Political Mandate and Clarity of Responsibility: Economic Policies under Rightist Governments in Latin America

Since the mid-1990s, some rightist governments in Latin America have adhered to a strict market orientation while others have shown less attachment to doctrinaire neoliberal policies, a puzzle as rightists are expected to favor minimal government intervention in the economy. In an environment over the past two decades in which market-oriented policies, in general, have grown increasingly unpopular with many Latin Americans, we contend that rightists have less political cover to endorse neoliberal policies. Using panel data for eighteen Latin American countries from 1995 to 2015, we find that, because of the clarity of responsibility that occurs under political mandates and the unpopularity of market reforms, mandate-holding rightist governments will tend to go against their ideological preferences and decrease neoliberal policies. Our findings indicate that as presidential vote margins increase and responsibility for unpopular economic policies becomes clearer, rightist executives will be less willing to support such policies, but only to a point. The results suggest that clarity of responsibility can influence presidential decision-making concerning unpopular policies, especially microeconomic policies, but this influence diminishes as presidents become more electorally secure. Resumen A partir de mediados de la década de los 90, algunos gobiernos latinoamericanos de derecha han adoptado políticas estrictas de apertura comercial, mientras que otros se han mostrado más alejados de adoptar políticas neoliberales. Esto es un elemento relevante de análisis ya que se espera que los gobiernos de derecha estén en contra de la intervención del gobierno en la economía. Usando una base de datos panel sobre 18 países latinoamericanos para el periodo de 1995 a 2015, encontramos que los gobiernos de derecha actúan en contra de sus preferencias ideológicas disminuyendo políticas neoliberales por dos razones: la claridad que los mandatarios tienen sobre sus responsabilidades y la impopularidad de las reformas de libre mercado en Latinoamérica. Nuestros hallazgos indican que, si el margen de votos en las elecciones presidenciales incrementa y el sentido de responsabilidad sobre la adopción de políticas económicas impopulares es claro, los gobernantes de derecha estarán menos dispuestos a adoptar este tipo de políticas de libre mercado

International Coercion, Emulation and Policy Diffusion: Market-Oriented Infrastructure Reforms, 1977-1999

Why do some countries adopt market-oriented reforms such as deregulation, privatization and liberalization of competition in their infrastructure industries while others do not? Why did the pace of adoption accelerate in the 1990s? Building on neo-institutional theory in sociology, we argue that the domestic adoption of market-oriented reforms is strongly influenced by international pressures of coercion and emulation. We find robust support for these arguments with an event-history analysis of the determinants of reform in the telecommunications and electricity sectors of as many as 205 countries and territories between 1977 and 1999. Our results also suggest that the coercive effect of multilateral lending from the IMF, the World Bank or Regional Development Banks is increasing over time, a finding that is consistent with anecdotal evidence that multilateral organizations have broadened the scope of the “conditionality” terms specifying market-oriented reforms imposed on borrowing countries. We discuss the possibility that, by pressuring countries into policy reform, cross-national coercion and emulation may not produce ideal outcomes.http://deepblue.lib.umich.edu/bitstream/2027.42/40099/3/wp713.pd

Following the Flag: Troop Deployment and U.S. Foreign Direct Investment

N/

Chinese FDI in the United States

Data for forthcoming article at the Journal of Asian and African Studie

The Effects of Political Risk on Different Entry Modes of Foreign Direct Investment

N/

How soon is now? The effects of the IMF on economic reforms in Latin America

IMF, Stand-by agreements, Economic reform implementation, U.S., Domestic pressures, Latin America,

Investment, Opportunity, and Risk: Do US Sanctions Deter or Encourage Global Investment?

Complementing the effectiveness of US sanctions debate, the US government often prods US investors to disinvest from targeted countries, hoping to pressure sanctioned countries to back US foreign policy goals or face economic costs for their actions. Missing from the effectiveness of sanctions debate is the impact US sanctions have on third-party foreign direct investment (FDI). Using panel data for 171 countries from 1969 to 2000, we present the first empirical study on the effect of sanctions on global FDI. We find strong evidence that when US firms disinvest during US sanctions, global FDI significantly increases, providing the target country with a reliable source of capital replacement. The results suggest the limited effectiveness of sanctions for restricting capital flows to targeted countries and that US firms may ultimately bear the highest costs from US-imposed sanctions

Replication data for: Sovereign Bond Ratings and Neoliberalism in Latin America

The importance of credit rating agencies (CRAs) in rating sovereign bonds has grown as developing countries increasingly issue bonds to attract foreign capital. Although in their methodologies CRAs claim that the initiation of neoliberal reforms influences bond ratings, given the secrecy surrounding ratings, it is unclear what impact reforms actually have on CRAs. Controlling for macroeconomic and political determinants, we use statistical analyses, as well as recent qualitative evidence, for some 16 Latin American countries from 1992 to 2003 to assess the effects of economic reforms on CRA decisions. We find that among neoliberal policies only trade liberalization positively and consistently impacts bond ratings. The relative ease of implementation along with the credible commitment to maintain trade policies help explain higher bond ratings. The results also show that inflation and bond defaults negatively affect CRA assessments. The findings provide reasons for optimism. Many economic policies, often politically difficult to implement, do not lead to higher ratings. Others that are relatively easy to implement do. Policy makers in Latin American countries have more options to lessen political tensions, lower the cost of capital, and increase its availability for investment and growth than previously predicte