Embedding neoliberal reform in Latin America

World Politics

Volumn 60, Issue 2, 2008, Pages 231-280

  Kurtz, Marcus J ^a   Brooks, Sarah M ^a  

^a OHIO STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DEVELOPING WORLD; ECONOMIC REFORM; INDUSTRIAL DEVELOPMENT; INDUSTRIALIZATION; LIBERALIZATION; MODELING; NEOLIBERALISM; TIME SERIES ANALYSIS;

LATIN AMERICA;

EID: 48749087228     PISSN: 00438871     EISSN: None     Source Type: Journal    
DOI: 10.1353/wp.0.0015     Document Type: Article

References (142)

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28. Roberts (fn. 14), 4.
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43. Rodrik (fn. 1), 2.
44. Our concept of "embedded neoliberalism" also differs from van Apeldoorn's use of the term in the European context. See Bastiaan van Apeldoorn, Transnational Capitalism and the Struggle over European Integration (New York: Routledge, 2002).
45. Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton: Princeton University Press, 1995).
46. Alberto Melo and Andrés Rodríguez-Clare, "Productive Development Policies and Supporting Institutions in Latin America and the Caribbean," Working Paper no. C-106 (Washington, D.C.: Inter-American Development Bank, February 2006), 15. These partnerships run the gamut of economically vital policy areas, from science and technology, to finance, internationalization of the economy, education, labor, and infrastructure.
47. Ibid., 16.
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50. Melo and Rodríguez-Clare (fn. 31), 55.
51. Costa Rican R&D investment amounted to 1.2 percent of GDP in 1996, compared with 0.4 percent or less in Argentina, Mexico, and Venezuela, countries at a comparable or higher level of development. This is still smaller than the R&D investments made by the East Asian developing countries or the United States (in excess of 2 percent of GDP), but it is impressive for a poor Central American nation. See Derek Hill, "Latin America: R&D Spending Jumps in Brazil, Mexico, and Costa Rica" National Science Foundation Division of Science Resource Studies NSF 00-316 (Washington, D.C.: NSF, 2000), 3-4.
52. Eduaro Levy Yeyati, Alejandro Micco, and Ugo Panizza, "Should Government Be in the Banking Business? The Role of State-Owned and Development Banks," Working Paper no. 517 (Washington, D.C.: Inter-American Development Bank, 2004), 34.
53. Mary A. Clark, "Nontraditional Export Promotion in Costa Rica: Sustaining Export-Led Growth," Journal of lnteramerican Studies and World Affairs 37 (Summer 1995), 196.
54. Melo and Rodríguez-Clare (fn. 31), 55.
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56. Pablo Astorga, Ame R. Berges, and Valpy Fitzgerald, "The Standard of Living in Latin America during the Twentieth Century," Economic History Review 58 (November 2005), 766.
57. Bruton (fn. 40).
58. Ibid., 917.
59. John Sheahan, "Market-Oriented Economic Policies and Political Repression in Latin America," Economic Development and Cultural Cbange 28 (January 1980), 273.
60. Jeffry Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America (Princeton: Princeton University Press, 1991), 49.
61. Ibid., 47.
62. Inter-American Development Bank, Good Jobs Wanted: Labor Markets in Latin America (Washington, D.C.: IDB, 2004), 233.
63. Sebastian Etchemendy, "Constructing Reform Coalitions: The Politics of Compensations in Argentina's Economic Liberalization," Latin American Politics and Society 43 (Autumn 2001);
64. and M. Victoria Murillo, Labor Unions, Partisan Coalitions, and Market Reforms in Latin America (New York: Cambridge University Press, 2001).
65. Peter Kingstone, Crafting Coalitions for Reform: Business Preferences, Political Institutions, and Neoliberalism in Brazil (Princeton: Princeton University Press, 1999).
66. Bela Balassa, "Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review 76 (May 1986)
67. Other examples range from cement (CEMEX, Mexico), to steel and metallurgy (Techint, Argentina; CVRD, Brazil), and food products (Arcor, Argentina).
68. See Schrank and Kurtz (fn. 21).
69. Geoffrey Garrett, "Global Markets and National Politics: Collision Course or Virtuous Cycle?" International Organization 52 (Autumn 1998), 798.
70. Carles Boix, Political Parties, Growth and Equality (New York: Cambridge University Press, 1998).
71. Garrett (fn. 1);
72. Walter Korpi and Joakim Palme, "New Politics and Class Politics in the Context of Austerity and Globalization: Welfare State Regress in eighteen Countries, 1975-95," American Political Science Review 97 (August 2003).
73. Karen Remmer, "The Politics of Economic Policy and Performance in Latin America," Journal of Public Policy 22 (January 2002);
