Motivation
• Economists, IFIs emphasize policy recipes to achieve
development goals.
• This led to adoption of “Washington Consensus” reforms.
• Outcome somewhat disappointing.
• IPES: Potential of policy recipes depends on the quality of the
policymaking process through which policies are discussed,
approved, and implemented.
• Improvement and better understanding of policymaking
processes key in order to improve the quality of public
policies.
Beyond technocratic approach to policymaking
• In technocratic approach, public policies are objects of choice.
Policymakers just need to adopt those that lead to best outcomes.
• Actual policymaking involves a multiplicity of political actors
interacting in a variety of arenas.
• Policies are outcome of inter-temporal transactions among them.
• IPES: less emphasis on content of policies, more on process of
policymaking (PMP), and some resulting policy features.
• These processes differ across countries, can be traced back to
each country’s political institutions.
• While institutions are also endogenous, depend on culture and
historical legacies, in IPES we treat them mostly as exogenous.
– Focus on impact of existing institutions on policy outcomes, not on
the dynamics of institutional change.
Political institutions and policy outcomes
• So how do political institutions affect policy outcomes?
• Literature tends to focus on single institutional dimensions as
determinants of some policy outcome.
• PMPs do not depend on single-factor explanations but rather on
a multiplicity of factors, and their interaction.
• We adopt systemic approach, more appropriate to:
– understand why policy reforms that work under certain institutional
environments may not work under others
– think about the reform of political institutions.
• Approach requires deep knowledge of institutional details of
the countries under study.
Country focus
• Phase I of research agenda focused on detailed country studies,
produced by local teams of economists and political scientists.
• Argentina, Brazil, Chile, Colombia, Ecuador, Mexico,
Paraguay, Peru, Uruguay and Venezuela.
• We have added Costa Rica, Guatemala and Jamaica.
• Country studies are key input for the report.
Key features of public policies
• The focus of the approach is in explaining certain
common features of public policies:
–
–
–
–
–
–
Stability.
Adaptability.
Coordination and coherence.
Quality of implementation and enforcement.
Public regardedness.
Efficiency.
Measuring key features of policies
• Two main sources of data
• International comparative indicators from the Global
Competitiveness Report (GCR).
• Our own State Capabilities Survey, responded by more than
150 experts in 18 countries in Latin America.
• Time frame: last two decades (or since return of democracy).
• Thus, our indices do not reflect quality of policymaking under
current administrations, but during this longer period.
Example: Measuring policy stability
• Volatility of Fraser index of Economic Freedom.
• GCR question regarding cost of legal and political changes for
firm’s planning capacity.
• GCR question on the extent to which new governments honor
contractual commitments and obligations of previous regimes.
• SC Survey question on capacity of the State to set and
maintain policy priorities among conflicting objectives.
• SC Survey question on extent to which governments ensure
policy stability so that policies have time to work.
• SC Survey question on extent to which the State makes and
maintains international commitments.
Example: Measuring policy stability
• Volatility of Fraser index of Economic Freedom.
• GCR question regarding cost of legal and political changes for
firm’s planning capacity.
• GCR question on the extent to which new governments honor
contractual commitments and obligations of previous regimes.
• SC Survey question on capacity of the State to set and
maintain policy priorities among conflicting objectives.
• SC Survey question on extent to which governments ensure
policy stability so that policies have time to work.
• SC Survey question on extent to which the State makes and
maintains international commitments.
Policy Stability index
Chile
Uruguay
Costa Rica
Brazil
Colombia
Mexico
El Salvador
Honduras
Panama
Peru
Dominican Rep.
Paraguay
Bolivia
Nicaragua
Guatemala
Ecuador
Argentina
Venezuela
1
2
Stability Index (1-4 scale)
Source: Authors’ compilations.
3
4
Policy Stability index
Chile
Uruguay
Costa Rica
Brazil
High
Colombia
Mexico
El Salvador
Honduras
Panama
Peru
Dominican Rep.
Paraguay
Medium
Bolivia
Nicaragua
Guatemala
Ecuador
Low
Argentina
Venezuela
1
2
Stability Index (1-4 scale)
Source: Authors’ compilations.
