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ANRV377-PL12-06 ARI 13 April 2009 12:43

Social Policy in DevelopingCountriesIsabela Mares1 and Matthew E. Carnes2

1Department of Political Science, Columbia University, New York, New York 1007;email: [email protected] of Government, Georgetown University, Washington, District of Columbia20057; email: [email protected]

Annu. Rev. Polit. Sci. 2009. 12:93–113

The Annual Review of Political Science is online atpolisci.annualreviews.org

This article’s doi:10.1146/annurev.polisci.12.071207.093504

Copyright c© 2009 by Annual Reviews.All rights reserved

1094-2939/09/0615-0093$20.00

Key Words

social protection, welfare state, reform

AbstractDrawing on recent work and data on social protection in the develop-ing world, this essay evaluates the current state of the art and suggestsseveral important new lines of research. We first examine the historicalorigin and evolution of social protection systems in developing coun-tries, arguing that insufficient attention has been paid to the authoritar-ian roots of developing nations’ social policy. As a preliminary effort toremedy this shortcoming in the literature, we offer a political logic forthe observed variation in the character of institutions of social policy es-tablished by nondemocratic regimes. Next, we explore recent researchexamining linkages between models of economic development and wel-fare regimes in developing countries. Finally, we turn to the study of thepolitical determinants of the social policy reforms that occurred in thefinal decades of the twentieth century, arguing that variation in reformacross policy areas has been more complex than is generally appreci-ated in the literature. To explain this variation, we develop a theory thatidentifies the political coalitions supporting different policy outcomes.

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INTRODUCTIONOur understanding of the development of poli-cies of social protection is uneven across theregions of the world. We know a great dealabout the causes and distributional implica-tions of social policies in developed countries(Esping-Andersen 1990, Huber & Stephens2001). By contrast, our grasp of the variation inthe design and economic consequences of so-cial policies in developing economies is sketchyand preliminary. Although the study of socialpolicies in countries outside the OECD is arapidly growing area of research (Wong 2003;Weyland 2005, 2007; Segura-Ubiergo 2007;Brooks 2008; Haggard & Kaufman 2008), po-litical science as a field is far from understandingthe variation in the character of social protec-tion and the political factors that have causedthese outcomes.

A first striking indicator of the incomplete-ness of our knowledge is the absence of ba-sic descriptive information regarding the cross-national and temporal variation in the level ofsocial protection. In many developing coun-tries, the introduction of social policy legis-lation occurred in the early or middle twen-tieth century, yet we still lack reliable dataon the implementation of these policies, thescope of coverage, or the levels of benefits. Insome cases, social policy legislation providedgenuine protection to many citizens for vari-ous employment-related risks. In other cases,however, such measures were no more thanpromises that were not fulfilled or that wereimplemented in a highly discretionary fash-ion. For example, according to data on “offi-cial” levels of social protection recorded by theSocial Security Administration of the UnitedStates, 40 sub-Saharan countries had policies ofold-age and disability insurance in place, with“promised” levels of social protection roughlycomparable to that found in economies withmuch higher levels of economic development(Social Security Administration 1999). Yet thisinformation on social policy commitments isclearly contradicted by case studies of the im-plementation of these policies. Similarly, in

Latin American countries, governments havereneged on multiple occasions on many of thesocial policy promises enshrined in their leg-islation. In both regions, highly uneven socialprotection resulted because governments eitherlacked the administrative capacity to enforcecontributions to social insurance or deliberatelychose to manipulate social insurance to benefitparticular sectors.

A second shortcoming of the existingresearch is the absence of systematic cross-national and temporal data on the implementa-tion and design of social policies. This has hin-dered our understanding of the distributionalimpact of social policies and their effects on eco-nomic and labor market outcomes, such as thelevel of employment, overall labor force par-ticipation rates, and economic growth (Mares2007a). Consider for example the relationshipbetween the level of social protection and thesize of the informal economy. Since the influ-ential paper of Harris & Tadaro (1970), socialsecurity contributions and other labor marketregulations have been argued to be the maincause of labor market “dualism” in many devel-oping countries, segmenting employment be-tween secure, higher-paid jobs in the formalsector and precarious, lower-paid informal jobs.High social security contributions and above-market-clearing wages were theorized to forceworkers to queue for jobs in the formal sec-tor and subsequently shunt many workers intothe informal economy. However, a growingamount of empirical evidence raises significantdoubts about the explanatory power of this re-ceived wisdom. For example, over the past twodecades, lack of enforcement of minimum-wagelegislation in many Latin American countrieshas resulted in a tremendous downward flex-ibility of wages in the formal sector. At thesame time, many social insurance programshave been dismantled or have experienced se-vere cutbacks. Yet despite these changes, we seeno decline in the size of the informal economyacross the region. By 2005, the best estimatesshow that 50% of all salaried workers in LatinAmerica continued to work informally (Galiani

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& Weinschelbaum 2006). These results call intoquestion the expected positive relationship be-tween social insurance expansion and informal-ity, leaving us with no convincing alternativetheory of the factors that cause variation in thesize of the informal sector.

Third, many developing countries have ex-perienced tremendous social policy changein recent decades. Countries as diverse asThailand and Bolivia have enacted a wide rangeof social policy reforms—modifying the level ofinsurance coverage, the eligibility conditions,and the mix between private and publicly pro-vided benefits received by their citizens. How-ever, the direction of these changes is still in-sufficiently understood (Mares 2007b). Havewelfare states around the world been drivenby the competitive concerns of globalization toadopt “residualistic” models, characterized bynarrow social insurance coverage and a strongreliance on private-type institutions of socialprotection? Do we find significant differencesacross policy areas in the direction and mag-nitude of policy change? Have some particularsubsystems of the welfare state been more vul-nerable to retrenchment than others? Althoughthe study of the recent politics of welfare stateadjustment in developing countries has been arapidly growing area of research in recent years,many puzzles remain. We have an insufficientunderstanding of the variation in the distribu-tional implications of policy changes enacted inrecent years. Existing studies do not adequatelyexplain the strong divergence across policy ar-eas (often within the same country); we needan explanation that is grounded in a coherentmicro-logic and can account not only for thepreferences of political and bureaucratic elitesbut also for the preferences of organized groupsand mass publics.

