Strength and Commitment of the State: It Takes Two to Tango: A Case Study of Economic Reforms in Argentina in the 1990s.

This paper addresses the question of why radical economic reforms became a reality in Argentina in the 1990s by concentrating on the political and institutional dimensions of economic policy reform. It presents a framework for analyzing the determinants of the quality of economic institutions, notably the political commitment of the state to provide property and contract rights, and its administrative capacity("strength") in implementing them. The framework is applied to Argentina under the government of president Carlos Menem. The results of an empirical analysis clearly show an improvement in institutional quality, the state strength and commitment during Menem's first term. In turn, during his second term, the indicators show ongoing signs of decline. Considering the prospects for Argentina in the near future, deficiencies of commitment with regard to democratic control mechanisms represent a permanent threat to the economic reforms realized so far. Copyright 2002 by Kluwer Academic Publishers