| Abstract: |
Latin American countries in the 2020’s face many economic and social
challenges, including low growth, low investment levels, low productivity, as
well as high levels of poverty and inequality. Rising international interest
rates might induce capital outflows and debt sustainability problems. A
“reform agenda” discussion is on the table once again. This note provides some
elements to think about a political economy of reform for Latin American
countries in the 2020s. In order to organize our thinking, we suggest a
framework in which (a) vectors of public policies have effects on vectors of
relevant social outcomes, and (b) political economy arguments explain extant
policy vectors and potential obstacles to reform. In the agenda reported in
this paper, as a step towards that broader framework, we use fiscal vectors as
primary anchor of analysis. In order to provide some guidance and general
principles for a country-focused research agenda, we attempt to develop: (A) a
fiscal diagnostic framework of what the main problems are and what priorities
should be, and (B) a political economy framework to identify the main
constraints in each case. The logic in each case operates at two levels of
aggregation, across countries, and within countries across budget items
(public programs). The note has the purpose to guide the analysis, starting
from cross-country comparative indicators, and moving forward to more detailed
diagnostics at the country level. |