3
4
Key features of public policy since 1980s
Country
Stab
Adapt
Impl/Enf
Coord /
Coherence
Public Reg
Effic
Policy
Index
Argentina
L
M
L
L
M
L
L
Bolivia
M
H
M
M
M
M
M
Brazil
H
H
H
H
M
M
H
Chile
H
H
H
H
H
H
VH
Colombia
H
H
H
M
M
M
H
Costa Rica
H
M
H
M
H
H
H
Dominican Rep
M
M
M
M
L
M
M
Ecuador
L
M
L
L
L
L
L
El Salvador
H
H
H
M
M
H
H
Guatemala
M
M
L
M
L
M
L
Honduras
H
M
M
M
L
M
M
Mexico
H
M
H
M
M
H
H
Nicaragua
M
M
M
L
L
M
L
Panama
M
L
M
L
L
L
L
Paraguay
M
L
L
L
L
L
L
Peru
M
M
M
M
M
M
M
Uruguay
H
H
H
M
M
M
H
Venezuela
L
L
M
L
M
L
L
Key features of public policy since 1980s
Country
Stab
Adapt
Impl/Enf
Coord /
Coherence
Public Reg
Effic
Policy
Index
Argentina
L
M
L
L
M
L
L
Bolivia
M
H
M
M
M
M
M
Brazil
H
H
H
H
M
M
H
Chile
H
H
H
H
H
H
VH
Colombia
H
H
H
M
M
M
H
Costa Rica
H
M
H
M
H
H
H
Dominican Rep
M
M
M
M
L
M
M
Ecuador
L
M
L
L
L
L
L
El Salvador
H
H
H
M
M
H
H
Guatemala
M
M
L
M
L
M
L
Honduras
H
M
M
M
L
M
M
Mexico
H
M
H
M
M
H
H
Nicaragua
M
M
M
L
L
M
L
Panama
M
L
M
L
L
L
L
Paraguay
M
L
L
L
L
L
L
Peru
M
M
M
M
M
M
M
Uruguay
H
H
H
M
M
M
H
Venezuela
L
L
M
L
M
L
L
Key features of public policy since 1980s
Country
Stab
Adapt
Impl/Enf
Coord /
Coherence
Public Reg
Effic
Policy
Index
Argentina
L
M
L
L
M
L
L
Bolivia
M
H
M
M
M
M
M
Brazil
H
H
H
H
M
M
H
Chile
H
H
H
H
H
H
VH
Colombia
H
H
H
M
M
M
H
Costa Rica
H
M
H
M
H
H
H
Dominican Rep
M
M
M
M
L
M
M
Ecuador
L
M
L
L
L
L
L
El Salvador
H
H
H
M
M
H
H
Guatemala
M
M
L
M
L
M
L
Honduras
H
M
M
M
L
M
M
Mexico
H
M
H
M
M
H
H
Nicaragua
M
M
M
L
L
M
L
Panama
M
L
M
L
L
L
L
Paraguay
M
L
L
L
L
L
L
Peru
M
M
M
M
M
M
M
Uruguay
H
H
H
M
M
M
H
Venezuela
L
L
M
L
M
L
L
Why focus on key features of policies?
• More naturally linked to the institutional environment than the
content of policies themselves.
• More closely related to political institutions than outcome
variables such as economic growth.
• Reassuringly, features of public policy and the overall policy
index correlate well with growth and other welfare indicators.
The Policymaking Process (PMP)
• Within our approach, the PMP takes center stage. Characterizing
PMP in each country:
– Which are the key actors that participate in it?
– What powers and roles do these actors have?
– What preferences, incentives and capabilities do they bring to the
table?
– What are the characteristics of the arenas in which they interact?
– How frequent are these interactions?
– What is the nature of the transactions they engage in?
Actors and arenas in policymaking
• Background papers study role of various actors and institutions in
Latin America’s PMPs.
–
–
–
–
–
–
–
Political parties and party systems.
The legislature (and the legislators).
The president and his cabinet.
The bureaucracy and the judiciary.
Sub-national actors.
Business organizations, unions, social movements.
Articulation of technical expertise into the PMP.
• Studies discuss formal and actual roles, interaction with other
actors, incentives, policymaking capabilities.
• “Democracies in Development” project also key input for this part
of the IPES.
Policy
Political
 PMP 
Outcomes
Institutions
PMP  Policy outcomes
• Key insight: features of public policies (such as stability,
adaptability, etc) depend crucially on the ability of political
actors to strike and enforce inter-temporal deals, and thus
achieve cooperative outcomes.
