IMF Conditionality,Government Partisanship,and the Progress of Economic Reforms

The International Monetary Fund (IMF) often seeks to influence countries' domestic public policy via varying levels of conditionality—linking financial support to borrowing governments' commitment to policy reforms. When does extensive conditionality encourage domestic economic reforms and when does it impede them? We argue that, rather than universally benefiting or harming reforms, the effects of stricter IMF conditionality depend on domestic partisan politics. More IMF conditions can pressure left‐wing governments into undertaking more ambitious reforms with little resistance from partisan rivals on the right; under right governments, however, more conditions hinder reform implementation by heightening resistance from the left while simultaneously reducing leaders' ability to win their support through concessions or compromise. Using data on post‐communist IMF programs for the period 1994–2010, we find robust evidence supporting these claims, even after addressing the endogeneity of IMF programs via instrumental variables analysis.     

Who Learns from What in Policy Diffusion Processes?

The idea that policy makers in different states or countries may learn from one another has fascinated scholars for a long time, but little systematic evidence has been produced so far. This article improves our understanding of this elusive argument by distinguishing between the policy and political consequences of reforms and by emphasizing the conditional nature of learning processes. Using a directed dyadic approach and multilevel methods, the analysis of unemployment benefits retrenchment in OECD countries demonstrates that policy makers learn selectively from the experience of others. Right governments tend to be more sensitive to information on the electoral consequences of reforms, while left governments are more likely to be influenced by their policy effects.     

Lesson-Drawing in Family Policy: Media Reports and Empirical Evidence about European Developments

Since 1980, the U.S. press has painted a vivid picture of widespread welfare state dismantling in Europe. Yet our analysis of social expenditures in 14 European countries from 1980–1995 finds a pattern of resilience and, with respect to family benefits, a pattern of expansion. Our review of qualitative research on policy reforms upholds the expenditure-based findings. We conclude that U.S. media misrepresentation of social welfare developments in Europe is likely to impede lesson-drawing from abroad by U.S. policymakers. This constitutes a lost opportunity, as the U.S. is now engaged in social policy reformulation, especially with respect to programs for families.     

Redistributive policies in decentralised systems: The effect of decentralisation on subnational social spending

This article uses cross‐national data to examine the effects of fiscal and political decentralisation on subnational governments’ social expenditures. It revisits the benefit competition hypothesis put forward by fiscal federalism research, which posits that subnational governments in decentralised countries match welfare benefit reductions by their peers to keep taxes low and avoid an in‐migration of welfare dependents. As a consequence, subnational social expenditures are assumed to plateau at similar and low levels. Using a new cross‐national dataset on social expenditures in 334 subnational units across 14 countries and 21 years, the author explores whether benefit competition causes subnational governments to converge on similar levels of social spending. The analysis reveals that as countries decentralise, subnational social spending levels begin to diverge rather than converge, with some subnational governments reducing their social expenditures and others increasing them. Furthermore, decentralisation is not likely to be associated with lowest common denominator social policies, but with more variability in social expenditure. The article also examines the effects of other macro‐level institutions and demonstrates that policy coordination influences the relationship between decentralisation and subnational social spending levels.     

Different by Design? Analyzing How Governments Justify GMO Liberalization through the Lens of Strategic Communication

GMO liberalization can be seen as politically risky for policy actors; it confronts them with policy‐specific strategic challenges and incentives regarding their policy communication. This perspective has received much more attention in association with two other kinds of policies, welfare state retrenchment and foreign policy. The aim of this paper is thus to situate GMO liberalization within a larger framework and to examine how governments deal with this kind of policy through their communication. The analysis looks at the liberalization of GMOs in Norway and the UK to examine how their communication depends on policy characteristics as well as country‐specific conditions. The findings suggest that the communication of GMO liberalization differs markedly from the communication of welfare state retrenchment and foreign military interventions and that the typical features of GMO policies as well as the sociocultural context of the two countries mattered for how the governments have communicated GMO liberalization.     