Fourth, the empirical bias that has char-acterized the existing literature on compara-tive systems of social protection has limited theefforts of scholars to test competing explana-tions against each other. Most of the explana-tions that seek to account for cross-national dif-ferences in the level of social protection haveonly been tested in a narrow subsample of

countries that covers 14–18 OECD economies.In this limited universe of cases, the theo-retical variables that are considered importantdeterminants of the trajectory of social pol-icy development—such as the strength of left-wing partisanship, the organizational density ofbusiness and labor, and the type of electoralsystem—are highly correlated with each other.As a result, many quantitative studies of the de-terminants of social protection in advanced in-dustrialized countries leave out important ex-planatory variables and are unable to test allrelevant competing theories against each other.Broadening our sample size by including de-veloping countries allows us to overcome prob-lems of multi-collinearity and to include a largernumber of potential explanatory variables inour estimations. A study of policies of socialprotection with a broader empirical scope canhave important theoretical externalities.

Drawing on recent work and data on so-cial protection in the developing world, thisarticle evaluates the current state of the artand suggests several important new lines of re-search. We first examine the historical originand evolution of social protection systems indeveloping countries, arguing that insufficientattention has been paid to the authoritarianroots of developing nations’ social policy. Asa preliminary effort to remedy this shortcom-ing in the literature, we offer a political logicfor the observed variation in the character ofinstitutions of social policy established by non-democratic regimes. Next, we explore recentresearch examining linkages between strategiesof economic development and welfare regimesin developing countries. This represents a novelagenda of research, paralleling the latest re-search on social policy in advanced industrial-ized societies. However, it requires better speci-fication of its micro-foundational logic. Finally,we turn to the study of the political determi-nants of the social policy reforms that occurredin the final decades of the twentieth century,arguing that variation in reform across policyareas has been more complex than is gener-ally appreciated in the literature. To explain thisvariation, we develop a theory that identifies the

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political coalitions supporting different policyoutcomes.

THE HISTORICAL ORIGINOF SOCIAL POLICIES INDEVELOPING COUNTRIES:THE UNEXPLORED POLITICALLOGIC OF AUTHORITARIANGOVERNMENTS

The first generation of research examining thevariation in social policy has explored the im-pact of underlying structural variables—such asthe level of economic development or the leveland speed of industrialization—on the levelof social spending. For economists, the mech-anism linking higher economic developmentand higher levels of social spending goes backto Wagner’s observation that spending on so-cial transfers rises as incomes rise. This pos-itive income elasticity of government trans-fers is expected to account both for the steadygrowth of social spending and for the observedcross-national variation. Political scientists, bycontrast, emphasize the new needs and vulner-abilities in the economy created by the pro-cess of industrialization. Early empirical workon OECD countries found a positive correla-tion between the level of industrialization oreconomic development and aggregate socialspending (Wilensky 1975). However, the rela-tionship between economic development andthe size of the government or the level of gov-ernment revenues does not prove to be ro-bust in a broader sample that includes devel-oping countries (Adsera & Boix 2002, Mares2005a). Economic development does not seemto explain much of the variation in spend-ing among developing countries. The short-comings of these variables point to the needto consider political determinants of socialpolicy.

Among the latter, perhaps the most stud-ied question in the literature has been the re-lationship between regime type and the size ofthe government. Typically, this work has arguedthat democracies, owing to their need to caterto a broad electoral base, will have more ex-

tensive social policy commitments. The logicis that competition among political candidateswill lead to social policy expansion to reach newgroups of voters. Likewise, democratic free-dom permits interest group organization andpressure for the increase of social spending(Haggard & Kaufman 2008). Although somedisagreement exists (Mulligan et al. 2003), thequantitative literature seems to support thiscontention that democracies spend more thannondemocracies on particular social programs(Przeworski et al. 2000, Lake & Baum 2001,Avelino et al. 2005).

Within democracies, we now know a greatdeal about patterns of social spending and pol-icy, especially in developed economies. For ex-ample, left-wing, labor-associated governmentsare more likely to undertake greater socialspending (Esping-Andersen 1990, Huber &Stephens 2001); yet, these effects are morepronounced in the formative years of labor-associated parties than in the later, reformperiod—in which these parties have often pro-tected their core constituencies of “insiders” atthe cost of the broader working class (Rueda2005). On the other side of the political spec-trum, employers and associated parties on theright are not univocally opposed to socialpolicy expansion. Under certain conditions—such as increased economic competition orthe presence of industrial risks in the produc-tion process—firms may support government-administered social protection schemes andthus enter into cross-class alliances with work-ers (Mares 2003, 2005a; Swenson 2002).

However, one significant weakness of thisliterature is its binary distinction betweendemocracy and nondemocracy. This blunt di-chotomy misses the important variation in so-cial spending and social policy design withinregime types. More fundamentally, even whenvariation in regime types appears to account fordifferences in the growth of social policy ex-penditures, it cannot explain the political ori-gin of social insurance programs. As Esping-Andersen (1990, p. 15) pointedly remarks, “thethesis that democracy leads to larger welfarestates confronts the historical oddity that the

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Table 1 Regime type at time of first adoption of social insurance policies, by region∗

Region Regime type Old age Disability Sickness UnemploymentLatin America authoritarian 12 16 13 0

democratic 2 3 1 3Advanced industrialized nations authoritarian 7 8 7 2

democratic 15 14 13 19Eastern Europe authoritarian 9 7 8 2

democratic 0 2 1 2Africa authoritarian 3 4 3 1

democratic 0 0 0 0Middle East authoritarian 5 8 3 –

democratic 1 0 0 –Asia authoritarian 4 9 2 –

democratic 2 2 3 –TOTAL authoritarian 40 52 36 5

democratic 20 21 18 24

∗ Sources: Flora & Heidenheimer 1981; Mares 2005a; U.S. Social Security Administration, Social Security ProgramsThroughout the World, various years.

first major welfare state initiatives occurredprior to democracy and were powerfully moti-vated to arrest its realization.” In the Europeancontext, nondemocratic regimes—such as thoseof Bismarck in Germany and von Taaffe inAustria—pioneered social insurance legislation,and the expansion of social programs often oc-curred under conditions of limited suffrage.One quantitative analysis of the evolution of so-cial spending in Europe during the last decadesof the nineteenth century and the first twodecades of the twentieth century suggests thatvariables capturing differences in the type ofdemocracy can account for only very small dif-ferences in social spending (Lindert 1994).