• Cooperation, in turn, depends on factors such as:
– Number of actors with substantial impact on policy.
– Temporal horizon (or discount rate) of actors.
– Existence of well functioning arenas for political exchange (eg:
institutionalized parties, a well-functioning legislature).
– Credible enforcement technologies (eg, independent judiciary).
Political Institutions  PMP
• In turn, key aspects of the PMP are determined by the nature of
the political institutions such as constitutional rules, electoral
rules, etc, which determine (among others).
–
–
–
–
The number of actors and their roles
Their incentives
The rules of engagement among them
The nature of the arenas in which they interact
Different looks at policymaking
• IPES looks at links between political institutions, policymaking
processes and policy outcomes from different angles.
• Cross-sectional analysis (chapter 6)
• Policymaking in action in specific countries (chapter 7)
– Chile: Policymaking in an institutionalized setting
– Colombia: the 1991 Constitution and the policymaking process
– Brazil and Ecuador: Policymaking in fragmented party systems
• Policymaking in specific sectors (chapters 8 – 11)
–
–
–
–
Tax policy
Public services
Education
Decentralization, budget processes, and feedback effects
Different looks at policymaking
• IPES looks at links between political institutions, policymaking
processes and policy outcomes from different angles.
• Cross-sectional analysis (chapter 6)
• Policymaking in action in specific countries (chapter 7)
– Chile: Policymaking in an institutionalized setting
– Colombia: the 1991 Constitution and the policymaking process
– Brazil and Ecuador: Policymaking in fragmented party systems
• Policymaking in specific sectors (chapters 8 – 11)
–
–
–
–
Tax policy
Public services
Education
Decentralization, budget processes, and feedback effects
Cross-Sectional Analysis
Some results
Some results from cross-section analysis
• High-quality policies are associated with:
–
–
–
–
Congress with good policy capabilities
Political parties that are institutionalized and programmatic
Strong bureaucracies
Independent judiciaries
• Impact of other institutional variables, such as presidential
powers, or degree of proportionality of electoral systems,
depends on interactions with other institutional dimensions.
Congressional capabilities
• National legislature is natural arena for discussion, negotiation
and enforcement of political agreements.
• Legislators with strong capabilities and legislatures with
adequate organizational structures may promote better quality
policies (more stable, adaptable, etc).
• We build an index of congressional capabilities, which includes:
–
–
–
–
–
Different measures of public perception of Congress
Education of legislators
Years of legislative experience
Specialization in Committees
A few more subjective variables
Congressional Capabilities and the Quality of Policies
4.0
Policy Index (1-4 scale)
3.5
3.0
2.5
2.0
1.5
1.0
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
Congressional Capability Index (1-3 scale)
Source:
Authors' compilation.
2.8
3.0
Characteristics of political party systems
• In some countries, political parties participate directly in public
policy debate
• In others, party systems affect the PMP indirectly, affecting:
– executive-legislative relations
– possibilities for coordination in Congress
– incentives of elected officials.
• Institutionalized parties , when they are programmatic (competing
on basis of public policies and policy outcomes) are more likely
to encourage long horizons, and prevent opportunistic behavior.
• They can facilitate inter-temporal bargains within and between
parties, since commitments made by current party leaders are
more likely to be respected in the future.
Party System Institutionalization, Programmatic Orientation
and the Quality of Policies
Programmatic Index (0-8 scale)
8
Chile
7
Uruguay
El Salvador
6
Policy Index = 2.57
5
4
Policy Index = 2.04
Policy Index = 2.06
3
Mexico
2
Brazil
1
Argentina
Ecuador
Honduras
Paraguay
Colombia Costa Rica
Peru Venezuela
Bolivia
Guatemala
0
40
50
Policy Index = "Very high"
Panama
60
70
Institutionalization Index (0-100 scale)
Policy Index = "High"
Policy Index = "Medium"
Note: Boxes show the average value of the Policy Index for the countries in each quadrant.
Source: Authors' compilation and Jones (2005).
Dominican Rep.
80
Policy Index = "Low"
Judiciaries and Bureaucracies
• Good enforcement and implementation facilitate cooperation,
strengthen quality of policies.
• Judiciary most obvious enforcer. Independent courts ensure that
the president does not overstep his boundaries, and that neither
branch violates the constitution.
