Despite the Odds: The Political Economy of Social Sector Reform in Latin America

Abstract

Whether considering health, education, or pension systems, and regardless of the extent of change proposed, conventional political economy indicates that reform initiatives are likely to be met with stiff opposition and lukewarm support. The social sectors are a classic case in which political calculations based on the identification of winners and losers or on the distribution of power within institutional contexts militate against change. Not surprisingly, given these expectations, political economists generally anticipate that reform initiatives will fail. Despite the political odds against such outcomes, in the 1990s, a significant number of countries in Latin America introduced major changes in the way health and education systems operated and set in motion fundamental changes in the structure of pension systems. This paper explores why reforms are adopted more frequently than political economy models predict. Analysis of the process of reform must be incorporated into political analysis if concepts and models are to become more helpful in understanding when and why change occurs. In this process, reformers and their strategic decisions, as well as the organizational characteristics of winners and losers and the constraints introduced by political institutions, become key factors in determining reform destinies.