In the case of developing countries, regimetype even more strikingly fails to account fordifferences in the origin of social programs.Here, the overwhelming number of social in-surance programs were initially adopted bynondemocratic governments. Table 1 presentsdata on regime type at the time of the adoptionof different social policies. Several regional pat-terns stand out. In Europe and North America,the majority of policies were adopted by democ-racies. Only one third of the earliest measures(disability, old age, and sickness) were instituted

under autocracies. We find the opposite pat-tern when we move to different regions of theworld. Disability insurance, to cover workplaceinjuries that could leave workers incapacitated,was often the first policy adopted and is themost prevalent policy cross-nationally. How-ever, of the 73 countries included in this sample,>70% were autocracies at the time of adoption.And when the advanced industrialized nationsare removed from the total, fully 88% of de-veloping nations adopted disability insuranceunder authoritarian rule. Both old-age insur-ance and sickness insurance show similar pat-terns, with twice as many autocratic nations in-stituting these programs as democracies. Theonly departure from the pattern of authoritar-ian first-adoption has been unemployment in-surance. Far more limited cross-nationally, un-employment insurance is largely restricted tothe advanced industrialized nations, and thuswas adopted primarily under democracies.

Nondemocratic regimes have adopted so-cial insurance programs that vary dramaticallyin the scope of insurance coverage, the ag-gregate level of benefits, and the compositionof those benefits. In some cases, authoritariangovernments have designed policies to serve


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extremely narrow political clienteles and havebeen able to maintain this narrowness of cover-age despite rapid economic change and grow-ing affluence. For example, prior to democrati-zation in Taiwan, the major old-age insuranceprogram—the Labor Insurance Act—providedemployment-related benefits to <10% of thelabor force. In contrast, other authoritarianregimes have chosen to enact universalistichealth care and education systems. For exam-ple, in Brazil in 1971, the military governmentof Emilio Medici presided over a dramatic ex-pansion of social insurance in the countryside(Malloy 1979).

Theories linking regime type and social pol-icy thus need to be grounded in an explana-tion of the internal political dynamics of theseregimes. Unfortunately, prevailing theories ofautocracies offer very limited guidance in thiseffort. Much of the theoretical work on autoc-racies tends to be taxonomical; it has generateda long list of possible nondemocratic regimetypes (O’Donnell 1979, Linz 2000). These in-clude “neo-sultanistic, neo-patrimonial, per-sonal, bureaucratic authoritarian, military, in-clusive military, exclusive military, single party,dominant (or hegemonic) party, semiauthor-itarian, autocratic, and totalitarian—to namesome of the most commonly used categoriesof authoritarian government” (Haber 2007,p. 694). This attention to the diverse institu-tional shapes of autocracies has proven helpfulin understanding the specifics of particularcases, but it provides less traction in cross-national comparisons and cannot account forthe variation in policy output of nondemocraticregimes. To illustrate this point, consider thebroad variation in the social policy legislationadopted by military regimes. Some of theseregimes have adopted policies that favor ur-ban labor, whereas others have taken a harshand repressive stance against industrial work-ers. Still other military regimes have introduceduniversalistic social insurance. In short, “mili-tary regimes”—one critical category of prevail-ing taxonomies of autocratic regimes—is notparticularly helpful in explaining variation insocial policy outcomes.

Turning our attention to the relationshipbetween autocratic regimes and their popula-tions has significant predictive power regardingthe design of, and spending on, social welfarepolicies. In doing so, we build on recent workthat has sought to better specify the politicaleconomy of autocracy, noting the dilemma au-thoritarian rulers face in remaining in powerover a population whose support can never becompletely trusted (Wintrobe 1998). In partic-ular, the group that maintains the autocrat inpower, which can also credibly mount a chal-lenge to her rule, has become central to “selec-torate” theories of political survival (Bueno deMesquita 2003). Organizations strong enoughto put an autocrat in power must also possessthe resources to end her rule. Three distinctpolitical equilibria exist as solutions to the “au-tocrat’s dilemma,” the challenge of preservingher rule in the face of her launching organiza-tion (Haber 2007).

In a first scenario, the leader attempts toeradicate the power of the launching organi-zation through a strategy premised on terror,torture, and purges. If the dictator succeeds,the outcome is one of unconstrained powerand discretion. Under these conditions, how-ever, the dictator will be unable to commit her-self not to expropriate predatorily all returnsfrom economic activity. The consequence is alack of investment in these regimes, which willdepress economic activities and tax revenues.The implications for social policy are relativelystraightforward: One should see little or no so-cial policy legislation enacted by these regimes.Much like the classic “stationary bandit” witha short time horizon, they extract rents to themaximum extent possible and target spendingon their repressive apparatus (Olson 1993).

The second potential strategy pursued byauthoritarian leaders in their conflict with com-peting organizations is one of collusion. In thisequilibrium, the dictator seeks to prevent coupsby providing leaders of the launching organi-zation with a stream of rents in selected eco-nomic sectors, and by simultaneously restrict-ing the level of economic competition in thenation. Measures such as barriers to entry, the

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selective allocation of import permits, and therequirement of licenses or concessions to enterparticular economic activities confer an ongo-ing privileged status on members of the launch-ing organization (Haber 2007). To be effective,the dictator must also bind her own hands andthose of her rivals and private economic agents,limiting them to a pattern of distribution ofrents that increases the costs of their defec-tion from this arrangement. In other words, thedictator sets up institutions that alleviate rivals’fear of arbitrary expropriation and also guaran-tee them a steady stream of rents (Haber et al.2003).

The strategy of collusion has distinct impli-cations for the design of social policies. Con-sistent with a set of economic policies premisedon the creation of monopolies, we expect to seethe establishment of “restrictive” social policies,characterized by narrow coverage and generousbenefits. Thus, the beneficiaries of social policylargesse will be workers in the state-owned orprivate-sector industries on which the regime isalso conferring trade protection and other priv-ileges. High levels of benefits ensure the loy-alty of these workers to their leaders and theiremployers, reducing strikes and other labor ac-tivism and encouraging wage moderation. Fi-nancing for these generous programs is madepossible by the monopoly rents these industriesenjoy.

An example of this sort of collusive socialpolicy occurred under the “immigrant regime”of the Nationalist government in Taiwan. Po-litically, this regime relied on the supportof “mainland Chinese” who had immigratedwith Chiang Kai-shek to Taiwan during thecivil war. The institutions and policies put inplace by Chiang Kai-shek contained strong fa-voritism toward this group and an implicit biasagainst native Taiwanese, denying them partic-ipation in the national power structure (Tsai &Chang 1985), through a strategy often referredto as “internal colonization” (Hechter 1975,Grabowski 1988). Thus, even though the main-land Chinese constituted a minority in number,they enjoyed disproportionate power and wereable to set up the political and economic insti-

tutions to benefit their friends and buy off theirpotential adversaries.

