Why aren’t Latin Americans smiling?

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Ugo Panizza and Monica Yanez ask why Latin Americans are so unhappy about pro-market reforms. Theory #1:

What matters is the difference between expectations and actual outcome. Policymakers may have made the mistake of overselling the reforms by promising too much, and the disillusionment with reforms documented in this paper could be due to unmet expectations.

Theory #2:

The current economic crisis happened after a period of intense reforms and those who now oppose reforms might believe that there is a causal relationship between the reform process and the economic crisis.

Theory #3:

A final interpretation has to do with the perceived fairness of the capitalist system. Di Tella and MacCulloch (2004) find that residents of poor countries tend to be less pro-market than residents of industrial countries and argue that this is due to the presence of widespread corruption that reduces the perceived fairness of the capitalist system.

Via DBRB. Also see previous posts on the political cost of market reforms or crony capitalism in Latin America.

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