Strength and Commitment of the State: It Takes Two to Tango – A Case Study of Economic Reforms in Argentina in the 1990s

This paper addresses the question of why radical economicreforms became a reality in Argentina in the 1990s byconcentrating on the political andinstitutional dimensions of economic policy reform. Itpresents a framework for analyzing the determinants ofthe quality of economic institutions, notably thepolitical commitment of the state to provide propertyand contract rights, and its administrative capacity(``strength'') in implementing them. The framework isapplied to Argentina under the government of presidentCarlos Menem. The results of an empirical analysisclearly show an improvement in institutional quality,the state strength and commitment during Menem's firstterm. In turn, during his second term, the indicatorsshow ongoing signs of decline. Considering theprospects for Argentina in the near future,deficiencies of commitment with regard to democraticcontrol mechanisms represent a permanent threat tothe economic reforms realized so far.