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Financialisation and Financial Crisis in South-Eastern European Countries

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Dubravko Radošević and Vladimir Cvijanović

The book discusses various cases of financialisation and financial crisis in South-Eastern Europe. While these can be directly traced to the region’s reliance upon the global financial regime, the interplay of international financial institutions, the eurozone’s rigidity and domestic policies have produced various outcomes in the countries of the region. The study presents quantitative and qualitative research and offers new insights into the processes that shape the financial and monetary systems. The ex post analysis of how financial instability was created and how it could have been prevented, hopes to provide insights for policy-makers today.
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Financialisation in Croatia and Slovenia

Introduction

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This paper focuses on Slovenia and Croatia, neighbouring Central and South-East European countries with a common history and somewhat divergent paths since their independence from former Yugoslavia in 1991. Beginning in 2009 Slovenia and Croatia both entered a period of recession, with GDP falling in 2009, 2012 and 2013 in Slovenia and in the whole period until 2013 in Croatia – with negative trends probably continuing. This has produced the second largest deviation from a long term GDP growth trend since transition and independence of these countries started in 1991. At some point in time growth will continue, although at a smaller pace than was the case before the crisis. Hence, at the beginning of this decade we can talk about the turning point. Cardoso and Faletto (1979: xx) nicely say ‘[f]rom the economic point of view a system is dependent when the accumulation and expansion of capital cannot find its essential dynamic component inside the system’. We argue that the most important factors in explaining the dependent nature of this type of capitalism, in terms of inability of economic policy to change its growth performance at the current point in time have been connected with financialisation. We compare these two countries from the angle of institutional tradition.

Financial system is one of the principal subsystems of any economy, alongside product and labour markets, social protection and educational system (Amable, 2003). However, finance has gradually become the predominant subsystem, so we can speak of financial capitalism....

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