ECONOMIC POLICIES AND GOVERNMENTAL PERFORMANCE

READING Smith, Democracy, ch. 8 Modern Latin America, chs. 11, 12

OUTLINE 1. Seeking Keys to Development 2. Declining State Capacity 3. Politics of Economic Growth The Arguments The Findings 4. Democracy and Social Welfare: Infant Mortality and School Attendance 5. Poverty and Inequality

IN SEARCH OF SOLUTIONS The Liberal Era (1880s-1920s) Import-Substitution Industrialization (1930s-1970s) The Socialist Alternative (1950s-1980s) Neoliberalism and the Washington Consensus (1980s- present)

HYPOTHESES: THE POLITICAL ECONOMY OF DEVELOPMENT H 1 : The greater the prevalence of democratic rule, the greater the provision of material benefits. H 2 : The greater the prevalence of undemocratic (authoritarian) rule, the greater the provision of material benefits. H 3 : The prevalence of democratic or undemocratic rule bears no systematic relationship to the relative provision of material benefits.

Patterns of GDP Growth,

Table 8-2. Electoral Regimes and GDP Growth, 1960s-2000 | _____________Electoral Regime__________ GDP | Autocracy Semi-Democracy Democracy Growth (%) (%) (%) Low | | Med-Low | Med-High | High | | N | | 734

Table 8-4. Electoral Regimes and Infant Mortality, 1960s-1990s Infant | _____________Electoral Regime______________ Mortality | Autocracy Semi-DemocracyDemocracy (%) (%) (%) High | | Medium-High | Medium-Low | Low | | Total | | N

Table 8-7. Electoral Regimes and Primary School Enrollment, 1980s-1990s Primary | _____________Electoral Regime______________ School | Autocracy Semi-DemocracyDemocracy Enrollment (%) (%) (%) Low | | Medium-Low | Medium-High | High | | Total | | N Note: Columns may not add up to 100 because of rounding.

FOLLOW-UP STUDY Universe=Middle income countries 55 in lower-middle, 41 in upper-middle, N=96 Time frame= Units of analysis=country-years Dependent variables= Annual GDP growth rate (%) Infant Mortality (per 1,000) Primary School Enrollment (%)

REGIONAL DETERMINANTS __Growth__ __Mortality__ __Schooling__ (1,091) (280) (370) East Asia (0, 1) Eastern Europe (0, 1) * * Central Asia (0, 1) * * Middle East (0, 1) Sub-Saharan Africa (0, 1) * * South Asia (0, 0) LatinAmerica & Caribbean (0, 1) Constant: * * * R *Significant at.05 level or better.

REGION AND DEMOCRACY __ __Growth__ __ Mortality__ __ Schooling__ (1,032) (266) (346) Latin American & Caribbean Democracy (0, 1) * * Other Democracy (0, 1) * * Nondemocracy (0, 0) Constant: * * * R *Significant at.01 level or better.

DEMOCRACY WITHIN LATIN AMERICA __Growth__ __Mortality__ __Schooling_ (240) (48) (80) Liberal (0, 1) Illiberal (0, 1) Semi (0, 1) Nondemocracy (0, 0) Constant: * * R *Significant at.05 level or better.

UPDATE: GROWTH RATES

UPDATE: POVERTY LEVELS N __%__ __(millions)__

UPDATE: INEQUALITY = rising  increasing lower-higher skilled gap  uneven effects of international trade  absence of public policies = declining (slightly)  reduced lower-higher skilled gap (due to education)  government programs (including remittances)  unclear impact of global crash  still high by world standards

ANTI-POVERTY PROGRAMS (CCTs) Goals:  Empowerment of poor, improvement of life chances  Increase of human capital  Reduction of poverty and inequality Features:  “conditional cash transfers”  social contract between state and beneficiaries  typical conditions: children’s attendance at school, of health care, nutrition  payments usually made to women (mothers), not men (traditional heads of family)  requirements for oversight (entry, exit, funding)

CASES: MEXICO AND BRAZIL Mexico: “Oportunidades” (1997- )  5 million households  20 % of household consumption  payment to mothers  major impact on school attendance  excellent data collection  0.5% of GDP Brazil: “Bolsa Família” (2003- )  11 million households  $14 USD per child up to 3 children (+ “basic benefit” ≈ $37)  payment through debit card  distribution > human capital formation  20% decline in inequality  0.5% GDP Elsewhere: Argentina, Colombia, Chile, Ecuador, Honduras, Nicaragua, Paraguay, Peru…

Perceptions of Poverty in Latin America, Europe and the United States Percentages (%) who believe that: The poor are poor because: “Society is Unjust” “They are Lazy” “The poor have very little chance to escape from poverty” LAC - Average Mexico Argentina Brazil Chile Peru Venezuela Uruguay Dom. Republic Colombia n.a. n.a Continental Europe United States