The Nationalists’ social policy legislationwas introduced by presidential decree—ratherthan an act of the legislature—on March 1,1950, the day of Chiang Kai-shek’s politi-cal inauguration. The centerpiece of the leg-islation was the Labor Insurance Act. Cov-erage was limited to employees of centraland local government-owned enterprises andblue-collar workers in private enterprises withmore than ten employees. In the same year,the government introduced soldiers’ insurance.In short, the government instituted a systemthat benefited its most likely challengers—fellow Nationalists (the launching organiza-tion), workers with the potential to organize(and the holders of private capital for whomthey worked), and the military.

A third distinct political equilibrium foundin authoritarian governments is characterizedby organizational proliferation. In this case, thedictator encourages the creation of competingorganizations in order to raise the costs of col-lective action by the launching organization.We see this logic at work in a variety of cases thathave been categorized as distinct regime typesby previous studies: military governments thatencourage the creation of political parties orone-party Communist regimes that foster po-litical competition among rival organizations,such as the secret police and the military. Haberinvokes Mexico under the PRI as the paradig-matic case of this political strategy. As Haber(2007, p. 703) argues, “the key to the PRI’s suc-cess was that it sat at the center of a network oforganizations which were designed to align theincentives of a wide variety of organized cor-porate groups, making it extremely difficult forany of them to mount a credible challenge tothe party’s monopoly on power.”

In sharp contrast to the collusive autocraciesor to dictatorships that pursue strategies of po-litical terror, regimes premised on this logic oforganizational multiplication confer economicrights to broader segments of the population.Although their resulting property rights sys-tem is more extensive, it is also more uneven,


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as groups that have been granted some pri-vate property rights can easily usurp the rightsof unprotected individuals. These regimes of-ten produce a chaotic mix of economic policiesgranting selective benefits to a variety of groups.In the past century, authoritarian governmentsthat employed organizational proliferation fre-quently pursued economic strategies involvingimport substitution, targeting tariff policies andgovernment spending to benefit key groups oflocal producers and workers, and thus buyingtheir political support and diffusing potentialtensions.

This characterization of the logic of orga-nizational proliferation pursued by the PRI inMexico resonates with the characteristic poli-cies pursued by “state corporatist” regimes(Schmitter 1979). In this strategy, the stateorganizes society into constituent units thatare “limited in number” by government re-striction, “singular” because competitors havebeen eradicated, “compulsory” through legalor other institutional constraints, “noncompet-itive” owing to state intervention, “hierarchi-cally ordered” under state management, “func-tionally differentiated” through organizationssuch as industrial unions, recognized by thestate, with a “representational monopoly” onmembers of their group, and with state “con-trols on leadership selection and interest ar-ticulation” (Schmitter 1979, pp. 20–21). Theorganizational proliferation model seeks to co-opt existing competitors by incorporating theminto the system of benefits as under collusive au-thoritarianism, but it also seeks to cultivate neworganizations. These new organizations dilutethe power of elites from the launching orga-nization, and they create overlapping responsi-bilities and restraints on defection. Indeed, thetotal pool of beneficiaries grows substantiallysuch that even if benefits are uneven, mountinga credible threat against the government maybe difficult. Rents in various forms reach moremembers of the population.

The social policy profile of autocracies pur-suing a political strategy premised on organi-zational proliferation will differ dramaticallyfrom the social policy profile of other autocra-

cies. One expects these autocracies to enact so-cial policies with two (seemingly contradictory)policy characteristics. On the one hand, the so-cial policies will be characterized by high levelsof institutional fragmentation. This is associ-ated with pronounced inequities in the level ofsocial policies. They will, most likely, resemblethe “conservative welfare regimes” of advancedindustrialized democracies, where we find pol-icy privileges granted to civil servants and alarge number of occupational groups (Esping-Andersen 1990). On the other hand, the levelof social policy coverage found in these regimeswill be much broader than the coverage undercollusive autocracies.

The political development of social pro-tection in many Latin American countriesprovides ample examples of this logic. Underthe military junta that came to power in 1943in Argentina, efforts were made to developnew ties to labor through a number of state-administered social policy measures, includingpensions, public health and social assistance,housing finance, and unemployment insurance(Godio 2000). Yet the mix of benefits variedgreatly. Wages were significantly lower forgovernment workers and health and educationworkers, but these sectors were compensatedthrough even stronger job protections (Carnes2008). Equally importantly, the 1945 Law ofProfessional Associations assured labor unionbargaining rights and recognized monopolyunions in each industrial sector; however, thismeasure also limited the independence of laborand restricted its right to strike (Collier &Collier 2002). In Brazil, too, the harder-linemilitary regime that emerged in 1964 firstsought the most radical kind of organizationalproliferation—establishing an “official” oppo-sition party—the Democratic Movement ofBrazil (MDB). When this proved impossible tomanage, the government sought to fragment itinto smaller parties. On the social policy front,it extended social security entitlements to ruralworkers in 1971, and in 1974 gave pensionsto older urban workers who had not madefull payments into the social security system.Both were clear efforts to win the allegiance

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of alternative political bases. However, thebenefits to these rural and informal workerslagged far behind those enjoyed by industrialand civil service workers (Haggard & Kaufman2008). Our third example of organizationalproliferation comes from Mexico (Haber2007). Seeking to consolidate control over anation wracked by the regional and economicrivalries of the 1910–1920 Mexican Revolu-tion, Plutarco Elı́as Calles and his successorsdesigned their new party to gather the disparatestrands of the population—with sections forthe military, peasants, industrial workers, and“popular” middle classes (Skidmore & Smith2005). Although the Instituto Mexicano deSeguro Social (IMSS) was not created until the1940s and was restricted to a small number ofbeneficiaries, it would be gradually expandedto larger segments of the urban working class.Benefits were not even, though, as state work-ers received the far more generous assistanceof their own social security agency (ISSSTE).