• Inter-temporal cooperation hindered if courts are not independent,
actors are not held to their commitments.
• Bureaucracy plays a predominant role in policy implementation.
• But a strong bureaucracy can also facilitate inter-temporal
bargains through delegation (eg, central banks, autonomous
agencies).
Judicial Independence and the Quality of Policies
Policy Index (1- 4 Scale)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Judicial Independence Index (1-7 Scale)
Source: Authors' compilation and World Economic Forum (2004).
4.5
5.0
Development of Civil Service and the Quality of Policies
Policy Index (1- 4 scale)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Development of Civil Service System Index (0-1 scale)
Source: Authors' compilation and Iacoviello and Zuvanic (2005).
0.7
0.8
Institutional blessings are not independent
• “Good” institutions tend to come together. Countries with
stronger congresses tend to have more independent judiciaries.
• Virtuous dynamics: If executives do not tinker with the Courts,
this increases their independence and reputation. Independent
judiciaries enforce the domain and prerogatives of Congress,
increases incentives of legislators to invest in capabilities.
• Vicious dynamics can also occur, unfortunately.
• Problem: strong institutions take time to build, but can be
destroyed overnight.
Policymaking in fragmented party systems
Government type and constitutional
interruptions
Majority (or close)
Minority
# gov.
# CI
%
# gov.
# CI
%
Single party
36
2
5.6
19
5
26.3
Coalition
28
2
7.1
15
5
33.3
Total
64
4
6.3
34
10
29.4
Based on 98 democratic governments in Latin America since 1978.
CI defined as periods in which either the President or the legislature did not complete their terms.
Source: Chasquetti (2004), Payne et al (2002) y and author’s compilation.
Government type and constitutional
interruptions
Majority (or close)
Minority
# gov.
# CI
%
# gov.
# CI
%
Single party
36
2
5.6
19
5
26.3
Coalition
28
2
7.1
15
5
33.3
Total
64
4
6.3
34
10
29.4
Based on 98 democratic governments in Latin America since 1978.
CI defined as periods in which either the President or the legislature did not complete their terms.
Source: Chasquetti (2004), Payne et al (2002) y and author’s compilation.
Policymaking in fragmented party systems:
Brazil and Ecuador
• Political institutions have important common elements
• Most fragmented party systems in Latin America
Political Party Fragmentation
Brazil
Ecuador
Bolivia
Colombia
Venezuela
Peru
El Salvador
Guatemala
Argentina
Costa Rica
Panama
Mexico
Uruguay
Paraguay
Dominican Republic
Nicaragua
Honduras
Chile
1
2
3
4
5
6
Effective Number of Legislative Parties
Source: Jones (2005).
7
8
Brazil and Ecuador: party system fragmentation
President's Chamber Contingent
60
Chile
Nicaragua
Paraguay
Honduras
Argentina
50
Guatemala
Uruguay
Dominican Republic
Costa Rica Peru
Panama
Mexico
40
El Salvador Venezuela
30
Bolivia
20
Ecuador
Colombia
Brazil
10
0
2
4
6
Effective Number of Parties
Source:
Jones (2005), Saiegh (2005).
8
10
Policymaking in fragmented party systems:
Brazil and Ecuador
• Political institutions have important common elements
• Most fragmented party systems in Latin America
• Strong presidential constitutional powers (to compensate for
weak partisan powers)
Presidential Legislative Powers
Chile
Brazil
Ecuador
Colombia
Peru
Argentina
Panama
Uruguay
El Salvador
Venezuela
Guatemala
Dominican Republic
Honduras
Mexico
Bolivia
Costa Rica
Paraguay
Nicaragua
0.0
0.2
0.4
0.6
0.8
Presidential Legislative Powers index (0-1 scale)
Source: Payne and others (2002).
1.0
Policymaking in fragmented party systems:
Brazil and Ecuador
• Political institutions have important common elements
• Most fragmented party systems in Latin America
• Strong presidential constitutional powers (to compensate for
weak partisan powers)
• Legislators elected under similar electoral rules: open list, PR,
incentives to deliver benefits to their jurisdictions.
Policymaking in fragmented party systems:
Brazil and Ecuador
• Political institutions have important common elements
• Most fragmented party systems in Latin America
• Strong presidential constitutional powers (to compensate for
weak partisan powers)
• Legislators elected under similar electoral rules: open list, PR,
incentives to deliver benefits to their jurisdictions.
