Patterns of subordination in the Global South between natural resources, foreign ownership and financial inflows

• A pattern exists for natural resources extractivist-based Global South countries. • Despite solid trade balance surpluses, they have strong primary income deficits. • That is due to FDI and foreign extractivism causing current account deficits. • To cover them more financial inflows are needed fortifying financial subordination. • The end of the supercycle commodities booms often contributes to social unrest. Peru and Kazakhstan have often been presented as success stories—respectively, in Latin America and Central Asia—due to their sustained economic growth since the early 2000s. Despite their distinct histories, geographies, and cultural contexts, both countries exhibit comparable economic features: a heavy reliance on natural resource exports, significant foreign ownership in strategic sectors, and persistent dependence on external financial inflows. These shared characteristics raise concerns about a common pattern of dependency and subordination. While the 2003–2014 commodity supercycle enabled both countries to reduce poverty and transition into upper-middle-income status, this growth was primarily driven by extractive sectors and fuelled by foreign capital. Beneath this apparent success lies a more troubling reality: structural current account deficits, driven by negative primary income balances despite strong trade surpluses. These deficits were increasingly financed through pro-market policies aimed at attracting foreign direct investment, particularly in copper extraction in Peru and oil in Kazakhstan. Although commodity prices have experienced partial revivals, long-term sustainability remains questionable—especially given rising social unrest and mounting geopolitical tensions. This paper explores the financial underpinnings of this subordination by analysing balance of payments dynamics and international investment position statistics for both countries and further contrasting it with Mexico as a third country. In doing so, it critically assesses the viability of development strategies based on natural resource extraction and foreign capital inflows, situating the analysis within broader geopolitical and historical frameworks.