Mechanisms of institutional continuity in neoliberal "success stories": Developmental regimes in Chile and Estonia

Aldo Madariaga

No 13/10, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: How do neoliberal political economies threatened with declining competitiveness and social cohesion manage to remain neoliberal over time? This paper explores mechanisms of neoliberal continuity in Chile and Estonia by extending gradualist approaches to institutional change with the notion of institutional hierarchy. Neoliberal continuity, it is argued, depends on the ability of dominant groups to defend those institutions that are more favorable to their interests while altering those that are not in order to obtain political support from other social groups. The question is explored in relation to the parallel trajectory of two policy domains: monetary policy (exchange rates) and industrial policy. Dominant groups try to retain a conservative monetary policy and a neutral industrial policy by altering their parameters (marginal adjustment), narrowing their interpretation (solidification), or negotiating minor/larger concessions (accommodation/compromise). While these mechanisms have allowed dominant groups in Chile and Estonia to retain neoliberalism, the timing and combination of different mechanisms over time have generated different trajectories of continuity. Estonia remains closer to a neoliberal orthodoxy whereas Chile has a more pragmatic trajectory.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:mpifgd:1310

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