• Yet completely different political and policy outcomes
Key features of public policy and overall index
Country
Stab
Adapt
Impl/Enf
Coord /
Coherence
Public Reg
Effic
Policy
Index
Argentina
L
M
L
L
M
L
L
Bolivia
M
H
M
M
M
M
M
Brazil
H
H
H
H
M
M
H
Chile
H
H
H
H
H
H
VH
Colombia
H
H
H
M
M
M
H
Costa Rica
H
M
H
M
H
H
H
Dominican Rep
M
M
M
M
L
M
M
Ecuador
L
M
L
L
L
L
L
El Salvador
H
H
H
M
M
H
H
Guatemala
M
M
L
M
L
M
L
Honduras
H
M
M
M
L
M
M
Mexico
H
M
H
M
M
H
H
Nicaragua
M
M
M
L
L
M
L
Panama
M
L
M
L
L
L
L
Paraguay
M
L
L
L
L
L
L
Peru
M
M
M
M
M
M
M
Uruguay
H
H
H
M
M
M
H
Venezuela
L
L
M
L
M
L
L
How can these differences be explained?
• Substantial differences in capabilities of key institutions.
Lower House Reelection Rates
Chile (1993-2001)
Uruguay (1989-99)
Panama (1999)
Brazil (1995-2002)
Paraguay (1998-2003)
Colombia (1990-98)
El Salvador (2003)
Ecuador (1996-2002)
Bolivia (2002)
Venezuela (1989-2004)
Guatemala (1994-2004)
Argentina (1989-2003)
Peru (2001)
0
10
20
30
40
50
60
Rates of Immediate Reelection to the Lower House (percentage)
Source: Saiegh (2005)
70
Judicial Independence Index
Uruguay
Chile
Brazil
Costa Rica
Dominican Rep.
Mexico
Colombia
El Salvador
Panama
Guatemala
Peru
Honduras
Ecuador
Argentina
Bolivia
Nicaragua
Paraguay
Venezuela
1
Source: World Economic Forum (2004).
2
3
4
5
Index of Development of the Civil Service
Brazil
Chile
Argentina
Costa Rica
Uruguay
Colombia
Mexico
Venezuela
Dominican Rep.
Bolivia
Guatemala
Nicaragua
Ecuador
Peru
Paraguay
Honduras
El Salvador
Panama
0.0
Source: Iacoviello and Zuvanic (2005).
0.2
0.4
0.6
0.8
1.0
How can these differences be explained?
• Substantial differences in capabilities of key institutions.
• Presidents in Brazil have necessary tools to engage in political
exchanges with other parties, and sustain coalitions in Congress.
How can these differences be explained?
• Substantial differences in capabilities of key institutions.
• Presidents in Brazil have necessary tools to engage in political
exchanges with other parties, and sustain coalitions in Congress
• In Ecuador, coalitions are unstable, and tend to collapse as
presidential terms progress and elections approach.
Brazil: building coalitions
• President needs to rely on coalition to pass his agenda.
• Legislators need to deliver benefits to their communities, add
budget amendments involving programs with local benefits.
• Strong presidential powers, include discretional capacity to
impound budgetary amendments.
• Key exchange is small investment projects in exchange for
political support to pass the president’s agenda.
• One of several inducements president uses to pass agenda in a
fragmented system (others include sharing ministries with
coalition partners)
Ecuador: ghost coalitions
• Legislators have incentives to deliver pork to their communities, but
geographically based items not allowed in the budget.
• Being perceived as “gobiernista” is politically costly, so ministries
are not always attractive to potential coalition partners, particularly
towards end of presidential term.
• Politicians avoid visible and politically costly commitments, engage
in “ghost coalitions”, providing legislative support in narrow set of
issues in exchange for immediate benefits.
• Result: unstable coalitions, adversarial relations between the
executive and the legislature, and a great deal of political instability.
• This in turn affects time horizons of politicians, and quality of
public policies.
Size of the President's coalition (percent)
Ecuador: Size of Government’s Coalition in Congress
over the presidential term (1984-2002)
60
50
40
30
20
10
1
5
9
13
17
21
25
29
33
37
Administration's months in office
Source: Mejía-Acosta (2004).
41
45