The Political Economy of Recent Conversions to Market Economics in Latin America

1994 ◽  
Vol 26 (1) ◽  
pp. 191-219 ◽  
Author(s):  
David E. Hojman
Keyword(s):  
Latin America ◽  
Open Economy ◽  
Tax Reform ◽  
Debt Crisis ◽  
Free Market ◽  
The Political ◽  
Sufficient Condition ◽  
Highly Qualified ◽  
Explanatory Factors ◽  
Market Economics

The objective of this article is to attempt to explain why free market open economy policies (FMOEP) have become so popular in Latin America in the 1990s. There are six possible major explanatory factors: (i) lessons learnt from the debt crisis and its immediate aftermath, (ii) more highly qualified technocrats, (iii) development of an entrepreneurial middle class, (iv) exhaustion of import substituting industrialisation, (v) a combination of tax reform, financial modernisation and export diversification, and (vi) a favourable public opinion. Yet none of these factors by itself was a sufficient condition for FMOEP; necessary factors were different from country to country, and the nature of the interaction between two or more factors was different in each country.

Experts and Encounters

PMLA ◽  
2020 ◽  
Vol 135 (5) ◽  
pp. 989-994
Author(s):  
Robert Chodat
Keyword(s):  
Free Market ◽  
Political History ◽  
Literary Studies ◽  
The Political ◽  
Twilight Zone ◽  
Urban Decay ◽  
Johns Hopkins University ◽  
History Of ◽  
First Time ◽  
Market Economics

In a 2018 piece for the chronicle of higher education, Michael Clune describes a “rude awakening” he once experienced when developing a new course as a graduate student at Johns Hopkins University. As was customary then at Johns Hopkins, he was required to submit a course proposal that underwent a review by a board of professors from different fields. Clune arrived at the interview ready to discuss a syllabus that, as he recalls, “purported to explain urban decay, novels, the nature of free-market economics, and the political history of the 1970s in one brilliant synthesis.” But the board was underwhelmed. As Clune cited the “illustrious figures” and “hallowed formulas” he had learned to incant in literary studies, the political scientists and historians sitting in front of him—people who spend their lives researching stuff like urban decay, free-market economics, and recent political history—responded with “withering skepticism” and did something he hadn't anticipated: they “actually asked difficult questions about the reasoning behind the stars' dicta,” unimpressed by “the heroes of literature-department economic, political, and historical thought.” Clune doesn't say whether he got to teach the course, but the episode was the first time he began to see literary studies as “a kind of twilight zone,” an “exploded discipline” with fading intellectual prestige.

Foreign Direct Investment and Its Politics in Latin America

2019 ◽  
Author(s):  
R. Douglas Hecock
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Latin American ◽  
Comparative Politics ◽  
Direct Investment ◽  
International Political Economy ◽  
Debt Crisis ◽  
National Development ◽  
The Political ◽  
Latin American Countries

The open economic policies Latin American countries adopted in the wake of the debt crisis of the early 1980s were expected to bring a variety of benefits. Trade liberalization and privatization make domestic firms more competitive, and deregulation helps to create an efficient business climate. Notably, such policies are also likely to spur foreign investment seeking new opportunities, and Latin American countries did indeed begin to see large inflows in the 1990s. Foreign direct investment (FDI) is thought to be particularly complementary to economic development. Compared to portfolio investment in stocks and bonds, FDI consists of the construction or purchasing of physical assets including manufacturing facilities, retail outlets, hotels, and mines. FDI should spur local economic activity and bring with it jobs and technology transfers. Furthermore, because divestment takes planning and time, direct investment is relatively long-term, so investors are expected to display greater commitments to the economic and political futures of their hosts. As a result of these substantial potential benefits, a body of scholarship has emerged to try to understand the political dynamics of FDI. Is investment more likely to flow to democratic or authoritarian regimes? Are direct investors seeking countries with few labor protections and weak environmental regulations or are they attracted to public investments in human capital? Do they eschew governments with poor human rights records or do they see abusers as potential partners in managing a compliant workforce? What are the effects of FDI flows on the political contexts of their hosts? Among others, these questions have received significant scholarly attention, and while we have learned a great deal about the behavior and effects of FDI, considerable potential remains. Having received massive inflows averaging more than $100 billion between 2000 and 2017 and consisting of countries with broadly similar development trajectories, Latin America offers a rich landscape for such analysis. In particular, finer-grained examinations of FDI to Latin American countries can help us understand how it might affect political systems and which types of investment best complement national development projects. In so doing, studies of FDI flows to Latin America are poised to make major contributions to the fields of international political economy, development studies, and comparative politics.

