Search

Prior to the 1980s, Mexico and Kenya had strong reputations for effective state-led economic development and sustained state-dominated political stability in their respective continents. This chapter documents the extent to which expectations based on these reputations eroded and then broke down. The experiences of the two countries differ, yet the combined effect of economic and political change altered the context for state action in similar ways. In Mexico, the interaction of economic and political conditions indicates that economic crisis sharpened and accelerated an emergent political crisis. In contrast, Kenya provides a case of a country whose political crisis contributed significantly to deepening its economic problems. Deep and sustained economic crisis has farreaching consequences, as the case of Mexico explored here demonstrates. Although most frequently measured and discussed in terms of stagnant or declining rates of growth and indices of social welfare, extended economic crises also stimulate critical reassessment of the intellectual underpinnings of national development strategies. Such crises encourage citizens, policy makers, and politicians to question prior growth strategies and policy regimes, even those that had produced positive results in the past. In consequence, long-accepted notions about how development is best achieved become subject to greater skepticism and at times are held responsible for creating current conditions. Along with this questioning of appropriate routes to development, sustained economic crisis also has a profound impact on the economic interests supporting and benefiting from existing policies. [ABSTRACT FROM AUTHOR]

The 1980s and 1990s witnessed economic and political crises of historic significance in Latin America and Africa. Throughout both regions, economies that were already fragile were almost destroyed by debt, inflation, low commodity prices, high interest rates, and devastating natural disasters. Political systems faced grave challenges to their right to govern societies that were themselves torn by division and unrest. Regime changes, civil wars, civic protest, and demands for human rights and accountable public officials characterized the political history of this era. The evidence is extensive and unambiguous: economic and political distress were hallmarks of an unsettled and unsettling era. Repeatedly, crisis exposed the weakness of existing state capacities to manage economic and political relationships. This chapter uses data from sixteen countries in Latin America and Africa to explore the scope, nature, and implications of economic and political crisis. It addresses four questions. First, what was the scope of the dual crises of economic and political development facing countries in these regions? Second, what factors explain the nature of the problems that confronted a wide range of governments? Third, what impact did economic and political collapse or near collapse have on various dimensions of state capacity? Finally, what consequences did crisis have for state–economy and state–society relationships? Subsequent chapters deal in greater detail with the same issues in Mexico and Kenya; this chapter indicates the extent to which these two countries shared in region-wide political and economic trends. [ABSTRACT FROM AUTHOR]

The 1980s and 1990s posed great challenges to governments in Latin America and Africa. Deep economic crisis and significantly heightened pressure for political reform severely taxed their capacity to manage economic and political tasks. In fact, the era was a critical moment in which existing state–economy and state–society relations were challenged and, at times, redefined. This book is about the significance of these challenges and redefinitions for the capacities – institutional, technical, administrative, and political – that states in Latin America and Africa require if they are to encourage economic development and provide effective governance for their societies. It explores the roles that political leaders and institutions played in a decade-long drama of crisis and change. There is little question that this period will be remembered as an era of crisis for countries in Latin America and Africa. An economic crisis, often rooted in development policies adopted in prior decades and greatly increased prices for oil in the 1970s, was precipitated in the early 1980s by a series of external shocks, principal among which were a sharp rise in real interest rates, a rapid decline in the availability of international credit, and a sharp fall in international commodity prices. As a consequence, external terms of trade became highly unfavorable for many developing countries, budget deficits escalated, and foreign debt burdens became unmanageable. International conditions as well as domestic policies explain these problems. The impact of such conditions on developing country economies was extensive and often extreme. [ABSTRACT FROM AUTHOR]

In the early 1980s, as governments and international financial institutions struggled to manage deep economic problems, the immediate tasks of establishing macroeconomic stability and initiating the process of structural adjustment received almost exclusive attention. Soon, however, policy makers, practitioners, and development specialists began to question why many reforms did not produce expected results more quickly. As they asked this question, the issue of the administrative capacity of the state acquired greater salience. Some policy reforms required long chains of administrative action if they were to be implemented – improved tax collection, customs reform, health sector restructuring, and decentralization of decision making, for example. Some required public officials to be active managers and problem solvers – deregulation, tariff reform, and privatization, for example. And the success of other reforms required procedures and institutional structures to facilitate market activities and to encourage risk taking by the private sector – the development of financial sector institutions and economic regulation, for example. Initial adjustment efforts in Latin America and Africa confirmed that if government institutions were to monitor public spending, stimulate trade, expand the revenue base, manage an effective foreign exchange regime, and encourage private sector investment, they had to be organized effectively to carry out routine functions and they had to be able to count on administrators able to perform assigned tasks willingly, competently, and efficiently. The same realization applied even more to efforts to decentralize government to local and regional levels and encourage reforms in agriculture, health, and education. [ABSTRACT FROM AUTHOR]

States are unique among social institutions in that they seek to ensure that their rules predominate over the rules of other institutions such as the family, the community, the tribe, or the market. In fact, the capacity to exert authoritative control has long been a defining feature of states. Characteristically, modern states must make and enforce sets of rules related to property rights, contracts, civil and criminal justice, and the selection of those who make and implement the rules. Part of their purpose is to “reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction.” The most authoritative states are those in which the right to make and enforce rules is based on widespread acceptance of their legitimacy to do so. But the history of economic and political development in Latin America and Africa is a useful reminder that institutions of state dominance are not always authoritative. The 1980s and early 1990s were replete with conflict and uncertainty over whose rules would predominate and be accepted as legitimate. Informal markets, ethnic conflict, armed subversion, sectarian claims on personal loyalties, corruption, and other evidence of institutional instability recalled the notion of the soft state, initially used by Gunnar Myrdal to refer to states that lacked capacity to enforce obligations on citizens – states unable to govern. As many states failed in authoritativeness, rival sets of institutions often set the terms for economic and political interactions. [ABSTRACT FROM AUTHOR]