74. Alex Cukierman and Mariano Tommasi, "Credibility of Policymakers and of Economic Reforms," in Federico Sturzenegger and Mariano Tommasi, eds., The Political Economy of Reform (Cambridge, Mass.: MIT Press, 1998);
75. and Wibbels (fn. 4).
76. Remmer (fn. 55), 38.
77. Garrett and Lange (fn. 18), 541;
78. Quan Li and Dale Smith, "The Dilemma of Financial Liberalization: State Autonomy and Societal Demands," Journal of Politics 64 (August 2002), 781.
79. Remmer (fn. 55).
80. Katrina Burgess, "Loyalty Dilemmas and Market Reform: Party-Union Alliances under Stress in Mexico, Spain, and Venezuela," World Politics 52 (October 1999), 107.
81. Burgess, for example, points out that AD in Venezuela had a role in selecting who would stand for union office, while in Mexico the PRI had solidified control of the CTM (the principal labor confederation) by the 1950s; Burgess (fn. 59), 121, 130.
82. John Guidry, "Not Just Another Labor Party: The Workers' Party and Democracy in Brazil," Labor Studies Journal 28 (Spring 2003), 89.
83. Steven Levitsky, "From Labor Politics to Machine Politics: The Transformation of Party-Union Linkages in Argentine Peronism, 1983-1999," Latin American Research Review 38 (October 2003), 7.
84. Burgess (fn. 59), 107.
85. Levitsky (fn. 62), 5.
86. James McGuire, Υnion Political Tactics and Democratic Consolidation in Alfonsin's Argentina, 1983-89,Latin American Research Review 27, no. 1 (1992), 46.
87. Samuel Morley, Robert Machado, and Stefano Pettinato, "Indexes of Structural Reform in Latin America," Economic Reforms Series no. 12 (Santiago, Chile: ECLAC, 1999 [2006]).
88. It should be noted that by relying on reform indices constructed on the assumption of a single liberal/statist continuum, we employ measures that are biased against our finding of alternative openeconomy policy equilibria.
89. Morley, Machado, and Pettinato (fn. 66).
90. World Bank, World Development Indicators CD-ROM (Washington, D.C.: World Bank, 2005).
91. For example, Herbert Kitschelt, Zdenka Mansfeldova, Radoslaw Markowski, Gábor Tóa, PostCommunist Party Systems: Competition, Representation, and Inter-Party Cooperation (Cambridge: Cambridge University Press, 1999).
92. Richard Niemi, Stephen Craig, and Mattei Franco, "Measuring Internal Political Efficacy in the 1988 National Election Study" American Political Science Review 85 (December 1991).
93. Stephen Ansolabehere, James Snyder, and Charles Stewart III, "Candidate Positioning in U.S. House Elections," American Journal of Political Science 45 (January 2001).
94. For example, Schneider (fn. 11);
95. and Marcus Kurtz, "Chile's Neo-Liberal Revolution: Incremental Decisions and Structural Transformation, 1973-89," Journal of Latin American Studies 3l (May 1999).
96. World Bank (fn. 69).
97. Klaus Deininger and Lyn Squire, "A New Data Set Measuring Income Inequality," World Bank Economic Review 10 (September 1996).
98. Astorga, Berges, and Fitzgerald (fn. 41), 772.
99. Robert Barro and Jon Wha Lee, "International Measures of Schooling Years and Schooling Quality," American Economic Review 82 (May 1996).
100. An alternative analysis, relying on a dichotomous coding of left versus nonleft executives, produced very similar results. We incorporate the updates to the data set indicated by Philip Keefer, "DPI2004 Database of Political Institutions: Changes and Variable Definitions" (Manuscript, World Bank, 2005);we also corrected an error in the coding of the Chilean case, so that it now properly considers the two posttransition Christian Democratic governments centrist, while the two socialist executives are recoded as left wing. Inexplicably, all posttransition Chilean governments had been coded as right wing in the database.
101. The data set is described in Thorsten Beck, George Clarke, Alberto Groff, Philip Keefer, and Patrick Walsh, "New Tools in Comparative Political Economy: The Database of Political Institutions," World Bank Economic Review 15 (January 2001).
102. For details, see Keefer (fn. 78), available at http:// siteresources.worldbank.org/INTRES/Resources/ DPI2004_variable-definitions.pdf (accessed September 24, 2007).
103. IDB (fn. 13), 223.
104. Ronald Rogowski, "Trade and the Variety of Democratic Institutions," International Organization 41 (Spring 1987);
105. and Thomas Stratmann and Martin Baur, "Plurality Rule, Proportional Representation, and the German Bundestag: How Incentives to Pork-Barrel Differ across Electoral Systems," American Journal of Political Science 46 (July 2002).
106. Beck et al. (fn. 78).
107. Gregg Johnson and Brian Crisp, "Mandates, Powers, and Policies," American Journal of Political Science 47 (January 2003);
108. Helen Milner and Peter Rosendortf, "Trade Negotiations, Information, and Domestic Politics: The Role of Domestic Groups," Economics & Politics 8 (July 1996);
