Subordinated Fiscal Space. An Analysis into the Effects of Subordinate Production, Money and Finance and Debt Systems on Global South Expenditure Levels

State expenditure levels vary significantly. The ability of a government to exercise spending, in turn, is a crucial indicator of its room for manoeuvre within global capitalism. Discussions, among others, on fiscal space have highlighted diverging potentials and realities of government spending. However, the role of subordinated production, money and finance, and debt systems in shaping expenditure levels in Global South states has not yet been systematically assessed. This study addresses that gap by providing a theoretically informed econometric analysis of the expenditure levels of Global South states from 2007 to 2023. It argues that the subordinate integration of production, money and finance, and debt systems in global capitalism play a critical role in explaining expenditure levels. Contrary to the neoclassical view, which links expenditure levels to economic development, the findings show that a particular type of fiscal space — termed here subordinated fiscal space — is characteristic for dependent economies of the Global South. This subordination results from structural factors and the economic dynamics of contemporary financialised and globalised capitalism. By emphasising these relationships, this study challenges dominant economic paradigms and demonstrates how subordination systematically restrains Global South governments’ room for manoeuvre.