Working Papers - 1994 (#202 - #211)

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The Political Underpinnings of Economic Liberalization in Chile

Timothy R. Scully, CSC

Working Paper #211 - July 1994

Abstract

The contemporary consensus over economic policy-making in Chile and the democratic government's capacity to effectively implement these policies are powerfully shaped by a combination of institutional legacies from Chile's democratic past and certain institutional holdovers from the Pinochet regime. This paper reviews briefly the performance of the Chilean economy under the Concertation government headed by Patricio Aylwin. It then argues that Chile's democratic government has been uniquely endowed with a capacity to successfully sustain economic liberalization, in part because of the reappearance of a well-institutionalized party system, in part because of certain nondemocratic limits built into the democratic game during the Pinochet regime. Over the medium term, however, these limits may pose a threat to the consensual style of politics that has come to characterize the post-Pinochet political arena in Chile, and ultimately may threaten democratic political stability if left unaddressed.

Resumen

El consenso actual sobre la política económica de Chile y la capacidad del gobierno democrático para llevar a cabo efectivamente esta política han sido, en gran parte, moldeado por una combinación de legados institucionales del pasado democrático de Chile y de ciertos remanentes institucionales del régimen de Pinochet. El presente trabajo hace una breve reseña del desempeño de la economía chilena bajo el gobierno de Concertación encabezado por Patricio Aylwin. Posteriormente sostiene que el gobierno democrático de Chile ha mostrado una capacidad singular para mantener exitosamente la liberalización económica, en parte debido a la reaparición de un sistema de partidos bien institucionalizado, y en parte debido a ciertos límites no democráticos establecidos dentro del juego democrático durante el régimen de Pinochet. Sin embargo, a mediano plazo, estos límites pueden representar una amenaza al estilo consensual de hacer política que ha llegado a caracterizar a la arena política en Chile posterior a Pinochet , y si no se les atiende, pueden llegar a constituírse en una amenaza para la estabilidad política democrática.


Timothy R. Scully, CSC, is a Fellow of the Kellogg Institute, Associate Professor of Government and International Studies, and director of Latin American Area Studies at the University of Notre Dame. He has recently been elected a vice president and associate provost of the University. His extensive writings on political parties include Rethinking the Center: Cleavages, Critical Junctures, and Party Evolution in Chile (Stanford University Press, 1992) and Los partidos del centro: La evolución política chilena (CIEPLAN, 1992), and he is coauthor and coeditor of a volume with Scott Mainwaring, Building Democratic Institutions: Parties and Party Systems in Latin America (Stanford University Press, 1995).

The author is very grateful to several colleagues and friends for their comments and suggestions for revising this essay, especially David Collier, Abraham F. Lowenthal, Scott Mainwaring, Bill Maloney, Guillermo O'Donnell, and J. Samuel Valenzuela.

This paper is now available in Conversations on Democratization and Economic Reforms, ed. Leslie Eliott Armijo (North South Center, 1996).


Economic Integration in the Asian Pacific: Issues and Prospects

Kwan S. Kim

Working Paper #210 - May 1994

Abstract

This paper examines the scope, broad principles, and characteristics of Pacific Asia's economic relationships and cooperation at the regional level. The author addresses the broad issue of whether Asian efforts for regional cooperation and integration have been compatible with similar arrangements elsewhere or with an open multilateral trading system at the global level. The paper also assesses the changing dynamics of regional integration and its future prospects and explores the possibilities and implications of Asian integration for the United States and the rest of the world.

Resumen

El presente trabajo analiza el alcance, los principios generales y las características de las relaciones económicas y la cooperación a nivel regional en el Asia del Pacífico. El autor aborda el tema de si los esfuerzos asiáticos para la cooperación e integración regionales han sido compatibles con otros arreglos similares o con un sistema multilateral de comercio abierto a nivel global. El trabajo también evalúa la dinámica del cambio de la integración regional así como sus perspectivas futuras y explora las posibilidades y las implicaciones de la integración asiática para los Estados Unidos y el resto del mundo.