Deciding to Provide: Local Decisions on Providing Social Welfare

Fiscal federalism predicts local governments will avoid social welfare expenditures, owing to capital mobility across local jurisdictions. Yet Census of Governments data consistently show that many local governments provide one or more social welfare functions, and moreover many jurisdictions provide these functions without federal or state intergovernmental support. This article finds evidence that, while local expenditures are largely driven by fiscal capacity and federal and state assistance, local decisions on providing social welfare functions and participating in intergovernmental revenues are primarily affected by degree of capital mobility and by local political factors. Consequently, local governments exercise much greater autonomy over social welfare policymaking than fiscal federalism suggests.     

Holes in the safety net,leaks in the roof: Changes in Canadian welfare policy and their implications for social housing programs 1

Abstract

This article surveys recent reforms to Canadian social policy at the national level and welfare programs at the provincial level to determine how social housing policy and programming are being affected. The survey considers Canada's Social Security Review consultation process, which played out over 1994 and 1995. The article outlines various concerns raised over the Canada Health and Social Transfer, a fundamental reform to intergovernmental fiscal and policy relations announced in the 1995 federal budget and elaborated on in the 1996 budget.

The transfer of administrative responsibility for federally funded social housing to provincial and territorial governments is discussed and recent developments in welfare programs across Canada are described, noting housing elements within these programs.     

Sharing the Rewards,Dividing the Costs? The Electoral Consequences of Social Pacts and Legislative Reform in Western Europe

Do electoral pressures provide an explanation for why governments offer pacts to unions and employers rather than acting through legislation when faced with the need to pass potentially unpopular reforms to welfare policies, wages, and labour markets? This article addresses that question by analysing whether governments’ pursuit of pacts affects their vote share and increases the probability that they gain re-election for 16 West European countries between 1980 and 2012. It is found that the presence of social pacts has a significant and positive effect on incumbents’ vote shares at the next election and also results in a higher probability of re-election. These results are conditioned by government type: While all types of governments benefit electorally from pacts, the electoral penalties from the pursuit of unilateral legislation on policy reforms harm single-party majorities the most, minority governments moderately, and coalition majorities the least.     

In Search of Successful Reform: The Politics of Opposition and Consensus in OECD Parliamentary Democracies

Why are some governments able to undertake controversial policy reforms and others are not? Conventional wisdom argues that single-party majority governments are best able to implement reforms because there are fewer veto actors within the government that can block the reforms. However, these accounts fail to consider the veto power of societal actors and particularly of trade unions, which can stall reform even in the presence of a unified executive. This paper argues that controversial reforms require broad societal and, consequently, political consensus, which are easier to achieve under minority governments or governments of broad coalitions. Evidence from 22 OECD parliamentary democracies over 35 years shows that minority and large coalition governments have been more successful in reducing social security contributions and pensions than narrower majority governments. This is especially true in countries where trade unions are militant and often resort to industrial action.     

How Lasting Is Voter Gratitude? An Analysis of the Short‐ and Long‐Term Electoral Returns to Beneficial Policy

Dominant theories of electoral behavior emphasize that voters myopically evaluate policy performance and that this shortsightedness may obstruct the welfare‐improving effect of democratic accountability. However, we know little about how long governments receive electoral credit for beneficial policies. We exploit the massive policy response to a major natural disaster, the 2002 Elbe flooding in Germany, to provide an upper bound for the short‐ and long‐term electoral returns to targeted policy benefits. We estimate that the flood response increased vote shares for the incumbent party by 7 percentage points in affected areas in the 2002 election. Twenty‐five percent of this short‐term reward carried over to the 2005 election before the gains vanished in the 2009 election. We conclude that, given favorable circumstances, policy makers can generate voter gratitude that persists longer than scholarship has acknowledged so far, and elaborate on the implications for theories of electoral behavior, democratic accountability, and public policy.     

