850: PLS Pro-seminar in Comparative Politics Comparative Political Economy and Institutions in Latin America Michigan State University Department of Political Science spring 2007 Thursday 6:00-8:50, South Kedzie 104 Professor Carlos Pereira E-mail: [e-mail] and Phone: [phone] Office hours: Thursdays from 5:00 to 6:00, or by appointment. Course Description: This course applies theoretical tools of comparative political economy to investigate the functioning of political institutions, political systems and the policymaking process, and their effect on public policies and on economic performance. We will draw from a literature that has been developed primarily to study developed countries, and will attempt to use it to think in broader comparative terms, with focus on some Latin American countries. Existing institutional theories predict greater policy rigidity (deadlock) in a policy space characterized by multiple veto players with significant ideological polarization. It is assumed that the probability of policy change is reduced by the higher transaction costs and the existence of a smaller possible win-set to beat the status quo. Besides taking into account the number of veto points and the level of disagreement of their preferences, this course intends to comparatively investigate the institutional conditions under which gains from exchange can be extracted by the players in different institutional settings. In other words, we will access the extent to which the political players have the ability to develop inter-temporal political transactions. Our contention is that in order to understand the cost of policy change, it is necessary to examine a countrys political institutions for means that may exist (or not) of realizing political transactions. Where institutions have arisen to enable such transactions, the cost of policy change will be lower. Where transaction costs are large and there are few means of circumventing or mitigating them, policy change will be lacking or limited. The purpose of this course thus is not to analyze the details of any specific policy adopted by a particular country, but rather to explain the outer features of public policies; that is, the common characteristics that systematically permeate those policies. These characteristics are qualities such as stability vs. volatility, flexibility vs. rigidity, coordination vs. coherence, decisiveness vs. resoluteness, overall quality and investment-related qualities, private vs. public regardedness, and balkanization. The analysis of these outer features developed in this course assumes that a countrys political institutions, together with the features of the specific policy issues are key determinants of the characteristics of public policies. In the process of producing policy, political actors undertake complex intertemporal transactions that are often beset by political transaction costs. These costs are determined by the countrys political institutions and by the nature of the policy being considered. The political institutions determine who are the key players, the payoffs to the players, the forum in which they interact and the frequency of their interaction. In addition
each policy area has its own features that can increase or reduce those transaction costs, for example regional vs. national, spot vs. long term, complex vs. transparent, etc. In the absence of political transaction costs political actors would always have an incentive to adapt to economic and political shocks in ways that maximize the greatest gain from political exchange, with side-payments compensating those who could otherwise block those changes. However, in political markets, even more so than in economic markets, transaction cost are typically significant. The higher the political transaction costs the more difficult it will be to make those side-payments and the more probable that cooperation will not ensue, leading to sub optimal policies. In other words where political institutions are well-developed, political actors will be able to cooperate so as to better adapt to economic and political shocks, resulting in policies with positive characteristics, such as stability, adaptability and public regardedness. Where political institutions promote high political transaction costs, cooperation will be more difficult and policies will tend to have more detrimental qualities, being either too rigid or too volatile, as well as being more private regarding and incoherent. Course Organization: The course will be divided in two parts. The first part will focus on the theoretical and methodological core aspects of the political institutions and the policymaking process and the political economy outcomes. In the second part of the course students will have the opportunity to access those methodological and theoretical tools and to apply to several Latin American case studies recently produced by the Inter-American Development Bank IADB research department comparative projects. Students can find nine country papers at the following website http://www.iadb.org/res/Project_Search.cfm?st_id=82&final_draft=yes&Language=English The dataset for the IPES 2006 can be found: http://www.iadb.org/res/pub_desc.cfm?pub_id=DBA-008 