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Inter-American Development BankBanco Interamericano de DesarrolloLatin American Research NetworkRed de Centros de InvestigaciónResearch Network Working Paper #R-510
Political Institutions, Policymaking Processes,and Policy Outcomes: The Case of Uruguay
 
by
Mario Bergara (coordinator)*Andrés Pereyra*Ruben Tansini*Adolfo Garcé**Daniel Chasquetti**Daniel Buquet**Juan Andrés Moraes**
*Departamento de Economía, Universidad de la República Orientaldel Uruguay**Instituto de Ciencia Política, Universidad de la República Oriental delUruguay
March 2006
 
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Cataloging-in-Publication data provided by theInter-American Development BankFelipe Herrera Library
Political institutions, policymaking processes, and policy outcomes : the case of Uruguay / byMario Bergara (coordinator) … [et al.].p. cm.(Research Network Working papers ; R-510)Includes bibliographical references.1. State, The. 2. Uruguay—Social policy. 3. Uruguay—Economic policy. I. Bergara,Mario. II. Inter-American Development Bank. Research Dept. III. Latin American ResearchNetwork. IV. Series.320.1 P445--------dc22©2006Inter-American Development Bank 1300 New York Avenue, N.W.Washington, DC 20577The views and interpretations in this document are those of the authors and should not beattributed to the Inter-American Development Bank, or to any individual acting on its behalf.This paper may be freely reproduced provided credit is given to the Research Department, Inter-American Development Bank.The Research Department (RES) produces a quarterly newsletter,
 IDEA (Ideas for Development in the Americas)
, as well as working papers and books on diverse economic issues. To obtain acomplete list of RES publications, and read or download them please visit our web site at:http://www.iadb.org/res.
 
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Abstract
Uruguay generates a variety of policy outcomes. First, there are relatively stablepolicies, such as those allowing for the commercial and financial openness of thecountry. Then there are inflexible and low-quality policies, such as those relatedto social policies, some areas of state reform (civil servants’ wages and hiringmechanisms), the bankruptcy regime, etc. Finally, there are volatile outcomesresulting from economic shocks, such as those related to discretionary publicspending. In the cases in which historical precedence or the availability of external enforcement devices do not lead to relatively stable policies, the mainouter feature of Uruguayan policies is rigidity. The source of rigidity appears tobe a mixture of institutional factors (multiple veto points, factionalized parties anddirect democracy mechanisms) and political conflict (divergent policypreferences), in which it is very costly to move from the
status quo
due to thecredible threat of policy reversal. Political institutions in Uruguay are conduciveto achieving political compromise in the short run, but cannot effectivelycooperate in establishing stable and flexible policies in the long run. Thedifficulty in achieving intertemporal political exchanges is consistent with themain characteristics of the political environment: a large number of key politicalactors and veto points, a relevant amount of unobservable political maneuvering,poor enforcement technologies in the economic arena, a politically influencedbureaucracy, political exchanges occurring outside the legislative arena, aparticular constellation of parties and preferences and costly policymaking andinstitutional changes.
 
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