Varieties of Power in Latin American Pension Finance: Pension Fund Capitalism, Developmentalism and Statism

Abstract

When it comes to analyses of financial power in Latin America, there has been a tendency to assume it is mostly external, relatively homogeneous, and usually constraining of domestic policy autonomy. Increasingly, however, when speaking of financial power in the region, a focus exclusively on foreign capital misses a significant part of the empirical landscape, one inhabited by large domestic institutional investors: public and private pension funds. A focus on these funds reveals that a neat state–finance dichotomy is often unrepresentative of the type of blurred web of interests, influence and ownership that characterizes even those economies that have embraced a significant degree of liberalization. In fact, pension finance is far from uniform across countries. In order to capture this diversity in Latin America, a new typology is suggested that departs from the Anglo-American notion of ‘pension fund capitalism’ and further specifies pension finance as also revealing dynamics best described as ‘pension fund developmentalism and statism’. The typology is not only aimed at capturing more empirical nuance in Latin America; it can also serve as reference for cross-regional analyses of these often neglected, but increasingly powerful financial actors in emerging economies.

The Financial Crisis and Varieties of Pension Privatization Reversals in Eastern Europe

“…This portfolio allocation eventually made it much easier for Evo Morales to nationalize the funds in 2010. The Argentinean and Bolivian examples clearly illustrate that more research needs to be done on the oft‐neglected welfare–finance nexus, not only in CEECs or Latin America, but also in more affluent democracies (Datz ; Naczyk ).…”

Variegated financialization and pension fund asset demand: the case of Colombia and Perú

“…In particular, they may underestimate the role that PFAD has in shaping new developments in financial markets, outside the traditional structures of the particular capitalist variety. The creation of large pools of wealth has made institutional investors pivotal actors in providing the demand supporting the development of financial markets, fuelling the boom of existing markets and the creation of new asset classes, steering the move towards a market-based financial system and the capitalisation of income flows into new tradable securities, across different capitalist varieties (Fernandez and Aalbers, 2016;Hassel et al, 2019;Engelen et al, 2010;Dixon, 2008;Dixon and Sorsa, 2009;Datz, 2014;McCarthy et al, 2016;Hassel et al, 2019).…”

Creating French-style pension funds: Business, labour and the battle over patient capital

“…The evidence is clearest concerning trade unions. Indeed, organised labour has tried to wield greater power over pension fund management both in countries with well-developed pension funds, such as Sweden (Pontusson, 1992), the United States and Canada (Fung et al, 2001;Jacoby, 2008;McCarthy, 2014), and in those with emerging pension fund industries, for example Latin America (Datz, 2014). Unions have typically sought to turn pension funds into socially responsible investors that consider the impact of corporate decisions on workers' position in the company.…”

“…Several political science studies have started mapping this variation in the regulations governing pension fund management and have highlighted the functional benefits derived by economic agents from different institutional arrangements (cf. Datz, 2014;Estévez-Abe, 2001;Jackson and Vitols, 2001;Manow, 2001). But these studies have analysed socioeconomic actors' financial interests only after private pension plans have entrenched themselves, and have failed to examine how these actors' stances on the welfare-finance nexus lead them to actively influence the institutional design of such plans.…”