The conditions under which authoritariangovernments choose a strategy based on orga-nizational co-optation versus proliferation re-main uncertain. It would seem that the numberof critical supporters that make up the launch-ing organization—roughly analogous to the“selectorate” in the terminology of Bueno deMesquita et al.—is central to the choice of strat-egy. Where membership in the launching or-ganization is more restricted, and where otherpotential challengers are limited in number, itis easier to set up institutions to favor the focalelites. Conversely, when the autocrat is broughtto power by a broad coalition of interests, or in acivil conflict with many disparate parties and in-terests, then organizational proliferation will bepreferred. This allows the autocrat to cultivateties to each of the potential challengers, frag-menting them and frustrating their efforts tocollectively bring down the regime. Finally, theinitial political ties and the ideological goals ofthe launching organization constrain the policychoices of the dictator, leading to policies withdistinct distributional biases.

Given the large number of cases in which so-cial policy adoption occurred under autocracy,

and the scant attention it has received in the ex-isting literature, we contend that future studiesmust deepen our theoretical understanding ofthe political (especially authoritarian) dynamicsdriving social policy development. We have of-fered a preliminary outline of such an approach,but in-depth case studies are needed to test itslogic.

VARIETIES OF DEVELOPMENTALCAPITALISM AND VARIETIES OFWELFARE REGIMES

The explanation outlined above attributes di-vergence in social policy outcomes to differ-ent levels of political competition within auto-cratic regimes. However, a number of scholarsargue either that regime type is epiphenome-nal or that its causal effect is strongly medi-ated by other variables (Haggard & Kaufman2008). In this related line of research, a numberof studies are seeking to relate cross-nationaldifferences in social insurance programs to dif-ferences in the economic strategies pursued byvarious countries (Wibbels & Ahlquist 2007,Haggard & Kaufman 2008). This promisingline of research is characterized by an intensesearch for the “first-order” causal variables thatexplain the initial adoption of a developmentalmodel of capitalism.

The theoretical antecedent of these studiesis the scholarship stressing the causal linkagesbetween “production regimes” and “welfareregimes” in advanced industrialized economies(Kitschelt et al. 1999, Hall & Soskice 2001,Ebbinghaus & Manow 2001). These studieshave identified systematic cross-national diver-gence in the organization of financial and in-dustrial relations systems among advanced in-dustrialized countries, distinguishing betweencoordinated and liberal market economies. Incoordinated market economies, a dense net-work of business organizations as well as theprovision of patient capital by firms facilitateshigh levels of investment in firm- or industry-specific skills. The presence of these institutionsof nonmarket coordination affects the socialpolicy preferences of employers and workers in


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these economies and the formation of cross-class alliances in support of social policies thatprotect investment in skills (Estevez Abe et al.2001; Mares 2001, 2003). These include insur-ance policies with earnings-related benefits thatraise the reservation wage of high-skilled work-ers and lower their willingness to take up jobsthat do not correspond to their qualifications.By contrast, in liberal market economies, firms’incentives to undertake long-term investmentsin the skills of their workers are lower becauseof weak employers’ associations and fluid capi-tal markets. In this context, cross-class alliancesamong employers and employees are less likelyto form, and business is more likely to press forthe deregulation of labor markets and for re-ductions in social policy benefits (Wood 2001).

More recently, attention has turned to theways that nations use social policies to shape orcreate a labor force adequate to their “particu-lar development projects” (Wibbels & Ahlquist2007). According to this logic, the choice of so-cial policies is not driven by partisan politics orby the level of democracy or even by regimetype, but by four structural conditions: domes-tic market size, relative abundance or scarcity oflabor, asset inequality, and the openness of theinternational economy. The resulting policiestend to cluster on three main “regimes” thatemphasize redistributive social security insur-ance, human capital development, or a mix ofthe two.

In countries marked by large domesticmarkets, scarce labor, and high inequality,inward-oriented “import-substitution industri-alization” (ISI) development strategies predom-inated as a response to the Great Depression.Capitalists sought to create a labor force capa-ble of domestic industrial production, as well asa consumer base capable of absorbing their out-put. To do so, they needed to invest in skill de-velopment among workers, and they looked tosocial policy as a way to retain workers by insur-ing them against the risks of injury or sickness.Urban industrial workers came to possess a highlevel of bargaining power in these labor-scarceeconomies and were able to effectively organizeto lobby for “insurance-based social regimes”

(Wibbels & Ahlquist 2007). Capitalists weresupportive of this redistribution through socialsecurity programs because it ensured continueddemand for their domestically produced goods.

In contrast, in large, labor-abundant, andlow-inequality economies, ISI policies werestaved off through the efforts of relativelystronger rural sectors who would not toleratethe urban bias of ISI. In these cases, “export-ledindustrialization” (ELI) was chosen. Capitalistsrequired two features in the labor market—askilled workforce and low labor costs—in or-der to remain internationally competitive. Theyfavored a “human capital” social policy regimeemphasizing education and health care and withlittle or no redistributive social policy (Wibbels& Ahlquist 2007). In these cases, workers havenot felt the need to call for more redistribu-tion, and collective action has been complicatedby the relatively large and homogenous laborforce.

Finally, a “mixed” social spending regimecombines “modest levels of insurance and hu-man capital spending” (Wibbels & Ahlquist2007). These regimes have occurred in coun-tries with large domestic markets and abun-dant labor, but in which ISI developed ow-ing to high levels of inequality. Nevertheless,the abundance of labor made it impossible forworkers to collectively demand high insurancespending, leading to only moderate redistribu-tion and the adoption of some human capitalspending. Similar mixed outcomes may also oc-cur in smaller countries with mineral wealth.

This elegant and parsimonious theorypresents a novel explanation of the determi-nants of social spending in developing coun-tries. Several aspects of this theory, however,require further analysis. A critical assumptionis that all leaders facing similar structural con-ditions will happen upon similar developmentstrategies with similar implications for socialpolicy spending. However, we have suggestedabove that authoritarian regimes may have po-litical motives, unrelated to structural economicconditions, that determine their patterns of so-cial spending. A political answer based on theelectoral needs of the government in power

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underwriting the ISI policies with subsidies andtrade protections needs to be developed.

In addition, the causal connection betweensome of the underlying structural variables anda developmental regime is often unclear in thistheory. On the one hand, many of the struc-tural factors that are taken as given and exoge-nous might be in fact endogenous to the politi-cal process and social policy regime adopted. Inparticular, levels of inequality and labor mar-ket stratification would seem to be both causesand consequences of the educational systemand of social policy more generally. In addi-tion, many countries show significant variationover time in their levels of labor scarcity. Fi-nally, several countries experienced significantchanges in their developmental model. Koreashifted from an ISI model to ELI in the mid-1950s (Chibber 2003). Many Latin Americancountries pursued the ISI strategies for onlybrief periods of time. Models relying on time-invariant structural variables cannot account forthis contingency in the choice of developmentalmodels.

