Vol. 5 Num. 3 - GCG: Revista de Globalización, Competitividad y ...

Financial Integration in the Americas, Changing Geopolitics and Brazilian Foreign Policy28 6. ConclusionsWe have employed a nuanced view of inter-state relations with an emphasis on financialmarkets as a transnational actor. In previous work, we showed how changes in domesticeconomic orthodoxy and technical developments in international financial instrumentsmade Brazil more attractive to global investors. In this paper we extend this argument furtherand argue that these factors coupled with financial globalization have, paradoxically,increased Brazil’s hegemony within the region and diluted the dominant position of the US inLatin America. We have shown that financial market behaviour has become aligned with thelong standing ambition of the Brazilian elite. Markets, through the objective prism of monetaryreturns, now perceive Brazil as a developed world economy and as holding a dominantposition within South America.We use objective empirical data from the financial markets to bear out our findings. Takingthe broad based equity indices from the sample countries and conducting a cointegrationanalysis, we demonstrate long term trends towards cointegration within the indices examined.This analysis eliminates short term deviations and conclusively shows the local hegemonyof Brazil within an increasingly homogenous global financial marketplace. Our impulseresponse analysis further highlights the manner in which global markets respond to systematicshocks. This latter theme of financial homogenization through globalization is indicativeof a dilution of the financial and political hegemony of the United States in this region.GCG GEORGETOWN UNIVERSITY - UNIVERSIA SEPTIEMBRE-DICIEMBRE 2011 VOL. 5 NUM. 3 ISSN: 1988-7116pp: 16-29