Political and Economic Determinants of Changes in Government Spending on Social Protection Programs

Most Latin American and Caribbean countries tend to face greater macro-economic risk than countries at similar levels of development in most other regions of the world. Per-capita income, unemployment, and inflation fluctuate dramatically (e.g., Hausmann and Gavin, 1996; Inter-American Development Bank, 1997). Most LAC countries also seem to face greater political instability than most other countries at similar levels of development. They are more prone to switch between democratic and non-democratic rule. Many are characterized by highly personalistic political parties that tend to be short-lived and factionalized, and/or coalition governments with frequent turnover (e.g., Huntington, 1968; McDonald, 1971; Ames, 1987; Kaufman and Stallings, 1991; Coppedge, 1994; Mainwaring and Scully, 1995). In such circumstances, parties may have little incentive or ability to build long-term reputations or establish continuity in their policy programs.