The Making of Policy: Institutionalized or Not?

This paper develops a framework for analyzing different policymaking styles, their causes and their consequences in Latin America, finding that lower institutionalization and greater use of alternative political technologies (APTs) are more likely the lower the cost of using these technologies, the higher the potential damage they can cause, the lower the wealth of the economy, and the more asymmetric the distribution of de jure political power. Moreover, strategic complementarity exists in the use of alternative political technologies; for instance "bribes by the rich" and "protests by the poor" are likely to be countervailing forces, and will both occur in polities with weaker political institutions.Political institutions, Public policies, Institutional strength, Protests, Alternative Political Technologies, Development, Judicial independence, Party institutionalization, Congress capabilities, Cabinet stability, Corruption

Is Latin America on the Right Track? An Analysis of Medium-Term Frameworks and the Budget Process

Medium Term Fiscal Frameworks (MTFs) have become one of the most popular reforms to the budgetary process in Latin America during the last decade, and introducing MTFs seemed to be the magic solution for most fiscal ailments. Nonetheless, there has been no comprehensive evaluation of their impact. This document discusses the normative merits of using MTFs, provides a characterization of the different types of MTF, and describes their development in the Latin American region based on extensive field work. As a first approximation for understanding how they are working, this document explores in detail the cases of Argentina, Colombia and Peru. While an unambiguous diagnosis is not possible, this document lays the groundwork for progress toward comprehensive impact evaluations and, eventually, to the consolidation of MTFs in the region.Latin America, Medium-Term Fiscal Frameworks, Medium-Term Expenditure Frameworks, Budget Process, Fiscal Outcomes, Fiscal Reforms

Economic Crisis and Fiscal Reforms in Latin America

The recent financial crisis has initiated pressures for not only policy reform but also fundamental institutional fiscal reforms. This paper explores the connection between economic crises and fiscal institutional reforms in a region that has experienced plenty of both in recent years, namely Latin America. For that purpose it reviews the literature and provides five hypotheses about why, and under what circumstances, crises would promote reforms. The empirical evidence shows that debt crises make reforms more likely but banking crises on their own, if anything, reduce the pressure for fiscal institutional reforms. Political institutions are also important. If the electoral system encourages the personal vote, the country is more likely to reform. This evidence may become useful for predicting the likelihood of reforms in the developed world.Information and communications technology, Education, Experimental design, Ecuador

Political Institutions, Policymaking, and Economic Policy in Latin America

This paper surveys selected themes in the political economy of policymaking in Latin America, with an emphasis on recent research focusing on actual decision and implementation processes, and on the political institutions and state and social actors involved in those processes. In particular, the paper addresses how political rules work for or against intertemporal cooperation among political actors. The document shows that the extent to which polities obtain the key policy features that seem to determine development depends on the workings of political institutions, which define how the policymaking game is played, on the characteristics of the arenas of interaction, which define where the policymaking game is played, and on certain characteristics of key socioeconomic groups, which define who interacts with professionalpoliticians in pursuing different policy preferences.Political institutions, Public policies, Economic policy, Government capabilities, Development, Latin America

The Politics of Financial Development - The Role of Interest Groups and Government Capabilities

Although financial development is good for long-term growth, not all countries pursue policies that render full financial development. This paper builds on an extensive political economy literature to construct a theoretical model showing that the intensity of opposition to financial development by incumbents depends on both their degree of credit dependency and the role of governments in credit markets. Empirical evidence for this claim is provided, and the results suggest that lower opposition to financial development leads to an effective increase in credit markets’ development only in those countries that have high government capabilities. Moreover, improvements in government capabilities have a significant impact on credit market development only in those countries where credit dependency is high (thus, opposition is low). This paper therefore contributes to this rich literature by providing a unified account of credit market development that includes two of its main determinants, traditionally considered in isolation.Financial development, Interest groups, Political economy, Government capabilities

Veto Players and Policy Trade-Offs- An Intertemporal Approach to Study the Effects of Political Institutions on Policy

The capacity to sustain policies over time and the capacity to adjust policies in the face of changing circumstances are two desirable properties of policymaking systems. The veto player approach has suggested that polities with more veto players will have the capacity to sustain policies at the expense of the ability to change policy when necessary. This paper disputes that assertion from an intertemporal perspective, drawing from transaction cost economics and repeated game theory and showing that some countries might have both more credibility and more adaptability than others. More generally, the paper argues that, when studying the effects of political institutions on policy outcomes, a perspective of intertemporal politics might lead to predictions different from those emanating from more a-temporal approaches.Political institutions, Public policies, Veto players, Policy adaptability, Policy stability, Intertemporal, Credibility, Repeated games

Political Institutions and Street Protests in Latin America

This paper argues that where institutions are strong, actors are more likely to participate in the political process through institutionalized arenas, while where they are weak, protests and other unconventional means of participation become more appealing. This relationship is explored empirically by combining country-level measures of institutional strength with individual-level information on protest participation in 17 Latin American countries. Evidence is found that weaker political institutions are associated with a higher propensity to use alternative means for expressing preferences, that is, to protest. Also found are interesting interactions between country-level institutional strength and some individual-level determinants of participation in protests.Political institutions, Public policies, Institutional strength, Protests, Alternative Political Technologies, Political party representation, Ideology, Ideological extremism, Latin America

Political Institutions, State Capabilities and Public Policy - International Evidence

This paper introduces preliminary evidence from a cross-country database of policy characteristics and potential uses of that database. While most databases have emphasized either the content of policies (e.g., size of government deficits) or countries’ formal institutions (e.g., political regime, electoral system), the variables in this database reflect the policymaking capabilities of different polities. The paper attempts to explain these policy characteristics as depending on the workings of political institutions, using a logic emphasizing intertemporal political compromise. The paper also contrasts this logic with alternatives such as the veto players approach. The paper concludes by suggesting the use of these policy characteristics or state capabilities as explanatory variables for the effectiveness of public spending in various social areas.Political institutions, Public policies, Government capabilities, Veto players, Intertemporal cooperation, Development, Human Development Index, Public expenditures, Policy index, Adaptability, Stability, Judicial independence, Party institutionalization, Congress capabilities, Cabinet stability

Determinantes institucionales de transacciones políticas

En este documento se pasa revista a un número de actores, instituciones y ámbitos claves en el proceso de diseño de políticas, con el objeto de examinar el papel de cada uno, así como sus incentivos y capacidades en la formulación de políticas públicas, recurriendo a la extensa obra publicada en politología y economía política. Se analiza a cada uno de los actores individualmente, pero también en su articulación con los demás actores, vinculando los efectos de las instituciones políticas sobre sus incentivos y las características del juego de formulación de políticas. Se espera que este documento brinde a los investigadores los instrumentos necesarios para continuar analizando los procesos de diseño de políticas, no sólo en los países latinoamericanos sino también en los de otras regiones del mundo. (Disponible en Inglés)