The Politics of Market Discipline in Latin America
Globalization and Democracy

This book uses a multi-method approach to challenge the notion that financial markets exert a broad influence over economic policy making in emerging economies.

Daniela Campello (Author)

9781107649866, Cambridge University Press

Paperback / softback, published 21 January 2016

254 pages, 65 b/w illus. 21 tables
23 x 15.4 x 1.4 cm, 0.39 kg

'The widespread expectation is that capital mobility constrains the policy choices of elected governments, but Daniela Campello's lucid new book tells us precisely when and where mobile capital limits options for economic policy makers, especially those on the left. The theory is nuanced and compelling and should travel well beyond Latin America. This book is indispensable reading for everyone interested in the effects of globalization and the limits to democratization and redistribution in developing countries.' Ben Ross Schneider, Ford International Professor of Political Science, Massachusetts Institute of Technology

The Politics of Market Discipline in Latin America uses a multi-method approach to challenge the conventional wisdom that financial markets impose broad and severe constraints over leftist economic policies in emerging market countries. It shows, rather, that in Latin America, this influence varies markedly among countries and over time, depending on cycles of currency booms and crises exogenous to policy making. Market discipline is strongest during periods of dollar scarcity, which, in low-savings commodity-exporting countries, occurs when commodity prices are high and international interest rates low. In periods of dollar abundance, when the opposite happens, the market's capacity to constrain leftist governments is very limited. Ultimately, Daniela Campello argues that financial integration should force the Left toward the center in economies less subject to these cycles, but not in those most vulnerable to them.

1. Globalization, democracy, and market discipline
2. Between votes and capital: redistribution and uncertainty in unequal democracies
3. Investors' 'vote' in presidential elections
4. The politics of currency booms and crises: explaining the influence of the investors' 'vote'
5. Currency crisis, policy switch, and ideological convergence: presidential elections in Brazil
6. Exogenous shocks and investors' political clout: presidential elections in Ecuador
7. Controlling for incumbency: financial markets' influence in Chávez's Venezuela
8. 'Vivir con lo nuestro': default and market discipline in Argentina
9. Who governs?: market discipline in the developed world
10. Conclusion.

Subject Areas: Constitution: government & the state [JPHC], Politics & government [JP]