Fellow Explores Economic Disparities in the Latin American Democracies

Jan 01, 2003

When Hector Schamis applied for a fellowship at the Wilson Center, he proposed a project that would compare the Latin American and East-Central European transitions. He planned to examine the kinds of market reforms that could contribute to building more competent states in those regions and to the strengthening of their democracies.

But when he arrived as a fellow at the Center, in September 2002, his project shifted focus. Noting the economic slump in Argentina and Brazil he said, “the economic and political challenges in both regions had become far more different than they were only a year ago.”

While, driven by the incentive of accession, the post-communist European nations have pursued fiscal discipline in accordance with the guidelines of the European Union, the Latin American nations are under serious macroeconomic disequilibria, for the most part the result of their excessive indebtedness during the 1990s.

Schamis—an assistant professor of political science at Cornell University who is spending a year in residence at the Wilson Center—instead chose to compare and contrast the economies of four Latin American countries: Chile, Argentina, Brazil, and Mexico. Currently the most successful of these countries is Chile, which has introduced ambitious market reforms in the last few decades but which has been able to exercise effective regulation in crucial areas of the economy, for example, in banking, capital flows, and the privatized utilities.

Argentina, however, has opened its economy but has largely withdrawn from its regulatory role, while Mexico and Brazil are somewhat in the middle. “The way these countries confront and resolve their present economic hardships,” said Schamis, “will have further implications on the health and stability of their democratic regimes.”

While all Latin American countries embarked on similar reforms, he said, some have defended their currencies better than others, while some experienced generalized bank collapses and others did not. His research will delve into patterns that developed after the debt crisis of 1982, looking at how the four countries he has chosen renegotiated their debts, earned their foreign exchange, and managed to govern their economies through regulatory institutions.

“Looking at the current challenges with the hindsight of the last two decades,” said Schamis, “can help explain why Argentina collapsed last year, why Brazil is on the verge of collapse, and why Chile did not collapse.”

Schamis, born in Argentina, has visited Mexico and Brazil on several occasions and has lived in Chile for more than two years. Growing up in Argentina amidst the political instability of the 1970s—also a period of dramatic economic change—was a formative moment in his life, as he became curious about what drives policy and what its political effects are, under both authoritarian and democratic political orders.

Schamis holds a sociology degree from the University of Buenos Aires. He received his doctorate in political science at Columbia University. He has authored several journal articles and most recently the book Re-Forming the State: The Politics of Privatization in Latin America and Europe, published by the University of Michigan Press in 2002.

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