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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 Classification: D72, F59, P11 Keywords: political economy, market-oriented reform, Latin America, diffusion, executive decree authority, and corporatism http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics, Management, and Financial Markets 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
1842-3191
eISSN
1938-212X
Publisher site
See Article on Publisher Site

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 Classification: D72, F59, P11 Keywords: political economy, market-oriented reform, Latin America, diffusion, executive decree authority, and corporatism

Journal

Economics, Management, and Financial MarketsAddleton Academic Publishers

Published: Jan 1, 2014

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