Politicians and Economic Reform in New Democracies: Argentina and the Philippines in the 1990s.

By Kent Eaton. University Park: Pennsylvania State University Press, 2002. 351p. $58.50.

The political context in which market-oriented economic reform takes place in developing countries has attracted the attention of political scientists since such reforms were more widely adopted in the 1980s. Much of the literature has focused on the role of the executive in carrying out these reforms, regardless of whether they were enacted under authoritarian or democratic regimes. In this important new book, Kent Eaton argues that—under democracies of varying quality—legislatures are quite important in determining the destiny of reform. The argument is indeed quite convincing and carefully made. Eaton does not claim that legislatures initiate reform on a regular basis in the new democracies he analyzes, nor does he make any claims about the effectiveness of the reforms. He also limits his object of study, for the most part, to the different aspects of fiscal reform, which is certainly one of the most important types of economic reform that new democracies undertake. In the end, he wants to account for the variation in the content and implementation of reforms, and wants to specify the institutional conditions under which legislatures are more or less likely to go along with executive-initiated reform.

At the core of Eaton's argument is a distinction between candidate-centered and party-centered political systems, and he argues that under party-centered systems, legislatures are much more likely to go along with reforms proposed by executives of the same party. He deconstructs the institutional settings in his case studies—the Philippines and Argentina—and reaches straightforward conclusions about how institutional differences lead to policy and implementation differences in the cases. He concludes that in the candidate-centered system of the Philippines, legislatures are much less likely to go along with tax reform that simplifies the tax code and removes opportunities for discrimination among taxpayers. In the party-centered system of Argentina, on the other hand, Eaton finds that legislators were much more willing to go along with tax reforms that broadened the tax base and reduced flexibility in the application of the tax code.

In addition to focusing on how legislators respond to reform proposals from the executive, the author pushes his argument about the differences between candidate-centered and party-centered systems by looking at how bureaucratic reform plays out in the context of fiscal reform, and finds that the differences are significant here as well. On the one hand, in party-centered systems, legislators want to see reform actually carried out, so as to be able to take credit for it, and support greater resources for the bureaucracies to carry it out. On the other hand, politicians in candidate-centered systems want to limit the application of reforms so that they can save their own particular constituencies from having to pay the new taxes that the fiscal reform creates, implying that even if they do pass reform, they may try to block its being carried out. Eaton finds strong supporting evidence in both the Philippines and Argentina.

The argument then gets more detailed yet when Eaton pushes it to consider decentralization, and particularly the degree to which revenues are transferred from the national to local governments automatically or with a significant degree of discretion on the part of legislators. Here, the argument also gets more complicated, and it does not come down to a distinction simply between candidate-centered and party-centered systems, as that distinction breaks down. Rather, the degree to which there is automatic transfer of tax resources depends on the peculiarities of institutional context. For example, in Argentina, there was automatic transfer of tax revenues to the provinces when the Peronists controlled the legislature and not the executive in the 1980s. When the Peronists controlled both the legislature and the executive in the 1990s, however, they reversed course, recentralizing national control over revenue distribution. In the case of the Philippines, legislators abandoned a previous opposition to decentralization when faced with a new constitution that imposed term limits on legislators. Since one consequence of the term limits was a much greater likelihood that politicians would return “home” to their districts in other political capacities, they viewed decentralization more favorably. As these examples make clear, Eaton emphasizes, quite rightly, that attitudes toward decentralization can be explained by looking at the career prospects of legislators, and both types of action are consistent with a political survival motivation.

Another virtue of Politicians and Economic Reform in New Democracies is the empirical detail that Eaton provides. He presents just the right amount in his case studies, and explains their institutional contexts efficiently and clearly. For example, the Argentine case of reform is especially interesting, as it poses a fairly obvious question: How was it that Peronists were able to dismantle much of the Peronist legacy in such a short period of time in the early 1990s? Without a deeper look at the peculiarities of the Argentine case, this outcome would be unintelligible. The details of the Argentine and Philippine cases also make another of Eaton's arguments clearly: that the institutional incentives facing politicians frequently trump ideology when it comes to determining policy preference.

One might then ask: How generalizable are these findings beyond the Argentine and Philippine cases? While the theoretical argument presented here is quite compelling, and the two cases confirm it, the argument still relies heavily on the evidence in these two cases. To answer this question (indeed, Eaton anticipates most potential criticisms of his work quite effectively; it is a “tight” book in that sense), he includes a chapter that compares reforms in other contexts. He considers four additional Latin American cases (Brazil, Bolivia, Colombia, and Venezuela) and finds significant support for his argument. The findings in the other four cases do not always replicate the two primary cases in outcome, for a variety of contextual and institutional reasons that Eaton lays out, but they come close enough to make his general argument much more robust and nuanced. Indeed, this book does exactly what good com parative politics should do: It is cross-regional, theoretically informed, clearly argued, and chock full of solid empirical detail.