Latin America

How State Capacity Determines Policy Success

Bibliographic Data

ID6265151
AuthorsMariano Tommasi (University of San Andrés, corresponding author)
Year2011
Volume24
Issue2
Pages199-203
Publication date2011-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueGovernance (JOURNAL)
Journal identifiersISSN: 0952-1895 • E-ISSN: 1468-0491
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.1468-0491.2011.01528.x
OpenAlexW1511397872
LanguageEN
Citations received8

Most countries in Latin America tend to chart similar courses through the different fashions of advice coming from development agencies and the varieties of political winds that blow across the region. In recent decades, we have seen pendulum swings from inward-looking developmental statism to neoliberal market-oriented reforms. Then, when the neoliberal reforms did not deliver what they had promised, the pendulum in many countries has recently swung back, as many Latin American countries have embraced varied forms of state intervention and distrust of markets. Yet, despite the similarities, there are important differences in the effects of these processes on the functioning of the State and the long-term prospects for the economy. Argentina and Chile offer a stark contrast to illustrate my assertion that getting the policymaking process right is a crucial ingredient for success. One of the things that has been learned from evaluating the impact of various policy reform waves in the region is that what matters is not so much what you do, but how you do it. It is not so relevant whether you have a "public" or a "private" pension system, for example. What matters is whether most citizens, especially the poor, are covered in their old age, whether the system is financially viable in the long term, and whether the State can commit not to expropriate the promises to the pensioners implicit in the system. As the experience of Argentina shows, you can fail to achieve any of these objectives under any self-proclaimed system if you lack some basic state capabilities, such as the capacity to enforce policies or to deliver on promises. In Argentina, these capabilities were lacking in an earlier period when the pension system was public. They were missing again throughout the privatization of the 1990s, and are still lacking today, after the recent renationalization. Relevant economic and social outcomes depend not so much on the titles of policies (whether the pension system is "public pay as you go" or "private defined contribution") but on a number of characteristics of the actual implementation of those policies, such as their stability, their capacity to adjust to changing circumstances, and their enforcement. Pensions are but one example. State capacities are equally important to other policy areas such as regulation, international relations, education, and any policy that requires consistent efforts over time. Countries able to generate policies with such attributes reap the benefits of specific initiatives more than others. If the policies adopted do not have such attributes—no matter how good they look on paper—they are unlikely to achieve good development outcomes. Building on the pioneer work of Weaver and Rockman on state capabilities, with colleagues at the Inter-American Development Bank, we have developed indicators of the policymaking capabilities of various countries in Latin America and beyond. We have verified that the effects of policies are conditional on the existence of those capabilities. Then, the relevant question becomes, "what determines the ability of different polities to produce effective public policies?" Discovering how policies influence behavior and hence aggregate outcomes, exploring the conditions under which some reforms are most likely to give good results, and identifying effective ways to improve development outcomes require an understanding of the processes within which countries instrument policies, that is, their policymaking processes. It is essential that the policy process and the political process more broadly facilitate the agreement, design, and implementation of effective long-term policies. In these recently democratized countries, lengthening the horizons of social and political actors is crucial for the achievement of sustained improvements over time. We have identified a number of aspects of the workings of political institutions that are conducive to effective policymaking. Among those aspects, most salient are political parties that are institutionalized, programmatic, and have a national as opposed to regional (subnational) orientation; a legislature with strong policymaking capabilities; an independent judiciary; and a well-developed civil service system that attracts individuals with high human capital to the public sector. A further question, then, is what makes some countries develop programmatic as opposed to clientelistic party systems, to develop parliaments with strong capabilities to discuss and oversee policy, and to develop independent judiciaries and capable public sectors? It turns out that there is no single answer, no institutional magical bullet, and no particular constitutional/electoral configuration leading to these desirable outcomes. What seems to matter, we have found, is that complementary institutional features can produce positive synergies. Countries with stronger congresses tend to be countries with more independent judiciaries and with more developed civil service systems. That is not surprising if one thinks of these properties of institutions as the reflection of the equilibrium behavior of a number of relevant political actors over time. Strong congresses and independent judiciaries are not built overnight but are the outcome of processes of investing in the quality and credibility of such institutions, and these processes are interrelated and can lead