Between political legitimacy and economic-financial credibility: democratization and economic transformation in emerging market democracies

• Grant number: 05/59969-4
• Support Opportunities: Research Projects - Thematic Grants
• Field of knowledge: Humanities - Political Science
• Principal Investigator: Lourdes Sola
• Grantee: Lourdes Sola
• Host Institution: Pró-Reitoria de Pesquisa (PRO-PESQ). Universidade de São Paulo (USP). São Paulo , SP, Brazil
• Pesquisadores principais: Maria Rita Garcia Loureiro ; Matthew Macleod Taylor ; Sonia Miriam Draibe

Abstract

This central goal of this project is to study the decision-making processes that lie behind public policy-making in a broad family of countries which we define as "emerging market democracies." This family includes Brazil, Argentina, and Chile, three countries which will be the focus of our empirical research. The importance of this project in comparative perspective lies in its emphasis on the processes of decision-making and public policy formulation in the varied political and institutional contexts of these three nations, and in their differing responses to global processes of economic integration. This project is spurred by the need to revisit the theoretical model which sparked and guided the political, economic and institutional transformations of the 1980s and 1990s - a model branded the "Washington Consensus." Review of this model is required, given the multiple experiments already undertaken in economic liberalization and state reform, and their interaction with processes of democratization across a broad range of societies; the growing field of knowledge accumulated by academics and government elites in the past 15 years about these processes of change; and the innumerable "reality checks" and "stress tests" to which the recommendations of international financial institutions such as the IMF, the World Bank and the Bank for International Settlements have been submitted. Under volatile economic and political conditions, we argue, the efficacy and sustainability of public policies depends not only on their substantive technical merits, but also on the ability of reformers and other policymakers to construct a broadly agreed-upon strategy for change. This project will analyze these three countries' experiences in the elaboration and implementation of four important state reforms: fiscal reform, reforms to the financial order, judicial reform, and social security reform. The project will focus on the structural and contingent factors that conditioned implementation of these reforms, and that influenced the responses of policymakers and political elites to the demands created by the interaction between two separate constituencies. These two constituencies' preferences and behavior were grounded in distinct economic and political rationales which have been essential to setting the public policy agenda and to the process of reform implementation under democratization: 1) market agents, usually driven by criteria of economic-financial credibility, whose firepower has been clearly visible during crises of solvency and economic stabilization; and 2) a domestic constituency, made up of the various social sectors that together make up the electorate, whose preferences and performance objectives give priority to another economic and political rationale - the criteria of democratic legitimacy. (AU)