109. and Susan Stokes, Mandates and Democracy: Neoliberalism by Sur prise in Latin America (Cambridge: Cambridge University Press, 2001).
110. Beck et al. (fn. 78).
111. Rogowski (fn. 81).
112. For example, Helen Milner and Keiko Kubota, "Why the Move to Free Trade: Democracy and Trade Policy in the Developing Countries," International Organization 59 (January 2005).
113. Adserà and Boix (fn. 2).
114. Monty Marshall and Keithjaggers, Polity IV Project: Political Regimes and Transitions, 1800-2002 Data Users Manual (Manuscript, Center for International Development and Conflict Management, 2002).
115. World Bank (fn. 69).
116. Garrett (fh. 52); and Kaufman and Segura-Ubeirgo (fn. 4).
117. Wibbels (fn. 4), 459.
118. All four variables are from World Bank (fn. 69).
119. International Labour Organization (ILO), Key Indicators of the Labor Market, 4' ed, CD-ROM (Geneva: ILO, 2006).
120. World Bank (fn. 69).
121. Ibid.
122. Indeed, partisanship appears to have little direct relationship to orthodox neoliberalism, most likely because both conservative and left governments have pursued it in the region, albeit typically for different reasons.
123. See Sarah Brooks and Marcus Kurtz, "Capital, Trade, and the Political Economies of Reform," American Journal of Political Science 51 (October 2007). It is likely that other factors may condition the relationship (if any) between partisanship and aspects of orthodox neoliberal reform; at least this has been suggested in recent literature.
124. See M. Victoria Murillo and Cecilia Martínez-Gallardo, "Political Competition and Policy Adoption: Market Reforms in Latin American Public Utilities," American Journal of Political Science 51 (January 2007);
125. and Daniel Nielson, "Supplying Trade Reform: Political Institutions and Liberalization in Middle-Income Presidential Democracies," American Journal of Political Science 47 (July 2003). While we consider this a fruitful line of research, further analysis of the question is beyond the scope of this paper.
126. Sheahan (fn. 44), 273.
127. Jeffrey Sachs, "Social Conflict and Populist Policies in Latin America," NBER Working Paper no. 2897 (Cambridge, Mass.: National Bureau of Economic Research, 1989), 4.
128. Astorga, Berges, and Fitzgerald (fn. 41);
129. Bruton (fn. 40), 916.
130. Sanjay Lall, "Competing with Labor: Skills and Competitiveness in Developing Countries," Issues in Development Discussion Paper no. 31 (Geneva: ILO, 1999).
131. Rodríguez-Clare (fn. 25), 313.
132. We are grateful to Matthew Golder for publishing the stata code from which we developed these figures. For the article on which the code is based, see Thomas Brambor, William Roberts Clark, and Matt Golder, "Understanding Interaction Models: Improving Empirical Analysis," Political Analysis 14 (Winter 2006). The code is found at http://homepages.nyu.edu/-mrg2l7/interactionhtml#code.
133. U. S, Department of State, "Colombia: Country Reports on Human Rights Practices, 1999" (Washington, D.C.: U. S. Department of State, 2000). Available at http://www.state.gov/g/dri/rls/hrrpt/1999 /380.htm (last accessed January 31, 2008).
134. Johnson and Crisp (fh. 83);
135. and Stokes (fn. 83).
136. Adserà and Boix (fn. 2).
137. Peter Katzenstein, Small States in World Markets: Industrial Policy in Europe (Ithaca, N.Y.: Cornell University Press, 1985).
138. Adserà and Boix (fn. 2);
139. and Bates, Brock, and Tiefenthaler (fn. 3).
140. Thomas Phimper and Vera E. Troeger, "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis 15 (Spring 2007).
141. In both these estimations we corrected for the first-order autocorrelation indicated by a lagrange multiplier test, and we employed robust standard errors. The invariant and slow-moving variables were manufacturing share of GDP in 1980, human capital in 1980, and inequality in 1980, growth over the 1980s, electoral system, partisanship, unionization rates, and their interaction. Using standard errors that assume clustering by country produced nearly identical results, including the size, sign, and statistical significance of the variables of interest. Reestimations of the slightly more parsimonious models (1 and 2) indicated that the results are robust to the inclusion or omission of electoral system (PR).
142. Each of these differenced models naturally includes as a control the lagged level of the dependent variable as the change score is very likely in part dependent upon the antecedent level (that is, at high levels further increases are likely to be smaller). No correction for autocorrelation is made as lagrange multiplier tests indicate its absence. The time trend variable was omitted as the multivariate augmented Dickey-Fuller test indicated stationarity.