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POLICY CHANGE IN PRESIDENTIAL DEMOCRACIES: THE DIFFERENTIAL DETERMINANTS OF MARKET-ORIENTED REFORMS IN LATIN AMERICA

POLICY CHANGE IN PRESIDENTIAL DEMOCRACIES: THE DIFFERENTIAL DETERMINANTS OF MARKET-ORIENTED... Why do governments change economic policies? In advanced, industrial democracies domestic political actors and economic circumstances largely explain policy changes. The economic policy-making process is less clear in developing democracies, particularly in adoption of market-oriented reforms in Latin America’s young democracies. I argue that most studies of the region overlooked the fact that market reforms involved two separate sets of policies with divergent transaction costs. Consequently, I examine the differential effects of international pressure and economic crisis versus domestic political actors across areas of reform. Surprisingly, I find that a previously overlooked form of international pressure commonly found in the diffusion literature had a strong effect on both forms of market liberalization, and that the preferences and organization of the legislature and civil-society actors exerted stronger effects on policy-making than the extant literature suggested. I also find that specific economic conditions have only weak effects on the adoption of market-oriented reforms and that presidents often behaved in unexpected ways, mirroring a common concern found in the literature on presidentialism in Latin America. JEL Codes: D72; F59; P11 Keywords: political economy; market-oriented reform; Latin America; diffusion; executive decree authority; corporatism http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Self-Governance and Management Economics Addleton Academic Publishers

POLICY CHANGE IN PRESIDENTIAL DEMOCRACIES: THE DIFFERENTIAL DETERMINANTS OF MARKET-ORIENTED REFORMS IN LATIN AMERICA

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Publisher
Addleton Academic Publishers
Copyright
© 2009 Addleton Academic Publishers
ISSN
2329-4175
eISSN
2377-0996
Publisher site
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Abstract

Why do governments change economic policies? In advanced, industrial democracies domestic political actors and economic circumstances largely explain policy changes. The economic policy-making process is less clear in developing democracies, particularly in adoption of market-oriented reforms in Latin America’s young democracies. I argue that most studies of the region overlooked the fact that market reforms involved two separate sets of policies with divergent transaction costs. Consequently, I examine the differential effects of international pressure and economic crisis versus domestic political actors across areas of reform. Surprisingly, I find that a previously overlooked form of international pressure commonly found in the diffusion literature had a strong effect on both forms of market liberalization, and that the preferences and organization of the legislature and civil-society actors exerted stronger effects on policy-making than the extant literature suggested. I also find that specific economic conditions have only weak effects on the adoption of market-oriented reforms and that presidents often behaved in unexpected ways, mirroring a common concern found in the literature on presidentialism in Latin America. JEL Codes: D72; F59; P11 Keywords: political economy; market-oriented reform; Latin America; diffusion; executive decree authority; corporatism

Journal

Journal of Self-Governance and Management Economics – Addleton Academic Publishers

Published: Jan 1, 2014

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