INTERVI EW
Annina Kaltenbrunner
Annina Kaltenbrunner is a Post-Keynesian macro development economist studying how global finance structurally subordinates developing countries through currency hierarchies expressed for example through volatile capital flows and foreign currency debt, all of which limit their policy space to develop. Her work helps reframe development challenges as systemic financial constraints, specifically highlighting risks in current practices by multilateral development banks (MDBs). Kaltenbrunner is Professor of Global Economics at Leeds University Business School, UK. She has published widely and in December 2025 was awarded the Kurt Rothschild Prize, honoring her contributions to the public debate on economics.
OPEC Fund Quarterly : You are one of the leading proponents of the concept of international financial subordination, or how developing and emerging economies remain structurally disadvantaged. Can you briefly explain this concept? Annina Kaltenbrunner: The concept of international financial subordination emerged from observing structural asymmetries in the international economy that disadvantage and penalize developing countries more than developed ones. These phenomena are common across many developing countries in monetary and financial terms: structurally higher interest rates, greater dependence on financial flows and the fact that these flows are often determined by conditions in international monetary and financial markets. When financial conditions change, developing
countries are affected most and suffer the quickest withdrawal of capital, which then causes exchange rate volatility. The concept tries to conceptualize and partly theorize these empirical
borders. If countries industrialize late and finance themselves in a strong foreign currency, these risks are structural. So, while domestic policy matters, improving development outcomes requires addressing these structural features. That is where international development finance institutions and multilateral development banks come in. OFQ : If these constraints are structural, where do MDBs fit in? Are they part of the problem or the solution? AK: Currently, these structures are perpetuated because most capital going into developing countries is denominated in US dollars or euros, which shifts the currency risk to the borrower – i.e. back to the developing
phenomena, which, from our perspective, are fundamental
constraints on catch-up development. If the macroeconomy is unstable, with volatile exchange rates, high interest rates and prohibitively expensive domestic financing, then these are binding constraints. All the micro factors can be right, but if the macro is not in order, it is just not going to happen. It also highlights that these patterns are linked to the structure of the international monetary and financial system. In a system dominated by one key currency (the US dollar), risks are created as soon as finance crosses
country. So as soon as the local currency depreciates, the debt burden increases.
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