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The Politics and Economics of Pension Privatization in Latin America

Published online by Cambridge University Press:  05 October 2022

Raúl Madrid
Raúl Madrid*
Affiliation:
University of Texas at Austin
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Abstract

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This research note seeks to explain why a large number of Latin American countries have privatized their pension systems in recent years. It argues that the privatization schemes are a response to the severe capital shortages that have plagued their countries intermittently in recent years rather than to the financial problems facing some of the pension systems. The likelihood of pension privatization, I argue, is determined in large part by the vulnerability of countries to capital shortages as well as the influence wielded by international financial institutions, especially the World Bank. Whether such reforms are politically feasible, however, depends largely on the strength of organized labor and the president's degree of control over the legislature. A statistical examination of recent pension policy in Latin America provides support for most of these arguments.

Type
Research Reports and Notes
Information
Latin American Research Review , Volume 37 , Issue 2 , 2002 , pp. 159 - 182
Copyright
Copyright © 2002 by the University of Texas Press

Footnotes

*

I am grateful to Terry Karl, Larry Diamond, Geoff Garrett, Philippe Schmitter, Evelyne Huber, Steve Kay, Joan Nelson, Gilbert Merkx, and five anonymous LARR reviewers for providing helpful comments on earlier versions of this research note. I would also like to thank Carmelo Mesa-Lago for supplying essential data and Tse-Min Lin for statistical advice. The Institute for International Studies at Stanford University and the Institute for the Study of World Politics provided funding to carry out the field research that made this study possible.

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