World Politics

Research Article

Embedding Neoliberal Reform in Latin America

Marcus J. Kurtz and Sarah M. Brooksa1a2*

a1 Ohio State University, kurtz.61@polisci.osu.edu

a2 Ohio State University, brooks.317@polisci.osu.edu

Abstract

Although research in the advanced industrial nations has identified a supportive link between an expanded public sector role and economic openness, studies of the developing world have been much less sanguine about the possibilities of broader state intervention in the context of economic liberalization. The authors investigate the possibility that governments in Latin America may “embed” economic openness in a broader public sector effort. They find that while several countries have moved toward an orthodox neoliberal model with minimal state interventions, other Latin American governments have maintained a broader public sector presence on the supply side of the economy while pursuing deep liberalization. They call the latter strategy “embedded neoliberalism,” to distinguish it from the more egalitarian ambitions of postwar embedded liberalism. Cross-sectional time-series analysis reveals that embedded neoliberal strategies in Latin America have grown out of a legacy of advanced import-substitution industrialization and have been promoted by nonleft governments, except in cases where labor is very strong. The orthodox neoliberal model, by contrast, has emerged where postwar industrial development was attenuated and where labor unions were weakened considerably by the debt crisis.

Marcus J. Kurtz is an associate professor of political science at Ohio State University. He is author of Free Market Democracy and the Chilean and Mexican Countryside (2004) and has published articles in numerous journals. He is currently working on a book entitled, “Social Foundations Institutional Order: Latin American State-Building in Comparative Perspective.” He can be reached at kurtz.61@polisci.osu.edu.

Sarah M. Brooks is an assistant professor of political science at Ohio State University. She is the author of Social Protection and the Market: The Transformation of Social Security Institutions in Latin America (2008) and has published articles in numerous journals and edited volumes. Her current research focuses on the politics of risk and economic integration. She can be reached at brooks.317@polisci.osu.edu.

* The authors are grateful for comments and suggestions on earlier versions of the paper from Layna Mosley, Dan Corstange, panelists and participants in the American Political Science Association meetings of 2006 and 2007, the participants in the University of Wisconsin Political Economy Colloquium, and three anonymous reviewers. All errors remain our own.