to virtuous or vicious dynamics. Executives do not tinker with the composition of the Supreme Court and hence allow it to build strength and independence, if other societal and institutional actors are willing and able to impose costs on the executive for doing so. A strong and independent judiciary, in turn, acts as a guarantee of the protection of institutional rights of arenas such as congress and of the rights of individuals and groups. This, in turn, provides incentives for political and social actors to invest in these institutions, thereby strengthening them. The actions of citizens and pressure groups tend to reinforce the strength or weakness of these institutional actors and arenas. When congress and the political party system are effective conduits of preference aggregation and political bargaining, various relevant actors place their bets (investments) in those institutions, most citizens believe that those are the spaces where relevant decisions are made, and this whole logic reinforces and become self-fulfilling. On the contrary, if such institutional arenas are not taken seriously and everybody knows that the way of getting something out of the political system is to blockade a road or to bribe the president, those investments in the institutionalization of congress and/or parties are not undertaken and the weakness of formal institutions is reinforced. Polities might be stuck with higher or lower levels of institutionalization. Contrary to what seems to be conventional wisdom in studies of executive–legislative relations, interactions between the two institutions are not zero-sum games. Executive authority and the capacity to implement effective public policies need not rely on rubber-stamping congresses or puppet judiciaries. Hyperpresidentialism, the term used to describe the concentration of executive power in many Latin American countries, is not the inevitable consequence of the need to carry out public policy and avoid policy stagnation. Rather, hyperpresidentialism is an equilibrium political practice that occurs in some polities where political leaders operate with short-term horizons and not in others where political dynamics have led to stronger checks and balances. Chile is a case in point. Chile is one of the countries where the constitutional powers of the executive are the greatest, yet it is also the country with the most capable congress of the region and with one of the most independent judiciaries (with Uruguay and Costa Rica). Because of these institutional characteristics, Chile has consistently advanced in the direction of a well-regulated market economy, with each successive administration building on the achievements of the previous one and improving on the missing margins (pragmatism with a progressive bias, as it has been called). A great contrast is provided by the neighbor across the Andes. Argentina, historically a country of relatively high human capital and high levels of human development, has a very dysfunctional way of making public policies, and this mismanagement is taking its toll on its economic and social development. Argentine political leaders of the day tend to devise fairly myopic strategies, maximizing their short-term political power and the short-term benefits to some constituencies, often sacrificing long-term benefits, weakening institutions, and generating long-lasting legacies of mismanagement. Argentina has been characterized as one of the countries with the greatest policy volatility in the world. The case of pensions is just one example of this pendular back and forth between privatization and nationalization, which results in very little accumulation of institutional capacity or long-term perspective. This happens in the context of a clientelistic political system, where backward provinces with a history of feudal domination, overrepresented in the national congress, provide the best springboard for a shot at the presidency. The national legislature is a weak arena for policy construction, and it is the place where the most successful postdemocratization presidents have been able to implement widely contrasting policy reforms (such as privatizing and then renationalizing various public services) by the simple expedient of distributing fiscal largesse to the overrepresented provinces. These same presidents have tinkered with the composition of the judiciary, disinvested in the human capital of the public sector, and attempted to tinker with national statistics and with the media. Two centuries after independence we encounter Argentina and Chile immersed in quite different trajectories. Argentina's trajectory is defined by dramatic policy swings and by great uncertainty about the future, brought about by weak institutions and short-sighted leaders. Chile, by contrast, is on a positive trajectory of growth and development, facilitated by strong policy institutions that keep political leaders focused on long-term objectives. Certainly Chile has many important pending issues, including improving the inclusiveness of its political, social, and economic systems. This refers to another crucial challenge that all the countries in the region face: How to increase political inclusion while developing government effectiveness and long-term sustainability? Different countries are in different trajectories with respect to that question, but I am inclined to believe that Chile is on better grounding to keep progressing on both fronts than countries that have advanced more rapidly in some forms of social and political inclusion while weakening republican institutions and jeopardizing long-term economic prospects

Commit · Distrust · Economics · Intervention (counseling · Latin Americans · Political economy · Political science · Politics · State (computer science · Economic Theory and Policy · Law

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