these countries, reproducing EM' monetary and financial subordination. By stressing the structural financial (in)stability implications ICPF liabilities have for EM asset demand, the paper contributes to the literature on ICPF investments in EM, and bridges the gap between those which have noted the importance of liability conditions for ICPF and the literature pointing to the destabilising impact of ICPF due to behavioural and agency issues. Moreover, by basing itself on a Minskyan theoretical framework, it responds to recent calls for a more systematic incorporation of heterodox economic thought into financial geography.