ABSTRACT. Why do governments change economic policies? In advanced, industrial democracies domestic political actors and economic circumstances largely explain policy changes. The economic policy-making process is less clear in developing democracies, particularly in adoption of market-oriented reforms in Latin America’s young democracies. I argue that most studies of the region overlooked the fact that market reforms involved two separate sets of policies with divergent transaction costs. Consequently, I examine the differential effects of international pressure and economic crisis versus domestic political actors across areas of reform. Surprisingly, I find that a previously overlooked form of international pressure commonly found in the diffusion literature had a strong effect on both forms of market liberalization, and that the preferences and organization of the legislature and civil-society actors exerted stronger effects on policy-making than the extant literature suggested. I also find that specific economic conditions have only weak effects on the adoption of market-oriented reforms and that presidents often behaved in unexpected ways, mirroring a common concern found in the literature on presidentialism in Latin America. pp. 19–43
JEL Codes: D72; F59; P11

Keywords: political economy; market-oriented reform; Latin America; diffusion; executive decree authority; corporatism

How to cite: Johnson, Gregg B. (2014), “Policy Change in Presidential Democracies: The Differential Determinants of Market-Oriented Reforms in Latin America,” Journal of Self-Governance and Management Economics 2(1): 19–43.