“The Political Economy of Latin America: New Visions,” with José Luis Falconi (2021). Working Paper.

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The Political Economy of Latin America: New Visions


Latin American under-development has been fundamentally determined by a political economy syndrome of clientelism and state weakness which inhibits the provision of basic public goods. Rooted in the colonial period, this syndrome has been highly resistant to both modernization and the types of reforms advocated by international institutions. We describe why this is and sketch how the architecture of Latin American states facilitates this syndrome. Yet we also point out that the incomplete nature of the state this creates makes it vulnerable to many forces and leaves large spaces in which alternative political projects can germinate. We illustrate this with examples from Bolivia and Colombia. We emphasize that successful development requires the emergence of a new political equilibrium that can start from such spaces. Moreover, the new identities and coalitions needed to underpin such incipient equilibria have arisen historically, both in Latin America, and elsewhere, organically from society, with state elites having little ability to control them. We illuminate this with Peronism, and though it, like Chavismo, is a Manichaean identity formed in reaction to a history of extractive institutions, the Latin America of today is different from the one they formed in opposition to. We finally use the example of the emergence and spread of the “Cholo” identity in Perú to illustrate how new cultures and identities can emerge in ways which are inclusive and highly conducive to productivity, and under the nose of a highly corrupt and ineffective state. Nothing sums up the impact of this better than the spread of Peruvian cuisine. Such identities are now more likely to emerge in Latin America because democracy and basic rights are far more consolidated than they ever have been historically. We sum up the discussion with the implications of our analysis for the potential of different strategies to make Latin America more inclusive.