Kwan S. Kim is Professor of Economics and Faculty Fellow of the Kellogg Institute at the University of Notre Dame. He is a development economist, occasionally serving as an economic consultant for governments of developing countries and for international agencies. His career includes four years as a Rockefeller Foundation scholar in East Africa, two years as a senior economist with the United States Agency for International Development, recently a year as a visiting professor at Hitotsubashi Institute of Economic Research in Tokyo, and short stints as an economic researcher at such institutions as the Hudson Institute, UNIDO, and the Nacional Financiera in Mexico. He has published extensively in over fifty professional journals in the areas of development studies, international economics, and quantitative analysis. His published books include Papers on the Political Economy of Tanzania (Heinemann), Debt and Development in Latin America (Notre Dame), Industrial Policy and Development in South Korea (Nacional Financiera, Mexico), Development Strategies for the Future of Mexico (ITESO, Mexico), Korean Agricultural Research: The Integration of Research and Extension (USAID), The State, Markets and Development (Edward Elgar, forthcoming), The Acquisition, Adaption and Development of Technologies: Japan's Experience (Macmillan, forthcoming), and Trade and Industrialization (The Netherlands Institute for International Management).

An earlier version of this paper was presented at an American Economic Association session during the American Social Science Association (ASSA) annual meetings in Boston, January 1994. The author acknowledges helpful comments from Professors Robert Lucas and Amitava Dutt.


Guidelines for Industrial Reconversion and Restructuring (With Application to Uruguay)

Hugh Schwartz

Working Paper #209 - April 1994

Abstract

This paper seeks to contribute to a more informed public discussion of the issues involved in industrial reconversion and industrial restructuring in developing countries, and makes special reference to recent efforts along those lines in Uruguay. It lists ten questions that might be raised and, after consideration of them, offers a series of recommendations and a conclusion that maintains that restructuring is a process involving social interaction, and thus that it can benefit by incorporating into the economic analysis elements from other behavioral social sciences. The discussion emphasizes the importance of often overlooked microeconomic policies in achieving reconversion/restructuring, reviews alternative concepts of restructuring, outlines the current debate on the determinants of dynamic competitive advantage and the techniques of gauging international competitiveness, and considers policies beyond trade liberalization to promote increased industrial productivity and industrial competitiveness.

Resumen

El presente trabajo busca contribuir a una discusión pública mejor informada sobre la reconversión y reestructuración industrial en los países en desarrollo, y hace referencia especial a los esfuerzos recientes en Uruguay. Hace una lista de diez preguntas que podrían ser planteadas y, después de considerarlas, ofrece una serie de recomendaciones y una conclusión que sostiene que la reestructuración es un proceso de interacción social y que, por eso, se puede beneficiar incorporando al análisis económico elementos de otras ciencias del comportamiento social. La discusión enfatiza la importancia de las políticas microeconómicas, que muchas veces han sido descuidadas, para alcanzar la reconversión y reestructuración, revisa los conceptos alternativos de reestructuración, esboza el debate actual sobre los determinantes de las ventajas competitivas dinámicas y las técnicas de medición de la competitividad internacional, y toma en cuenta las políticas que, más allá de la liberalización comercial, pueden promover aumentos en la productividad y la competitividad industriales.


Hugh Schwartz, Executive Director of the Center for Behavioral Economic Analysis, was Fulbright Lecturer and Visiting Professor in the Department of Economics, School of Social Sciences, University of the Republic, Montevideo, Uruguay, during 1990-1993. A PhD from Yale, he taught at Kansas, Yale, and Case Western Reserve, and worked as an economist for many years at the Inter-American Development Bank. His publications have dealt with entrepreneurial development, Latin American industrialization, and cost-benefit analysis. In 1991, he edited Supply and Marketing Constraints on Latin American Manufacturing Exports. He has consulted for several international organizations.

An earlier version of this paper appeared as Document 6/92 of the School of Social Sciences of the University of the Republic in Uruguay and was then presented at CERES (Montevideo) and at the annual meeting of Uruguayan economists sponsored by the Central Bank of that country in November 1992. This version is essentially the same as that given at the Kellogg Institute in February 1993.