The preferences and incentives of politi-cal actors over different policy choices alsoare inadequately specified. Consider the choicewhether or not to invest in educational poli-cies. It is unclear why both workers and em-ployers under ISI do not prefer spending oneducation, recognizing the advantages of sucha choice in the long term. Why do workers notcall for more broad-based educational efforts?Why would employers prefer to bear the costof educating workers in basic skills when theycould outsource education to the government?Further, recognizing the gains that could bemade if efficiency were achieved and marketsopened, why would capitalists “vote” againstuniversalistic education that would make work-ers interchangeable and lower the wage rate?A political answer, based on the concentrationof rents for industrial workers and the electoralneeds of the government in power underwritingthe ISI policies with subsidies and trade protec-tions, needs to be developed.

A final difficulty with this approach is thatit emphasizes policy continuity and tends to

downplay the variation in social spending thatoccurred over time, especially in the most re-cent decades. The examples of South Korea,Tunisia, and Mexico, which are cited as pre-senting stable social security spending, actuallyshow increases of 100% or more (and decreasesof 50% or more) in particular policy areas inthe period of 1970–1982. Thus, although de-scribing spending regimes is helpful, this anal-ysis may miss some of the most important andpolitically contentious modifications that havehappened over time.

An alternative structural approach empha-sizes the importance of “critical alignments”that occurred in the mid-twentieth century indifferent regions of the world, and contendsthat distinct logics are needed to explain the dif-ferent processes of social policy adoption andreform in developing countries (Haggard &Kaufman 2008).

Analyzing spending levels in each of thethree principal social policy areas—pensions,health, and education—the critical-alignmentsapproach proposes three regional social welfaretypes for Latin America, Asia, and EasternEurope (Haggard & Kaufman 2008). Com-paring social programs in 1980, Haggard &Kaufman describe how “social security spend-ing in Latin America dwarfs that of East Asia’sminimalist welfare states,” whereas EasternEuropean nations consistently outspend (oftenby a factor of two) the Latin American states. Inhealth care, Latin America tends to emphasizecurative health care while Asia spends propor-tionally more on basic health care. In education,although spending levels are not radically dif-ferent between the two regions, Latin Americadevoted more spending to secondary educa-tion, and Asia showed superior performance instudent retention through fifth grade.

Critical realignments are argued to haveprovided the genesis of the distinct social wel-fare policy regimes in the mid-twentieth cen-tury in each region, through which the chang-ing composition of the ruling elite led to new“incentives to co-opt, control or repress urbanlabor unions and political movements repre-senting the working class and the peasantry”


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(Haggard & Kaufman 2008, p. 20). At this time,the Cold War produced very different resultsin Eastern Europe, where Communist dictator-ships took control and made workers central totheir political strategy, and Asia, where viru-lently anti-Communist leaders severely limitedthe emergence of left parties and weakened la-bor. In Latin America, reformist leaders camefrom the military and middle classes and soughtto win electoral support from the urban work-ing class by extending employment-related so-cial insurance. Each of these ruling coalitionsplayed a crucial role in setting up each nation’sdevelopment strategy—whether ISI or export-led growth—which reinforced and supportedthe coalitions. Where large urban labor forceswere co-opted or integrated into the state inLatin America and Eastern Europe, ISI policieswere chosen, further cementing the industrialworkforce’s privileged place in the economy. InAsia, as many of the nations emerged from colo-nial rule in the postwar period, Cold War con-cerns and U.S. support encouraged export-leddevelopment strategies.

A separate logic is proposed to explainthe reform process of social welfare policy inthe three regions during the post-1980 “thirdwave” of democracy. Here the causal impor-tance of two main independent variables isstressed. First, economic conditions in the1980s set up a path of either expansion or con-traction. Where economic growth and struc-tural conditions were positive (East Asia), socialpolicy programs tended to expand in size andcoverage. Where these conditions were nega-tive (Latin America and Eastern Europe), thereturn to democracy was marked by a contrac-tion of social policy commitments. Second, thereforms of the 1980s and 1990s are argued tobuild on the earlier political legacy that so-cial policy had created in each region. Thus, inEast Asia, where social policy had been limited,the expansion of coverage was politically pop-ular, drawing in new supporters to democraticgovernments increasingly interested in cultivat-ing an electoral base. Conversely, in EasternEurope, where social policy commitments werebroad, efforts at reduction met widespread op-

position. Similarly, in Latin America, unionsthat had been privileged under earlier poli-cies opposed both expansion of coverage (whichwould dilute their benefits) and retrenchmentin the programs that targeted them.

Although this complex structural analysis isa significant advance over much of the existingliterature, the causal explanation it ultimatelypresents is nearly as complex as the reality itdescribes. The line between theory and historyis blurred to the point where it is unclear whichvariables are more important than others.

Further, the emphasis on regional clustersmay obscure more than it reveals. On the onehand, the “cross-regional” differences are notas stark as they are portrayed. Consider thedifferences in the relative emphasis on educa-tional spending, which, according to this expla-nation, differs dramatically between East Asiaand Latin America. There is no difference inthe average spending on education as a percent-age of GDP between Latin America and EastAsia—both are 3.2%—and the difference in av-erage education spending as a percentage of to-tal government spending is only 2.3% (17.5%of total spending in Asia versus 15.2% in LatinAmerica). Neither difference is statistically sig-nificant ( p-values of 0.6 and 0.55, respectively).Indeed, very few of the regional differences inwelfare state spending are statistically signifi-cant. Morever, the “regional dummies” invokedby this analysis conceal too much within-regionvariation. This within-region difference is per-haps starker in East Asia than in Latin America(Ramesh 2005). Explanations for cross-nationalvariation within regional clusters at these crit-ical moments invoke a long list of potentialexplanatory variables, which includes regimetype, strength of the labor movement, eco-nomic structure, strength of populist parties,and so on. The analysis does not specify theirrelative importance nor the levels and criticalvalues at which changes in these variables ac-count for cross-national variation within a re-gional cluster.

