In 1989, Argentina entered a process of sweeping transformations of its economic institutions, which have provided for the recovery of economic growth and the taming of inflation. The Argentine experience with market oriented reforms has been regarded by the literature as a salient case of radical and ‘unconstrained’ reform. Yet, a closer scrutiny of the process and of its outcomes portrays that the building and maintenance of a pro-reform coalition determined the pace, depth and characteristics of the ‘new economic institutions’. The idiosyncrasies of Argentina’s political institutions in turn conditioned this coalition-building strategy. The argument we present in this paper is twofold. on the one hand, we contend that the 1989 economic crisis provided the incentives that led President Carlos Menem to initiate the reforms, and triggered a series of "delegation" patterns conductive to the adoption of a reformist agenda. on the other hand, we assert that the political and institutional process of implementing these reforms has left a heavy imprint on the outcomes. Even in the framework of a favorable partisan composition of the institutional structure, and with high concentration of political power, the coalition that combined economic interest groups with the electoral support of the peronist party set limits to the reforms. These limits were translated in concessions of design and sequencing, as well as in the use of signaling, exchanges and compensations that fostered the adoption and implementation of the agenda. Though many of the features associated with a state-led development model were dismantled, some ‘illiberal enclaves’, such as the heavily regulated labor market, and provincial economies, survived. More so, we contend that it was through its the maintenance that the core of the reforms –privatization, liberalization and convertibility–, were made viable politically. The paper speculates on other issues related to the political economy of reforms. Firstly, the fact that the outcomes of public policy reform should be approached from a more micro-analytic perspective than has been the case in the economic literature. Second, it suggests a "vote buying theory", which might facilitate the analysis of the specific characteristics of economic reform processes in different countries. Third, it propounds that the sustainability of the new economic institutions is subject to institutional reforms of the political governance structure.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Volume (Year): 37 (2000) Issue (Month): 112 () Pages: 495-536 Download reference. The following formats are available: HTML,
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