The Politics of Market Discipline in Latin America

Abstract

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.

Structural power in comparative political economy: perspectives from policy formulation in Latin America

“…E.g Hirschman (1970)Maxfield (1990);Mahon (1996);Thacker (2000);Kaufman and Segura- Ubiergo (2001);Kaplan (2013);Campello (2015).…”

Investment Treaty Arbitration in Latin America

“…State involvement in investment treaty arbitration is also expected to vary with foreign exchange constraints, which make politicians particularly sensitive to the risks of losing access to foreign loans, trade, and investment, especially in countries with limited access to international capital markets. This expectation follows literature on Latin America showing that reducing foreign exchange constraints creates opportunities for the adoption of statist and leftist-populist policies, whereas the tightening of such constraints increases pressures for the adoption of more market-oriented economic policies (Kaufman 2011;Remmer 2012;Wibbels 2006;Campello 2012Campello , 2015): H 3 : The more positive the balance of payments, the greater is the likelihood that governments will become involved in ISDS.…”

“…Translating these coefficients into incident rates, the dispute incident rate for centrist leaders is more than five times that of leftist leaders, whereas that for rightist leaders is 2.3 times that of the leftist reference group. These findings reflect the pro-business orientation of rightist governments, but they also speak directly to the relevance of "games of confidence" that place leftist governments in countries dependent on international capital inflows under strong pressure to adopt policies that to cater to the preferences of fund managers, bond-rating agencies, and foreign investors (Martínez and Santiso 2003;Campello 2015). These pressures are felt across the full range of Polity scores, making the predicted number of disputes five times higher for centrist than for leftist governments even at a Polity rating of 20.…”

Soberania, desenvolvimento e sociedade

“…O caso paradigmático aqui foi o da Argentina. O peronista Carlos Menem, eleito em 1989 com um programa nacionalista e distributivista, adotou nos anos seguintes um radical programa de estabilização, assentado na conversibilidade total do peso a uma cotação fixa com o dólar e em massiva privatização (Campello, 2015).…”