Entrepreneurial Response to Economic Liberalization and Integration: An Inquiry About Recent Events in Uruguay Aimed at Developing Better Hypotheses About Economic Behavior

Hugh Schwartz

Working Paper #208 - April 1994

Abstract

This study outlines behavioral hypotheses drawn from actual decision-making processes. It is based on in-depth interviews with decision-makers in manufacturing enterprises in a small, relatively conservative and stable Latin American country (Uruguay) and on detailed questionnaires given to members of those firms as well as to economic agents in government, the service sector, and labor unions whose activities may have influenced the enterprises' decision-making. The paper considers the responses to major new incentives that have accompanied an ongoing process of economic liberalization and integration. It offers the tentative conclusion that while serious perception and judgment problems do not characterize all areas, where they are present they are more important than generally recognized and distort decision-making. Some important problems are difficult to ascertain ex post, and there may be serious limits to the ability to verify a number of hypotheses except by direct involvement in the decision-making process.

Resumen

El presente trabajo describe algunas hipótesis de comportamiento que se derivan de los procesos actuales de toma de decisiones. Está basado en entrevistas a fondo con los que toman decisiones en empresas industriales, en un país latinoamericano pequeño, relativamente conservador y estable (Uruguay) y en cuestionarios detallados entregados a miembros de dichas empresas así como a agentes económicos del gobierno, el sector servicios y a sindicatos cuyas actividades pueden haber influído en la toma de decisiones de las empresas. El trabajo toma en cuenta las respuestas a los nuevos incentivos que han acompañado al actual proceso de liberalización e integración económica. Ofrece la conclusión tentativa de que mientras la existencia de problemas serios de percepción y juicio no caracteriza a todas las áreas, allí donde se encuentran presentes adquieren más importancia de la que generalmente se les da y distorsionan la toma de decisiones. Algunos problemas importantes son difíciles de confirmar ex post, y puede haber serias limitaciones a la capacidad de verificar ciertas hipótesis excepto mediante la participación directa en la toma de decisiones.


Hugh Schwartz, Executive Director of the Center for Behavioral Economic Analysis, was Fulbright Lecturer and Visiting Professor in the Department of Economics, School of Social Sciences, University of the Republic, Montevideo, Uruguay, during 1990-1993. A PhD from Yale, he taught at Kansas, Yale, and Case Western Reserve, and worked as an economist for many years at the Inter-American Development Bank. His publications have dealt with entrepreneurial development, Latin American industrialization and cost-benefit analysis. In 1991, he edited Supply and Marketing Constraints on Latin American Manufacturing Exports. He has consulted for several international organizations.

An earlier version of this paper appeared as Document 5/92 of the School of Social Sciences of the University of the Republic in Uruguay and was then presented at the annual meeting of Uruguayan economists sponsored by the Central Bank of that country in November 1992. A revised version was given at the Kellogg Institute in February 1993, and further revisions were incorporated for a presentation to the annual meeting of the Society for the Advancement of Behavioral Economics in Rensselaerville, NY, in August 1993. This version endeavors to respond to a number of editorial suggestions of Everton Conger. Preliminary verification of the hypotheses developed in this paper is being pursued with a grant from the North-South Center of the University of Miami.


Economic Integration in the Western Hemisphere
A Rapporteurs' Report

Caren Addis and Mathew Verghis

Working Paper #207 - April 1994

Abstract

This paper summarizes the discussion at an academic workshop titled "Economic Integration in the Western Hemisphere," held at the Kellogg Institute on 17 and 18 April 1993. Debate centered around an overview paper and papers on the North American Free Trade Agreement (NAFTA), the South American Common Market (Mercosur), the Andean Pact, the Chilean experience, the Central American countries, and the Caribbean group.

Resumen

El presente trabajo hace un resumen de la discusión llevada a cabo en el seminario académico titulado "La integración económica en el hemisferio occidental", que se llevó a cabo en el Instituto Kellogg el 17 y el 18 de abril de 1993. La discusión giró en torno a un trabajo que proporciona una visión de conjunto, así como a otros trabajos sobre el Tratado de Libre Comercio de América del Norte, el Mercado Común Sudamericano (Mercosur), el Pacto Andino, la experiencia chilena y los países de América Central y del Caribe.


Caren Addis is Assistant Professor of Political Science at Rutgers University-Camden. She was a Kellogg Visiting Fellow in spring 1992 and Acting Academic Coordinator for the Institute during the 1992-93 academic year. Mathew Verghis completed his PhD in Economics at the University of Notre Dame and is employed as a consultant at the Eastern Africa Department of the World Bank.