A final shortcoming of the structural“production regime” approach, shared withtheir theoretical counterpart in the literature

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focusing on advanced industrialized societies,is their assumption of strong policy coherencewithin countries. In the following section, weshow that evolution of social policies in recentdecades is characterized by tremendous varia-tion across policy areas even within the samecountry.

THE POLITICS OF SOCIALPOLICY REFORMS

During recent decades, social policies through-out the world have undergone significantmodification. Change and transformationare common to both developed and devel-oping countries. However, the magnitude ofchange experienced by advanced industrializedeconomies is dwarfed by the thorough-goingpolicy changes that occurred in Latin America,Asia, and Eastern Europe in the 1990s.

Two kinds of policy changes have receivedsignificant attention. The first is the wave ofpension privatization that has swept the world.By 2005, 24 countries had adopted a private pil-lar. The speed of privatization and the magni-tude of policy change have varied dramaticallyacross countries. Some countries, such as Chileand Mexico, have entirely abolished the pre-existing public pillar. Others, such as Uruguay,have adopted a mixed system, where workers’pensions are financed by a combination of thepublic and private systems. Still other coun-tries have enacted a parallel privatization, giv-ing their citizens a choice between the publicand the private pillar. In explaining the adop-tion of these policies, some studies have empha-sized the impact of the competitive and fiscalpressures of globalization—most notably thatof capital market liberalization (Madrid 2003,Brooks 2008). Other studies have focused onpolicy diffusion through the imitation of for-eign models, noting how cognitive biases andheuristic shortcuts lead policy makers to fol-low the example set by their neighbors’ reform(Weyland 2005, 2007).

The second set of changes that has receivedattention in the literature is the expansion ofsocial protection in East Asian economies. The

most dramatic examples are the introduction ofuniversalistic health insurance by Taiwan andKorea in 1994 and 1997, respectively (Wong2003). Explanations of these changes focus ontwo consequences of democratization. First,the incentives of politicians changed follow-ing transitions to democracy (Wong 2004). Inthe new context of heightened electoral com-petition, these studies argue, politicians haveappealed to voters by offering social policypromises, but they failed to internalize the long-term fiscal implications of programmatic ex-pansion. Because politicians from all politicalparties have found this strategy attractive, par-tisan differences carry little explanatory weightin accounting for variation in outcomes. An-other consequence of democratization was themobilization of new social groups, such as non-governmental organizations (NGOs), whichheightened political awareness of the strong in-equities in policy coverage and swayed politicalopinion in favor of the introduction of univer-salistic programs (H.J. Kwon 2002, S. Kwon2002).

Current research investigating thesechanges—the privatization of pensions and theintroduction of universalistic social policies—has generated insights that complement orchallenge the findings regarding the politics ofsocial policy reforms in advanced industrializedeconomies. One important set of theoreticalimplications concerns the role of partisanshipin affecting the direction of social policyreforms. The introduction of universalisticsocial policies in Korea and Taiwan challengesthe proposition advanced by power-resourcescholars that strong and encompassing tradeunions and social democratic parties are anecessary institutional precondition of uni-versalism (Esping-Andersen & Korpi 1984).Studies of pension privatization in LatinAmerica also reveal that left-wing parties arenot less likely than right-wing parties to adoptpension privatization, although some studiesfind a small partisan effect on the magnitudeof the reforms (Brooks 2008). Reformulatingthe “Nixon goes to China hypothesis,” otherscholars have suggested that left-wing parties


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are more likely to adopt radical reforms,owing to their superior ability to communi-cate to their constituents the advantages ofthese reforms and the absence of alternatives(Cukierman & Tommasi 1998, Tommasi 2002).Nevertheless, the importance of partisanshipas an explanatory variable continues to remaincontested. In recent research, Huber andothers argue that—conditional on the ageof democracies—the political strength ofleft-wing parties contributes to differences inpatterns of spending across Latin America,leading to lower levels of inequality (Huberet al. 2006).

Recent social policy reforms in developingcountries also present challenges to explana-tions that have stressed the constraining effectsof previous policies and institutions (Pierson1994, 2001). Scholars of policy reforms in ad-vanced industrialized societies have emphasizedthat existing policies “exhibit increasing returnsand self-reinforcement: each step along a pathproduces consequences which make that pathmore attractive in the next round and raises thecost of shifting to an alternative path” (Myles& Pierson 2001, p. 312). An important impli-cation of this argument is that the “stickiness”of existing policies is higher for larger pro-grams and for programs with a longer politi-cal history. As Pierson argues, a policy of longduration and large scope will have a large polit-ical constituency supporting it, which will con-strain efforts of politicians to change the statusquo. The wave of pension privatization that hasswept the world casts some doubt on the ex-planatory power of this theory. The prediction

3Targeting

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2Privatization

1Contributory insurance

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Socialization of risks

Figure 1Socialization of risks.

that larger programs are stickier is not borne outby the data: Pension programs, the largest socialpolicy program in most developing countries,have been the most vulnerable to retrench-ment. These developments point to the need toidentify the conditions under which dramatic,“path-departing” policy change is possible evenin the presence of programs with large polit-ical constituencies (Ebbinghaus 2005, Brooks2008).

The emphasis on these two broad changes—the privatization of pensions and the intro-duction of universalistic health insurance—hasobscured other important transformations insocial policies that have taken place in many de-veloping countries. Figure 1 maps examples ofpolicy changes in developing countries in a two-dimensional policy space. The horizontal axiscaptures variation in the “socialization of risks”across different social policies. Policies takinglow values along this axis are characterized bylow levels of risk pooling. These are private-type policies where the level of benefits is linkedeither to the actuarial risk facing the individualor to the returns made by investments in per-sonal, private accounts. The common feature ofboth policies is the individualization of risk, orin Baldwin’s definition, the “fact that individualsface risk alone and not as part of a broader com-munity of risks” (Baldwin 1990, p. 3). Policiestaking high values on this axis are characterizedby a high diffusion of risks across covered oc-cupational groups. The vertical axis measuresthe redistribution undertaken by the particularsocial policy, in other words, the “propoor bias”of the particular policy. Policies taking high val-ues along this axis involve higher redistributionfrom high-income to low-income groups. Bycontrast, in policies taking low values along thisaxis, little or no redistribution from the rich tothe poor is attempted.