Also on this page there is a link to the IPES online, which has an appendix that describes the variables in the dataset. Each class students will be invited to make short presentations (10-15 minutes) highlighting the core arguments of the authors and raising questions to be discussed. The syllabus should not be understood as a straitjacket; thus, it may change during the semester if needed! Course Requirements: Students will be evaluated on four components: occasional short presentations of weekly topics (10%); participation in discussions (10%); a midterm exam (30%); and a final original research paper (50%). Students are encouraged to present a proposal of the research paper no later than February 15 identifying a specific puzzle or question that will be addressed, discussing how you would try to answer that puzzle, laying out the necessary steps of the project, and finally suggesting how this project would advance the literature. Students should be ready to present their proposals in the classroom during the second half of the course when the class will have the opportunity to provide feedback which should be incorporated into the final paper, which should be around 15-20 pages, and is due no later than April 26. Suggested and optional Books (all books and papers are on reserve at the MSU main library. The three first books have also been ordered at the university book store):
1) WEINGAST, Barry R. and WITTMAN, Donald (2006) The Oxford Handbook of Political Economy, Oxford University Press. 2) RHODES, R. A. W., BINDER, Sarah A. and ROCKMAN, Bert A. (2006) The Oxford Handbook of Political Institutions, Oxford University Press. 3) TSEBELIS, George (2002) Veto Players: How Political Institutions Work, Princeton University Press. 4) HAGGARD, Stephan and McCUBBINS, Mathew (2001). Presidents, Parliaments, and Policy Cambridge: Cambridge University Press. 5) EPSTEIN, David and OHALLORAN, Sharyn (1999). Delegating Powers: a Transaction Cost Politics Approach to Policy Making under separate Powers. Cambridge: Cambridge University Press. 6) HUBER, John & SHIPAN (2002). Deliberate Discretion? The Institutional Foundations of Bureaucratic Autonomy Cambridge: Cambridge University Press. 7) LEWIS, David (2003) Presidents and the Politics of Agency Design Stanford: Stanford University Press. 8) MORGENSTERN, Scott (2004) Patterns of Legislative Politics: Roll-Call Voting in Latin America and the United States Cambridge University Press. 9) SPILLER, Pablo and TOMMASI, Mariano (2007). The Institutional Foundations of Public Policy in Argentina: A Transactions Cost Approach (Political Economy of Institutions and Decisions) Cambridge University Press. 10) DRAZEN, Allan (2000) Political Economy in Macroeconomics Princeton University Press. 11) DIXIT, Avinash (1996) The Making Economic Policy: A transaction Cost Politics Perspective MIT press. 12) ACEMOGLU, Daron (2006) Economic Origins of Dictatorship and Democracy Cambridge University Press 13) STEIN, Ernesto (2006) The Politics of Policies: Economic and Social Progress in Latin America IADB 2006 Report. 14) MORGENSTERN, Scott and NACIF, Benito (2002), Legislative Politics in Latin America, Cambridge: Cambridge University Press. 15) ALT, James E. and SHEPSLE, Kenneth A. (1990) Perspectives on positive economy political Cambridge University Press. Program: Week 1) January 11: Introduction, receiving syllabus, begin reading different approaches to political institutions RHODES, R. A. W., BINDER, Sarah A. and ROCKMAN, Bert A. (2006) The Oxford Handbook of Political Institutions, Oxford University Press, Chapters 1 6, 37 and 38. PRZEWORSKI, Adam (2004) Institutions Matter? Government and Opposition.
SHEPSLE, Kenneth (2006) Old Questions and New Answers about Institutions: The Riker Objection Revisited, Chapter 59; The Oxford Handbook of Political Economy.
Week 2) January 18: The Big Picture: Veto Players and difference of preferences Veto Players, Reform and Policy Stability.ppt TSEBELIS, George (2002) Veto Players: How Political Institutions Work, Princeton University Press. HAGGARD, Stephan and McCUBBINS, Mathew (2001). Presidents, Parliaments, and Policy. Cambridge: Cambridge University Press
Week 3) January 25: An entry point, political institutions and the determinants of public policies SPILLER, Pablo; STEIN, Ernesto; and TOMMASI, Mariano (2003) Political Institutions, Policymaking Process, and Policy Outcomes: An Intertemporal Transactions Framework (Mimeo) SCARTASCINI, Carlos and OLIVEIRA, Mauricio (2003) Political Institutions, Policymaking Process, and Policy Outcomes: A guide do theoretical modules and possible empirics (Mimeo) STEIN, Ernesto (2006) The Politics of Policies: Economic and Social Progress in Latin America IADB 2006 Report. Week 4) February 01: Transaction cost Politics EPSTEIN, David and OHALLORAN, Sharyn (1999) Delegating Powers: a Transaction Cost Politics Approach to Policy Making under separate Powers. Cambridge: Cambridge University Press. Chapters 1 DIXIT, Avinash (1996). The Making of Economic Policy: A Transaction-Cost Politics Perspective MIT Press. DIXIT, Avinash (2003) Some Lessons from Transaction-Cost Politics for Less Developed Countries Economic & Politics 15 (2): 107-133.