The Politics of Economic Liberalization: Argentina and Brazil in Comparative Perspective

Robert A. Packenham

Working Paper #206 - April 1994

Abstract

The recent trends toward economic liberalization in Latin America provide an unusual opportunity to analyze a number of important questions in the political economy of development and underdevelopment. Why has virtually every Latin American country suddenly reversed the direction of the economic policies that had been in place for a full half-century or more? Why is the pace of such change rapid in some countries and slow in others? What are the already discernible and likely future consequences of such changes for development? What are their implications for theories of development and underdevelopment? What conceptual, theoretical, and methodological tools are available and fruitful for analyzing these topics? This paper examines these questions with particular reference to the difference in the pace of change toward economic liberalization between Argentina under Menem and Brazil under Collor.

Resumen

Las tendencias recientes hacia la liberalización económica en América Latina proporcionan una oportunidad excepcional para analizar un buen número de cuestiones importantes referentes a la economía política de desarrollo y subdesarrollo. ¿Por qué virtualmente cada uno de los países de América Latina ha cambiado repentinamente la dirección de las políticas económicas que habían estado vigentes durante medio siglo o más? ¿Por qué el ritmo de este cambio es rápido en algunos países y lento en otros? ¿Cuáles son sus probables consecuencias futuras, y ya en alguna medida perceptibles, para el desarrollo? ¿Cuáles son sus implicaciones para las teorías del desarrollo y subdesarrollo? ¿Qué instrumentos conceptuales, teóricos y metodológicos, están disponibles y son fructíferos para analizar estos temas? El presente trabajo analiza estas cuestiones haciendo referencia especial a la diferencia en el ritmo del cambio hacia la liberalización económica entre Argentina bajo Menem y Brasil bajo Collor.


Robert Packenham is Professor of Political Science at Stanford University. A slightly different version of this paper was given at the 1992 annual meeting of the American Political Science Association, Chicago, Illinois, 36 September 1992.

Portions of this paper draw on interviews, notes, newspaper reports, and other materials gathered during fieldwork in Argentina and Brazil in August, September, and October 1991. The author wishes to acknowledge the financial support of the Center for Economic Policy Research and the Institute for International Studies, both of Stanford University, for travel, maintenance, and other research expenses during that period.


Religious Change and Women's Status in Latin America: A Comparison of Catholic Base Communities and Pentecostal Churches

Carol Ann Drogus

Working Paper #205 - March 1994

Abstract

The last 20 years have seen the emergence in Latin America of two religious trends that challenge the traditional Catholic culture. These are the Catholic comunidades eclesiales de base (base communities or CEBs) and Protestant pentecostal religious groups. The author examines the ways in which women's experiences in CEBs and pentecostal groups may change their gender attitudes and roles and describes the new forms of symbolic and participatory opportunities for women within each group. Do women respond to these opportunities by demanding greater access to traditionally male roles in the religious and public spheres? On the other hand, do women tend to gain greater stature and authority in their more traditional roles within the family as a result of their participation in religious groups? The author finds that while both CEB and pentecostal women reconceptualize gender roles, the two religious settings produce different outcomes. Due to the heterogeneity of available sources and methods, the analysis offers necessarily tentative conclusions. It does yield interesting and suggestive contrasts between the two religious groups, however, which can inform both theory and future empirical research.

This paper appears in Edward Cleary and Hannah Stewart Gambino, eds., Power, Politics and Pentecostals in Latin America, (Westview Press, 1997)

Resumen

En los últimos veinte años han surgido en Latinoamérica dos corrientes religiosas que ponen a prueba la cultura católica tradicional. Estas son las comunidades eclesiales de base católicas (CEB) y los grupos religiosos pentecostales protestantes. El autor analiza la manera en que las experiencias de las mujeres en las CEB y en los grupos pentecostales pueden cambiar las actitudes y los roles de su propio género y describe las nuevas formas de oportunidades simbólicas y participativas que tienen las mujeres dentro de cada grupo. ¿Acaso las mujeres responden a estas oportunidades solicitando un mayor acceso a roles tradicionalmente masculinos en las esferas religiosa y pública? Por otro lado, ¿Acaso las mujeres tienden a adquirir mayor importancia y autoridad en sus roles más tradicionales dentro de la familia como resultado de su participación en grupos religiosos? El autor encuentra que mientras ambos grupos de mujeres, los de las CEB y los pentecostales, reconsideran los roles de su propio género, los dos escenarios religiosos producen diferentes resultados. Debido a la heterogeneidad de las fuentes y métodos disponibles, el análisis necesariamente ofrece conclusiones tentativas. Sin embargo, proporciona contrastes interesantes y sugerentes entre los dos grupos religiosos que pueden ser útiles para la investigación teórica y empírica futura.