THE IMPACT of FINANCIAL SERVICES GLOBALIZATION UPON the CARIBBEAN COMMON MARKET

This article tests three hypotheses concerning the policy effects of foreign exchange market liberalization and exchange controls in the three Caribbean Common Market countries of Jamaica, Trinidad & Tobago, and Barbados during the 1990s. It concludes that these cases do not show either monetary or fiscal policy to be particularly effective, when foreign exchange markets are liberalized before a functional bank regulatory system is put in place. These cases also imply that given the challenges posed by financial services globalization, the need for informed judgment by governments regarding the pace and scope of financial sector liberalization will remain critical, particularly within small developing countries.     

Conditional Punishment: A Comparative Analysis of the Electoral Consequences of Welfare State Retrenchment in OECD Nations, 1980–2003

Do incumbent parties that retrench the welfare state lose votes during the next election? That is the guiding question for our paper. We analyse elections and social policy reforms in 18 established OECD democracies from 1980 to 2003. We show that there is no strong and systematic punishment for governments which cut back welfare state entitlements. The likelihood of losing votes is the same for governments that retrench the welfare state as for those that do not. Rather, electoral punishment is conditional on whether governments have the chance to stretch retrenchment over a longer period of time, and whether social policy cuts are made an issue in the electoral campaign. If other political parties and the mass media do not put the theme on the agenda of the campaign, and if the retrenchment can be carried out in small steps during a longer governmental term, governments may considerably reduce welfare state effort without fear of major electoral consequences.     

Public Sector Change,Organisational Culture and Financial Information: A Study of Local Government

Local government has undergone substantial change in Victoria, but the reforms have not necessarily resulted in improved financial management practices. This article examines the organisational culture of a sample of local governments, the critical events which have impacted on them, and their use of accounting, budgetary and financial (ABF) information. We find that despite the change process, organisational culture is not focused on competitive practices, although compulsory competitive tendering remains the most influential event. Consistent with the aims of reform, the quality and use of ABF information has improved over the last decade. This article will be of interest to those in government wishing to implement change programs aimed at increasing financial resource use efficiency.     

Age‐based self‐interest,intergenerational solidarity and the welfare state: A comparative analysis of older people's attitudes towards public childcare in 12 OECD countries

When faced with the necessity of reforming welfare states in ageing societies, politicians tend to demand more solidarity between generations because they assume that reforms require sacrifices from older people. Political economy models, however, do not investigate such a mechanism of intergenerational solidarity, suggesting that only age‐based self‐interest motivates welfare preferences. Against this backdrop, this article asks: Does the experience of intergenerational solidarity within the family matter for older people's attitudes towards public childcare – a policy area of no personal interest to them? The statistical analysis of a sample with individuals aged 55+ from twelve OECD countries indicates that: intergenerational solidarity matters; its effect on policy preferences is context‐dependent; and influential contexts must – according to the evidence from twelve countries – be sought in all societal spheres, including the political (family spending by the state), the economic (female labour market integration) and the cultural (public opinion towards working mothers). Overall, the findings imply that policy makers need to deal with a far more complex picture of preference formation toward the welfare state than popular stereotypes of ‘greedy geezers’ suggest.     

Globalization and the Strengthening of Democracy in the Developing World

Scholars and policy makers have long assumed that trade and financial liberalization encourages developing countries to become more democratic; yet no one has developed formal hypotheses about the causal relationship between globalization and democracy. This article shows that these two trends are indeed related, but not necessarily in the direct manner that has commonly been postulated. Combining theories of embedded liberalism and conflict-based theories of democracy, the model presented here depicts the process that affects decisions to strengthen democracy as trade and capital flows increase. I argue that increasing exposure to international export and financial markets leads to improvements in democracy if safety nets are used simultaneously as a strategy for providing stability and building political support. Empirical evidence is provided by econometric analysis covering 59 developing countries for the time period 1972–97.     

Retrenchment of Social Policy by Other Means: A Comparison of Agricultural and Housing Policy in Turkey

Abstract

In many low- and middle-income countries, conventional welfare state institutions provide social protection only for the formally employed. In contrast, the rural and urban poor are often protected by “social policy by other means”. Based on a comparative analysis of two major unconventional welfare programs in Turkey, agricultural state support and access to squatter housing, this article explains retrenchment of social policy by other means. Agricultural retrenchment was the result of coercive policy transfer from international organizations in a post-crisis context, while the retrenchment of squatter housing was driven by domestic political entrepreneurs responding to decreases in the availability of urban land and the number of informal squatters. In both cases, retrenchment became politically sustainable due to functional replacement with more conventional welfare programs. This analysis challenges the narrow focus of mainstream welfare state research, provides an explanation of retrenchment of social policy by other means, and enhances our understanding of Turkey’s uneven welfare state development.     

