Globalization and Democracy uses a multimethod approach to challenge the conventional wisdom that financial markets impose broad and severe constraints over leftist economic policies in emerging market countries. It shows, rather, that in Latin America, this influence varies markedly among countries and over time, depending on cycles of currency booms and crises exogenous to policymaking. Market discipline is strongest during periods of dollar scarcity, which, in low-savings commodity-exporting countries, occurs when commodity prices are high and international interest rates low. In periods of dollar abundance, when the opposite occurs, the market's capacity to constrain leftist governments is very limited. Ultimately, Daniela Campello argues that financial integration should force the Left toward the center in economies less subject to these cycles, but not in those most vulnerable to them.
The persistence of policy switches—whereby presidents renege on campaign promises shortly after winning elections—30 years after Latin America’s redemocratization defies established notions of democratic representation, and poses a puzzle to analysts and voters alike. In this article, I advance current explanations for switches, by arguing they can only be understood in the context of currency booms and crises, typical of Latin American economies after their reintegration into world finance in the 1970s. To test my propositions empirically, I examine elections held in the region between 1978 and 2006 and find evidence consistent with the claim that switches are more likely to occur in periods of dollar scarcity, when the need to attract financial capital to the economy pushes leftist presidents into adopting policies opposed to the programs they announced during campaign.
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