The Determinants of Economic Liberalization in Latin America

Abstract

Previous work on political institutions and economic reform provides a number of testable hypotheses that are rarely examined in a multivariate framework. Divided government, political polarization, fragmented legislatures, ideology, external factors, the strength of the presidency, and democracy itself have all been forwarded as possible constraints that influence the depth and speed of economic reform. Using time-series cross-sectional data, this research note provides a multivariate test of the impact these institutions have on different components of structural reform. Our findings suggest that specific institutional arrangements are important for achieving some specific kinds of economic reform. However, our main finding implies the kind of institutional and ideological constraints prominent in the literature do not constrain politicians from enacting reform.