This study outlines behavioral hypotheses drawn from actual decision-making processes. It is based on in-depth interviews with decision-makers in manufacturing enterprises in a small, relatively conservative and stable Latin American country (Uruguay) and on detailed questionnaires given to members of those firms as well as to economic agents in government, the service sector, and labor unions whose activities may have influenced the enterprises' decision-making. The paper considers the responses to major new incentives that have accompanied an ongoing process of economic liberalization and integration. It offers the tentative conclusion that while serious perception and judgment problems do not characterize all areas, where they are present they are more important than generally recognized and distort decision-making. Some important problems are difficult to ascertain ex post, and there may be serious limits to the ability to verify a number of hypotheses except by direct involvement in the decision-making process.
Topic:
Development, Entrepreneurship, Economic Integration, and Liberalization
The contemporary consensus over economic policy-making in Chile and the democratic government's capacity to effectively implement these policies are powerfully shaped by a combination of institutional legacies from Chile's democratic past and certain institutional holdovers from the Pinochet regime. This paper reviews briefly the performance of the Chilean economy under the Concertation government headed by Patricio Aylwin. It then argues that Chile's democratic government has been uniquely endowed with a capacity to successfully sustain economic liberalization, in part because of the reappearance of a well-institutionalized party system, in part because of certain nondemocratic limits built into the democratic game during the Pinochet regime. Over the medium term, however, these limits may pose a threat to the consensual style of politics that has come to characterize the post-Pinochet political arena in Chile, and ultimately may threaten democratic political stability if left unaddressed.
Topic:
Economics, Governance, Democracy, and Liberalization