Neoclassical economists suggest that the promotion of economic development requires deregulation of the financial sector, especially removal of the interest rate ceilings commonly enacted by the state in Third World countries. But this view ignores the relations between financial development, financial policy, and the development of the capitalist mode of production. Financially "repressive" interest rate policies are rooted in the attempts of Third World states to alter the international division of labor, and in the patronage relations which develop as a result of the absence of a strong domestic industrial bourgeoisie. The inability of actual experiments in financial "liberalization" to promote economic development reflects the limitations of externally oriented accumulation in the context of the unequal international division of labor.
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