TESTING ALTERNATIVE EXPLANATIONS OF CAPITAL CONTROL LIBERALIZATION*

The literature on why restrictions over capital flows have been liberalized is filled with alternative causal stories (the pluralist, statist and systemic model, and economic explanations). In this article, we provide a test of these models of capital control liberalization within the context of 18 OECD countries from 1967 to 1995. We have avoided the usual practice of aggregating multiple governments in one country within one year into one country‐year observation, and use the country‐year‐government as the unit of analysis instead to correctly test the relationship between government characteristics and liberalization policy. We find that when the government considers lifting or imposing restrictions over capital flows, it responds to both systemic pressures and the key supporters of free capital flows. Governments also consider the current account balance and are heavily influenced by the prior policy choice regarding restrictions on capital transactions. We fail to find support for such explanations as the impact of government ideology, government strength, and central bank independence.     

The impact of globalization on the composition of government expenditures: Evidence from panel data

According to the disciplining hypothesis, globalization restrains governments by inducing increased budgetary pressure. As a consequence, governments may attempt to curtail the welfare state, which is often seen as a drag on international competitiveness, by reducing especially their expenditures on transfers and subsidies. This globalization-induced welfare state retrenchment is potentially mitigated by citizens’ preferences to be compensated for the risks of globalization (“compensation hypothesis”). Employing two different datasets and various measures of globalization, we analyze whether globalization has indeed influenced the composition of government expenditures. For a sample of 60 countries, we examine the development of four broad expenditure categories for the period 1971–2001: capital expenditures, expenditures for goods and services, interest payments, and subsidies and other current transfers. A second dataset provides a much more detailed classification: public expenditures, expenditures for defence, order, economic affairs, environment, housing, health, recreation, education, and social expenditures. However, this second data set is only available since 1990—and only for OECD countries. Our results show that globalization did not influence the composition of government expenditures in a notable way.     

On the front lines of welfare delivery: Are workers implementing policy reforms?

The impact of policy changes on the local delivery of services has been overlooked in several decades of largely unsuccessful efforts to “reform” welfare. This article uses one case of state-level welfare reform in the early 1990s to examine the implementation of policy changes in local welfare offices. Direct observation of transactions between welfare workers and clients suggests that policy reforms were not fully implemented by street-level bureaucrats. The instrumental transactions that continued to dominate interactions with clients were consistent with processing claims and rationing scarce resources, but they were poorly aligned with new policies aimed at changing the services and message delivered to welfare clients. The failure to fully implement reforms on the frontlines has implications for the achievement of policy objectives and for equity in service provision. Implementation issues will have even greater urgency as welfare is devolved from federal to state governments.     

From policy lessons to policy actions: motivation to take evaluation seriously

The purpose of this article is to analyse the institutional aspects of creating effective systems for monitoring and evaluations (M&E) in government‐led rural development efforts in developing countries. We argue that the ultimate challenge of creating effective M&E systems for public policy is not only related to the supply of information and the delivery of new knowledge to policy makers, but more importantly to their demand for lessons learnt about the effects of earlier policies. The challenge, then, is for governments to construct institutional arrangements that support the transformation of policy lessons into policy actions. This article shows that the likelihood of this transformation is closely related to the capacity of institutions to deliver mechanisms for downward accountability and processes for organisational learning. We add to earlier work in this area by considering the conditions under which such a transformation process is more or less likely, given the severe power and information asymmetries that characterise the institutional context of many developing countries' national governments. We use the tools of institutional analysis to examine the incentive structures of the actors involved in two concrete field settings, and assess to what extent these actors are likely to take evaluations seriously. Copyright © 2004 John Wiley & Sons, Ltd.