Three different theoretical explanations are tested for the exceptionally high level of electoral volatility found in contemporary Latin America: economic voting, institutional characteristics of political regimes and party systems, and the structure and organization of class cleavages. A pooled cross-sectional time-series regression analysis is conducted on 58 congressional elections and 43 presidential elections in 16 Latin American countries during the 1980s and 1990s. Institutional variables have the most consistent effect on volatility, while the influence of economic performance is heavily contingent upon the type of election and whether the dependent variable is operationalized as incumbent vote change or aggregate electoral volatility. The results demonstrate that electoral volatility is a function of short-term economic perturbations, the institutional fragilities of both democratic regimes and party systems, and relatively fluid cleavage structures.
While increased exposure to the global economy is associated with increased welfare effort in the Organization for Economic Cooperation and Devel-opment~OECD!, the opposite holds in the developing world+ These differences are typically explained with reference to domestic politics+ Tradables, unions, and the like in the developing world are assumed to have less power or interests divergent to those in the OECD-interests that militate against social spending+ I claim that such arguments can be complemented with a recognition that developed and developing nations have distinct patterns of integration into global markets+ While income shocks associated with international markets are quite modest in the OECD, they are profound in developing nations+ In the OECD, governments can respond to those shocks by borrowing on capital markets and spending countercyclically on social programs+ No such opportunity exists for most governments in the developing world, most of which have limited access to capital markets in tough times, more significant incentives to balance budgets, and as a result cut social spending at the times it is most needed+ Thus, while internationally inspired volatility and income shocks seem not to threaten the underpinnings of the welfare state in rich nations, it undercuts the capacity of governments in the developing world to smooth consumption~and particularly consumption by the poor! across the business cycle+ Much of the research from the past decade on the consequences of globalization has focused on either the macroeconomic convergence associated with integrating markets or the welfare state implications of globalization+ In both areas of study, empirical analyses have focused overwhelmingly on Organization for Economic Cooperation and Development~OECD! cases+ To the degree that researchers of the developing world have researched the political economy of open markets, they have done so largely in the context of a market reform literature that emphasizes
Recent research on federalism is extremely divided. While some tout the benefits of “market-preserving” federalism, others point to the fragmentation and incoherence of policy in federal states. This research bridges the divide by analyzing the political andfiscalstructures that are likely to account for the highly divergent economic experiences of federal systems around die world. To test these propositions, the authors use an original data set to conduct analyses of budget balance and inflation infifteenfederationsaround the world from 1978 through 1996. The empirical research suggests that the level of fiscal decentralization, the nature of intergovernmental finance, and vertical partisan relations all influence macroeconomic outcomes. The find- ings have broad implications for the widespread move toward greater decentralization and for the theoretical literatures on federalism and macroeconomics.
Most researchers interested in the relationship between global markets and public policy focus on advanced industrial democracies. In contrast, we examine competing hypotheses as to globalization's effect on governments by expanding the scope of the discussion to include developing nations. More specifically, we investigate the relationship between international market integration and the evolving burden of taxation on capital, as well as the subsequent response of markets to shifts in tax policy in Latin America since the late 1970s. Consistent with our theoretical expectations, we find that global market forces are more constraining vis-à-vis tax policy in Latin America than in the world's wealthiest nations. Despite these market-based pressures, however, national politics continue to influence tax policy in Latin America in a manner consistent with findings on advanced industrial democracies. As such, developing nations continue to have some room to manipulate policy, though within the context of a more strictly neoliberal context than their counterparts in advanced industrial democracies.
Policymakers and scholars have turned their attention to federalism as a means for managing conflicts between central governments and subnational interests. But both the theoretical literature and the empirical track record of federations make for opposing conclusions concerning federalism's ability to prevent civil conflict. This article argues that the existing literature falls short on two accounts: first, it lacks a systematic comparison of peaceful and conflict-ridden cases across federal states, and second, while some studies acknowledge that there is no one-sizefits-all federal solution, the conditional ingredients of peace-preserving federalism have not been theorized. The authors make the argument that the peace-preserving effect of specific federal traits—fiscal decentralization, fiscal transfers, and political copartisanship—are conditional on a society's income level and ethnic composition. The argument is tested across twenty-two federal states from 1978 to 2000.
Though fiscal policies of central governments sometimes provide modest insurance against regional income shocks, this paper shows that pro-cyclical fiscal policy among provincial governments can easily overwhelm these stabilizing effects. We examine the cyclicality of budget items among provincial governments in eight federations, showing that own-source taxes are highly pro-cyclical and contrary to common wisdom, revenue-sharing and discretionary transfers are either acyclical or pro-cyclical. Constituent governments are thus left alone to smooth their own shocks, even though various restraints on borrowing and saving undermine their ability to do so. These results have important policy implications for Latin America and the European Union.JEL Codes: H71, H72, H74, H77
Studies of “waves” of regime change, in which large numbers of countries experience similar political transitions at roughly similar periods of time, though once popular, have fallen from favor. Replacing the “third wave” arguments are several competing models relating domestic social structure—specifically, the distribution of income and factor ownership—to regime type. If any of these distributive models of regime type is correct, then global trade has an important explanatory role to play. Under factor‐based models, changes in the world trading system will have systematic effects on regime dynamics. Trade openness determines labor's factor income and ultimately its political power. As world trade expands and contracts, countries with similar labor endowments should experience similar regime pressures at the same time. We propose a novel empirical specification that addresses the endogeneity and data‐quality problems plaguing previous efforts to examine these arguments. We investigate the conditional impact of the global trading system on democratic transitions across 130 years and all of the states in the international system. Our findings cast doubt on the utility of factor‐based models of democratization, despite their importance in fueling renewed interest in the topic.
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