Carol Ann Drogus is Assistant Professor of Government at Hamilton College, Clinton, NY. Her articles on religion and politics in Brazil have appeared in several journals and books, including Archives de Sciences Sociales des Religions (no. 71, 1990) and Conflict and Competition: The Latin American Church in a Changing Environment, Edward Cleary and Hannah Stewart-Gambino, eds. (Boulder: Lynne Rienner, 1992). She was a Fellow at the Kellogg Institute in 1992-93. Support from the Kellogg Institute made the research on pentecostalism and the writing of this paper possible. A revised version of this paper appeared in Edward Cleary and Hannah Stewart-Gambino, eds., Power, Politics, and Pentecostals in Latin America, Westview Press, 1997. She completed a book: Women, Religion, and Social Change in Brazil's Popular Church (University of ND Press 1997).


Asian Economic Success and Latin American Failure in the 1980s: New Analysis and Future Policy Implications

Ajit Singh

Working Paper #204 - March 1994

Abstract

A striking feature of the world economy during the last decade has been the collapse of economic growth in Latin America whilst industrialization and development have proceeded apace in the Asian countries. This paper first assesses alternative explanations of the Asian economic success and the Latin American failure during the 1980s. Secondly, it examines the related question of the long-term development strategies followed by the outstandingly successful East Asian economies. The paper arrives at rather different analyses and policy conclusions on these issues from those of the international financial institutions and the mainstream economists.

Resumen

Un rasgo notable de la economía mundial durante la última década ha sido el colapso del crecimiento económico en Latinoamérica, mientras que la industrialización y el desarrollo han avanzado rápidamente en los países asiáticos. Este trabajo evalúa, en primer lugar, las explicaciones alternativas del éxito asiático en materia económica y del fracaso latinoamericano durante la década de los ochenta. En segundo lugar, analiza el tema, vinculado al anterior, de las estrategias de desarrollo a largo plazo seguidas por las notablemente exitosas economías del Asia oriental. El análisis y las conclusiones de política económica que, sobre estos temas, desarrolla el trabajo, resultan distintos de aquéllos presentados por las instituciones financieras internacionales y los economistas ortodoxos.


Ajit Singh, an Indian economist who graduated from Punjab University and obtained his Ph.D. at the University of California, Berkeley, is Fellow and Director of Studies in Economics at Queens' College, University of Cambridge. He is a Visiting Departmental Fellow of the Kellogg Institute and holds the Dr. William M. Scholl Visiting Chair in the Department of Economics at Notre Dame. He has been a senior economic advisor to the governments of Mexico and Tanzania and a consultant to the ILO, FAO, UNCTAD, and UNIDO. He is the author of Takeovers: Their Relevance to the Stockmarket and the Theory of the Firm and coauthor of Growth, Profitability and Valuation, both published by Cambridge University Press. His research has been concerned with North-South interactions and problems of the long-term growth of the world economy.


Renovation in the Revolution? Dictatorship, Democracy, and Political Change in the Chilean Left

Kenneth M. Roberts

Working Paper #203 - March 1994

Abstract

This paper provides an analysis of political learning and change in the Chilean Socialist and Communist parties since the overthrow of Salvador Allende in 1973. It argues that 'prodemocratic' patterns of political learning identified by other researchers are not an inevitable outcome of authoritarian experiences. Instead, they are contingent upon the interaction of several organizational and strategic factors. A 'most similar systems' comparison suggests that the flexible organizational structure and relative autonomy of the Socialist Party facilitated ideological and strategic 'renovation' under authoritarian rule, whereas the organizational rigidity and dependence of the Communist Party combined with its environmental constraints to produce a process of radicalization. These divergent patterns of change caused the two parties to reverse their respective positions within the Chilean party system, with important implications for Chile's democratic transition.