Week 5) February 08: Credibility, commitment and inter-temporal political cooperation NORTH, Douglass and WEINGAST, Barry (1989) Constitutions and Commitment: the evolution of institutions governing public choice on seventeenthcentury England Journal of Economic History 49: 803-32. WEINGAST, Barry R. and WITTMAN, Donald (2006) The Oxford Handbook of Political Economy, Chapters 16 20.
MUELLER, Bernardo and PEREIRA, Carlos (2002). Credibility and the Design of Regulatory Agencies. Brazilian Journal of Political Economy 22 (3): 65-88. Jacobs, Alan (2004) Democracy, Public Policy, and Timing: Toward a theory of intertemporal policy choice. Presented at the annual conference of Canadian Political Science. http://faculty.arts.ubc.ca/jacobs/Jacobs%20CPSA%20Paper%202004.pdf DRAZEN, Allan (2000) Political Economy in Macroeconomics Princeton University Press, chapters 4 6.
Week 6 and 7) February 15 and 22: Interactions of the Legislature, President, Bureaucracy and Courts WEINGAST, Barry R. and WITTMAN, Donald (2006) The Oxford Handbook of Political Economy, Chapters 7 - 15 RHODES, R. A. W., BINDER, Sarah A. and ROCKMAN, Bert A. (2006) The Oxford Handbook of Political Institutions, Oxford University Press, Chapters 16, 18, 22, and 23. MORGENSTERN, Scott (2004) Patterns of Legislative Politics: Roll-Call Voting in Latin America and the United States LEWIS, David (2003) Presidents and the Politics of Agency Design Stanford: Stanford University Press. SPILLER, P. T. and TILLER, E. H. (1997). Decision costs and the strategic design of administrative process and judicial review Journal of Legal Studies XXVI (June). WEINGAST, B. R. and W. J. MARSHALL (1988). The industrial organization of Congress; or, why legislatures, like firms, are not organized as markets. Journal of political economy 96(1): 163. AMORIM NETO, Octavio; COX, Gary W.; and MCCUBBINS, Mathew D. 2003. Agenda Power in Brazils Cmara dos Deputados, 1989 to 1998, World Politics 55 (July 2003), 550 578.
Week 8) March 01: Electoral and Party Systems (MIDTERM) WEINGAST, Barry R. and WITTMAN, Donald (2006) The Oxford Handbook of Political Economy, Chapter 40. RHODES, R. A. W., BINDER, Sarah A. and ROCKMAN, Bert A. (2006) The Oxford Handbook of Political Institutions, Oxford University Press, Chapters 29, JONES, Mark; SAIEGH, Sebastian; SPILLER, Pablo; and TOMMASI, Mariano (2002) Amateur Legislators, Professional Politicians: The Consequences of PartyCentered Electoral Rules in Federal Systems American Journal of Political Science. July, 656-669. Persson and Tabellini (2002) Political Institutions and Policy Outcomes: What Are the Stylized Facts? (http://ideas.repec.org/p/bdi/wptemi/td_412_01.html)
DRAZEN, Allan (2000) Political Economy in Macroeconomics Princeton University Press, Chapter 7.
March 08 SPRING BREAK
Week 9 and 10) March 15 and 22: Political Institutions and Economic Performance WEINGAST, Barry R. and WITTMAN, Donald (2006) The Oxford Handbook of Political Economy, Chapters 35, 37 39. ACEMOGLU, Daron (2006) Economic Origins of Dictatorship and Democracy Cambridge University Press. KEEFER, Philip (2004) What does p...