#257 Globalization, Domestic Politics and Social Spending in Latin America

By Robert R. Kaufman, Alex Segura-Ubiergo, Joan Nelson, and Colin Bradford

From the Introduction

“Has globalization gone too far?” This question -- the title of a recent book by Dani Rodrik -- has been asked for over a century in Latin America. The issues it raises, however, have acquired special force in the last 25 years, as once-closed import-substituting economies have been transformed by structural reforms that have linked them far more closely to international trade and capital markets. As in other parts of the world, the specific effects of this transformation on Latin American societies remain unclear. Nevertheless, it seems quite apparent that it has brought about important modifications in the balance of political power and has altered the margins of choice available to domestic governments.

In this paper, we examine one of the most controversial aspects of this economic opening: its impact on governments’ fiscal commitments to social security, health and education. Many have argued that the new era of neoliberal reforms has undermined the thin protections that states in the region had provided to at least some of their citizens during earlier periods of ISI. Whether or not this is the case, the central challenge going forward is whether badly damaged welfare systems can be reconstructed and expanded in ways that will shield citizens exposed to new market forces and enable them to compete effectively in the new era of “globalization.”