ABSTRACT
This chapter describes that financial policy is linked to planning for structural change, through the dynamic use of flow-of-funds analysis. Actual and potential sources and uses of funds are related to the behavior of the real structure of the economy, with particular attention to the generation and channeling of "economic rents." Banks are involved in growth-related activities, such as mortage and investment lending, venture capital provision, and other forms of medium-term and long-term finance which present more serious problems. However, the effects of financial policy on the structure or production or distribution of income and wealth, problems of central importance to revolutionary policymakers are given less attention. Natural resource rents are common in developing countries. Thus Chilean copper rents were transformed into investment in overseas processing plants, timber, lead, zinc, and other activities in order to diversify the investment portfolio of the rent-generating firms and to prevent excess supply of copper.