Resumen

Ell presente trabajo analiza el proceso de cambio y aprendizaje políticos ocurrido desde la caída de Salvador Allende en 1973 en los partidos socialista y comunista chilenos. Sostiene que los patrones 'prodemocráticos' de aprendizaje político identificados por otros investigadores no son un resultado inevitable de las experiencias autoritarias, sino que dependen de la interacción de diversos factores organizativos y estratégicos. Una comparación en términos de 'los sistemas más similares' sugiere que la autonomía relativa del partido socialista y la flexibilidad de su estructura organizativa facilitaron la 'renovación' ideológica y estratégica bajo el régimen autoritario, mientras que la rigidez organizativa y la dependencia del partido comunista se combinaron con las restricciones de su entorno para producir un proceso de radicalización. Esta divergencia en los patrones de cambio hizo que los dos partidos cambiaran su posición relativa dentro del sistema de partidos en Chile, lo que tiene implicaciones importantes para la transición democrática chilena.


Kenneth M. Roberts is an Assistant Professor of Political Science at the University of New Mexico and a former Visiting Fellow at the Kellogg Institute. His research focuses on the dynamics of political and economic democratization in Latin America.

The author would like to thank FLACSO-Chile and the Kellogg Institute for International Studies for the generous support they provided for this research. He is also grateful to Karen L. Remmer, Richard Fagen, Terry Lynn Karl, Philippe C. Schmitter, and two anonymous reviewers from the Kellogg Institute for helpful comments on earlier drafts of this work.


Capitalists and Revolution

Rose J. Spalding

Working Paper #202 - March 1994

Abstract

This paper explores the relationship between the state and the economic elite during four cases of structural reform. Analyzing state-capital relations in Chile under the Allende government, El Salvador following the 1979 reforms, Mexico during the Cárdenas era, and Peru under the Velasco regime, the author finds substantial variation in the ways in which the business elite responded to state-led reform efforts. In the first two cases, the bourgeoisie tended to unite in opposition to the regime; in the second two, it was relatively fragmented and notable sectors sought an accommodation with the regime. To explain this variation, the paper focuses on the role of five factors: the degree to which class hegemony is exercised by a traditional oligarchy; the level of organizational autonomy attained by business elites; the perception of a class-based threat; the degree to which the regime consolidates politically; and the viability of the economic model introduced by the reform regime.

Paper now appears as a chapter in Capitalists and Revolution in Nicaragua: Opposition and Accomodation 1979-1993 (Chapel Hill: University of North Carolina Press, 1994).

Resumen

El presente trabajo examina la relación existente entre el Estado y la élite económica en cuatro casos de reforma estructural. Al analizar las relaciones existentes entre el Estado y el capital en Chile bajo el régimen de Allende, en El Salvador después de las reformas de 1979, en México durante la época de Cárdenas y en Perú bajo el régimen de Velasco, el autor encuentra una variación substancial en la manera en que la élite empresarial respondió a los esfuerzos reformistas conducidos por el Estado. En los dos primeros casos, la burguesía tendió a unirse contra el régimen; en los dos últimos, se encontró relativamente fragmentada y una buena parte de los sectores buscó un arreglo con el régimen. Para explicar estas variaciones, este trabajo destaca cinco factores: el grado en que la hegemonía de clase es ejercida por una oligarquía tradicional; el nivel de organización autónoma alcanzado por las élites empresariales; la percepción de una amenaza de clase; el grado en el que el régimen se consolida políticamente; y la viabilidad del modelo económico introducido por el régimen reformista.


Rose J. Spalding, Residential Fellow at the Institute during the fall semester 1991, is Associate Professor of Political Science at DePaul University. Her publications include The Political Economy of Revolutionary Nicaragua (Boston: Allen and Unwin, 1987) and Capitalists and Revolution in Nicaragua: Opposition and Accommodation, 1979-1993 (Chapel Hill, NC: University of North Carolina Press, published in 1994). Research for this paper was conducted with support from the College of Liberal Arts and Sciences and University Research Council of DePaul University, the Social Science Research Council and American Council of Learned Societies, and the Heinz Endowment. This paper can also be found in her book, Capitalists and Revolution in Nicaragua: Opposition and Accomodation 1979-1933. (Chapel Hill, University of North Carolina Press, 1994).