Research Article

Globalization, Domestic Politics, and Social Spending in Latin America: A Time-Series Cross-Section Analysis, 1973–97

Robert R. Kaufman^a1 and Alex Segura-Ubiergo^a2*

^a1 Rutgers University

^a2 Columbia University

This study examines the effects of globalization, democratization, and partisanship on social spending in fourteen Latin American countries from 1973 to 1997, using a pooled time-series error-correction model. The authors examine three sets of issues. First, following debates in the literature on OECD countries, they want to know whether social spending has been encouraged or constrained by integration into global markets. Within this context, they examine the extent to which such outcomes might be influenced by two additional sets of domestic political and institutional factors discussed in work on developed countries: the electoral pressures of democratic institutions and whether or not popularly based governments are in power.

The authors show that trade integration has a consistently negative effect on aggregate social spending and that this is compounded by openness to capital markets. This is the strongest and most robust finding in the study. Neither democratic nor popularly based governments consistently affect overall social spending. The authors then disaggregate spending into social security transfers and expenditures on health and education. They find that popularly based governments tend to protect social security transfers, which tend toflowdisproportionately to their unionized constituencies; but they have a negative impact on health and education spending. Conversely, a shift to democracy leads to increases in health and education spending, which reaches a larger segment of the population. The authors conclude by emphasizing the contrasting political log-ics of the different types of social spending.

Robert R. Kaufman is a Professor of Political Science at Rutgers University. He has written extensively on the politics of economic reform and democratic transitions. He is coauthor (with Stephan Haggard) of The Political-Economy of Democratic Transitions (1995) and coeditor (with Stephan Haggard) of The Politics of Economic Adjustment (1992), and he has contributed articles to numerous journals in the field. He is currently working on a comparative project on social welfare reform in middle-income countries.

Alex Segura-Ubiergo is a Ph.D. candidate in the Department of Political Science, Columbia University. His dissertation examines the effects of globalization and domestic political institutions on social spending and social policies in Latin America.

* Earlier versions of this paper were presented at seminars at the Institute of Latin American Studies, Columbia University, MIT Political Science Department, the Woodrow Wilson Center for Scholars, and the annual meeting of the Political Science Association of Brazil. The authors are grateful for the comments and advice of the following people: Neal Beck, Colin Bradford, David Brown, Christina Ewig, Carol Graham, Stephan Haggard, Jonathan Katz, Daniel Kelemen, Chapell Lawson, Richard Locke, Ed Mansfield, Helen Milner, Joan Nelson, Jonathan Rodden, Nita Rudra, Robert Shapiro, Ar-turo Sotomayor, Alfred Stepan, Judith Tendler, and Joseph Tulchin.