“We Have a Consensus”: Explaining Political Support for Market Reforms in Latin America

Abstract

By the 1990s, to the astonishment of many ob0servers, most Latin American countries had reformed their systems of national economic governance along market lines. Many analysts of this shift have assumed that it circumvented normal political processes, presuming that such reforms could not be popular. Explanations emphasizing economic crisis, external assistance, and politically insulated executives illustrate this approach. Through a qualitative investigation of the reform process in the region's four most industrialized countries, Argentina, Brazil, Chile, and Mexico, this study argues, to the contrary, that reforming governments found or created both elite and mass political support for their policies.

The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977–1999

“…Indeed, this burden was so large in some countries that it precipitated a full-blown macroeconomic crisis, which in turn led to the adoption of market-oriented reform. Empirical support for the positive effect of economic crises on the adoption of market-oriented reform can be found in sociological studies of the adoption of neo-liberal reform generally (Armijo and Faucher 2002;Remmer 1998). …”

Managing the Faustian Bargain: Monetary Autonomy in the Pursuit of Development in Eastern Europe and Latin America

“…The Washington Consensus and similar reforms can be seen as a cover for the tough decisions that seemed impossible through strictly domestic deliberations. Although some portray economic liberalization as a choice that was an imposition for foreigners' will on developing countries, closer examinations suggest that domestic constituencies have also favored such reforms (e.g., Armijo and Faucher 2002).…”

Exploring the Schelling conjecture in reverse

“…Since most public policy issues are multidimensional and can be judged along several criteria, leaders may seek to bury the most controversial aspects of international agreements (Hug and Konig, 2002;Koch, 1998) while simultaneously demonstrating how abstract (or controversial) policies will have a positive impact on people's daily lives (Powlick and Katz, 1998). Elites might also reframe external demands as 'organic,' domestic agendas, selling radical changes as necessary to avoid impending disaster, and in the process turning themselves into fearless saviors (Armijo and Faucher, 2002;Weyland, 1999). By putting a nationalist spin on the reform agenda, for example, Latin American leaders were able to increase costs for potential opponents (Mares, 1993).…”

“…While domestic transfers can raise the domestic costs of reaching an agreement, international actors also serve as the source of such transfers, which might be intangible (for example, membership in security pacts) or tangible (for example, international loans or aid) (Kelley, 2004). For example, states through the World Bank and IMF frequently use multilateral aid packages to convince elites to implement socially painful structural reforms packages that seem all but certain to produce political instability (Armijo and Faucher, 2002;Biglaiser and Brow, 2005;Haggard, 1985). Perhaps thanks in part to such aid, unpopular policies were adopted -frequently with success (Weyland, 1999).…”