The Dilemmas of Democracy in the Open Economy: Lessons from Latin America

2004 ◽  
Vol 56 (2) ◽  
pp. 262-302 ◽  
Author(s):  
Marcus J. Kurtz
Keyword(s):  
Latin America ◽  
Latin American ◽  
Open Economy ◽  
Free Market ◽  
Democratic Consolidation ◽  
Economic Organization ◽  
Development Economic ◽  
State Economy ◽  
Latin American Region ◽  
Collective Action Problems

Scholars have usually understood the problem of democratic consolidation in terms of the creation of mechanisms that make possible the avoidance of populist excesses, polarized conflicts, or authoritarian corporatist inclusion that undermined free politics in much of postwar Latin America. This article makes the case that, under contemporary liberal economic conditions, the nature of the challenge for democratization has changed in important ways. Earlier problems of polarization had their roots in the long-present statist patterns of economic organization. By contrast, under free-market conditions, democratic consolidation faces a largely distinct set of challenges: the underarticulation of societal interests, pervasive social atomization, and socially uneven political quiescence founded in collective action problems. These can combine to undermine the efficacy of democratic representation and, consequently, regime legitimacy. The article utilizes data from the Latin American region since the 1970s on development, economic reform, and individual and collective political participation to show the effects of a changing state-economy relationship on the consolidation of democratic politics.

Crisis and Democracy in Latin America

1991 ◽  
Vol 43 (4) ◽  
pp. 608-634 ◽  
Author(s):  
Peter H. Smith
Keyword(s):  
Latin America ◽  
Economic Crisis ◽  
Latin American ◽  
Political Change ◽  
Debt Crisis ◽  
The Political ◽  
Theoretical Frameworks ◽  
Political Impact ◽  
The Relationship

Democratization in Latin America took place throughout the 1980s within a context of acute economic crisis, thus posing a sharp challenge to established theory. This essay examines alternative explanations-economic, political, institutional, international-for this paradoxical outcome. It is argued that the political impact of the debt crisis differs for the short, medium, and long terms. The analysis also devotes considerable attention to the concept of “democratization” and to the quality of Latin American democracies, which tend to contain pervasive authoritarian features. Careful reading of these phenomena can lay the foundation for new and enduring theoretical frameworks about the relationship between macroeco-nomic transformation and political change.

The Crisis of Labor Politics in Latin America: Parties and Labor Movements during the Transition to Neoliberalism

2007 ◽  
Vol 72 (1) ◽  
pp. 116-133 ◽  
Author(s):  
Kenneth M. Roberts
Keyword(s):  
Twentieth Century ◽  
Latin America ◽  
Political Competition ◽  
Debt Crisis ◽  
Free Market ◽  
Import Substitution ◽  
Union Density ◽  
Party Systems ◽  
Capitalist Development ◽  
Free Market Reforms

AbstractFollowing the onset of mass politics in early twentieth-century Latin America, party systems were distinguished by different patterns of labor incorporation. In some countries, political competition was realigned by the emergence of a mass-based, labor-mobilizing populist or leftist party. In other countries, party systems remained under the control of traditional oligarchic parties or elite personalities who provided little impetus for labor mobilization. Countries with labor-mobilizing party systems were more deeply embedded in the state-led model of capitalist development known as import substitution industrialization in the middle of the twentieth century, and they suffered severe economic trauma when this development model collapsed in the debt crisis of the 1980s. Economic austerity and free-market reforms undermined the social foundations of these party systems, which experienced sharp declines in trade-union density and widespread electoral volatility during the waning decades of the twentieth century.

Political Economy of Taxation in Latin America

2019 ◽  
Author(s):  
Omar Sanchez-Sibony
Keyword(s):  
Latin America ◽  
Latin American ◽  
Tax Policy ◽  
Tax Reform ◽  
Policy Outcomes ◽  
The Political ◽  
Vertical Equity ◽  
Structural Factors ◽  
Weak State ◽  
State Infrastructural Power

While Latin America has augmented its tax effort significantly since 2000, tax revenues remain below the global norm given the region’s income per capita. Indirect taxes constitute a disproportionate portion of overall revenues, a manifestation of the political and technical difficulties inherent to taxing Latin American elites. Several structural factors characterizing the region hamper revenue collection, including mediocre economic performance, a large informal sector, high income inequality, the rentier status of some economies, and weak state infrastructural power, alongside feeble tax administration agencies, among other factors. Political scientists have deployed three main paradigms for understanding tax policy outcomes and tax reform: interest-based, ideational, and institutional accounts. Interest-based accounts, centered on the political power and resources that interest groups can wield, provide a useful first approximation to understanding tax outcomes; nevertheless, this theoretical lens under-predicts the prevalence of observed tax reform in Latin America. The ideational lens is indispensable to account for the overall contours of the taxation system in the region, because tax reform was informed by the neoliberal paradigm. In recent years, moderately progressive tax policy changes have been enacted by left- and right-wing governments alike, reflecting the increasing centrality of addressing inequality (the vertical equity objective) in the realm of ideas. Democracy, qua a system of institutions geared to enhance the public interest, has not spawned the taxation systems that the median-voter theory predicts in the context of high societal inequality, however. Democracy has not fulfilled the taxation and fiscal policy expectations placed upon it. Nonetheless, structural factors may yet produce a salutary fiscal result. The recent increase in the size of the region’s middle class has translated into greater societal pressures to enhance the quality and quantity of public services, which may portend the development of a more encompassing state–society fiscal pact.

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