Existing research has predominantly fo-cused on two cells of the policy space. Privateold-age insurance policies occupy the lowerleft-hand corner of the policy space. Althoughthese policies shift a significant part of the riskto individuals, the benefit structure also favorshigher-income earners. The other policies that

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have been studied are situated in the upperright-hand corner of the policy space. Univer-salistic social policies in Asia are characterizednot only by high levels of coverage but alsoby high levels of redistribution across incomegroups. According to estimates of the KoreanHealth Ministry, the ratio between health ben-efits and contributions for individuals in thelower 10% of the income distribution was 6.45.By contrast, it was 0.27 for the highest 10% ofthe population (Chun 2006). Studies of the dis-tributional implications of the Taiwanese healthcare sector reveal a similar pattern (Cheng2004, 2005).

But, as Figure 1 illustrates, the other twocells of this policy space are not empty in theway that the literature might suggest. The vastmajority of health care reforms introduced byLatin American countries occupy the upperleft-hand corner of this policy space. Many ofthese countries have introduced reforms thatattempt to increase the access of low-incomegroups to health services (Mesa-Lago 2007).Although means-testing limits the scope ofbeneficiaries of these policies (resulting inlow values on the coverage dimension), thesepolicies take high values on the redistributivedimension of the social policy space. Considerthe following examples. Beginning in themid-1990s, the Brazilian health ministry in-troduced policies that guarantee basic servicesfor lower-income groups (Weyland 2005, p.231). In 1993, El Salvador introduced similarpolicies subsidizing health benefits for thepoor. Peru introduced the Programa de SaludBasica para Todos in 1994, which increasedbasic health care in rural areas. A related policy,the Programa de Fortalecimiento de Serviciosde Salud provided subsidies for the poor. InColombia, the introduction of health insurancesubsidies for poorer sectors led to an increasein the access to health benefits of the poorfrom 4% in 1993 to 40% in 1997 (Weyland2005). In Mexico, President Zedillo introducedProgresa, a program providing health subsidiesto low-income groups, in 1995 (Gertler 2007).

Contributory social insurance policies, lo-cated in the lower right-hand quadrant of the

social policy space in Figure 1, are also distinctfrom the other social policy alternatives dis-cussed above. In these policies, insurance con-tributions are not tied to the incidence of riskfaced by the individual. As a result, risk is so-cialized, and the redistribution of risks is higherthan in private social policies. The structureof benefits is regressive, preserving (and some-times amplifying) market-based inequalities ofincome. Korean pension reforms are an exam-ple of a policy situated in this quadrant of thepolicy space (Moon 2001).

The literature’s exclusive exploration ofquadrants 2 and 4 of the policy space has hadimportant consequences. Significant variationin the design and distributive implications ofsocial policies has not been adequately ex-plored. While many countries in Latin Americahave privatized their old-age insurance policies,they have also introduced health care policiesthat explicitly provide benefits to the poor.Studies of social policy reform in Asia also failto account for variation across policy areas. Wesee the introduction of universalistic policies inone subsystem of the welfare state, health care,whereas the development of old-age insurancepolicies has followed a dramatically differenttrajectory. While Korea has introduced Bis-marckian policies, Taiwan has recently priva-tized its pension system. Existing explanationsfocusing on regional dummies or even country-specific attributes cannot adequately accountfor this variation.

Mares (2007b) proposes a political expla-nation of these policy outcomes that exploresthe sources of variation in individual prefer-ences over these policy alternatives and thestrategic alliances formed in support of, or op-position to, various programs. In this model,wage earners in the formal sector are the piv-otal political group. These employees can ei-ther choose to form a political coalition withlower-income groups (and thus support poli-cies with a propoor bias) or they can ally withhigher-income groups (supporting programswith no effort to redistribute income). Themodel also seeks to account for conditions un-der which these coalitions support policies that


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take different values along the dimension mea-suring the socialization of risks and favor either“private-type” social policies that involve no re-distribution of risks across occupations or poli-cies characterized by broad coverage and a highinteroccupational redistribution of risks.

The preferences for social policies of the piv-otal group are affected by several underlyingeconomic characteristics. These include the rel-ative level of income and the relative risk profilewith respect to the risk insured by the program(old age, sickness, disability, or unemployment).The relative salience of risk versus income de-pends on the overall level of inequality and thedistribution of risks in the economy. All thingsequal, if the level of inequality is high, the bene-fits from risk redistribution for high-risk groupsmight be outweighed by their disutility in termsof lower income. By contrast, if the level ofinequality is low, one expects the distributionof risks to be a stronger predictor of the dis-tributional conflicts over a new policy. Thisanalysis thus reconciles two competing theo-retical claims regarding the politics of redistri-bution, which have emphasized either income-based (Melzer-Richard) or risk-based conflict,showing that the relative importance of each(income and risk) depends on the underlyingdistribution of these variables in the economy.

In addition to these variables, an impor-tant individual-level determinant of social pol-icy preferences is the economic security of thepivotal group—in other words, its expectationof steady, uninterrupted employment. This as-sumption is the basis of the complex redistribu-tional mechanisms worked out in contributoryinsurance policies. An increase in the economicinsecurity of the pivotal group—due to exoge-nous changes such as tertiarization, an increasein labor market flexibility, or informalization—has important implications for its social pol-icy preferences. On the one hand, the expectedutility derived from all forms of contributoryinsurance declines. On the other hand, theirwillingness to support policies with a higherpropoor bias increases because they expectto rely on residual policies more frequently.In other words, an increase in the economic

insecurity of wage earners in the formal sec-tor contributes to the formation of coalitionsbetween this group and the poor in many de-veloping countries.

Differences in the extractive capacity of thestate explain variation in the location of thepreferences of pivotal voters along the horizon-tal axis of the social policy space and the choicebetween private-type social policies and poli-cies involving greater redistribution of risks. Inthis model, workers in the pivotal sector chooseamong different policies by comparing the costsof these programs (their post-tax wages) againstthe expected future stream of benefits. In thecase of a private program, those benefits are theresult of returns from private funds. By contrast,in the case of a policy administered by the state,future streams of benefits are a function of thecapacity of the state to enforce social insurancelegislation. If workers in the formal sector assessthat the ability of the state to enforce existingsocial insurance legislation is low, they will sup-port private-type social policies. Weaknesses instate capacity erode the potential gains theseworkers can reap from a broad redistributionof risks. The importance of this variable differsacross policy areas: Its impact is larger for poli-cies with a longer lag time between the paymentof the contributions and the receipt of social in-surance benefits (such as pensions) and smallerin policies where this lag is shorter. The impli-cation of this argument is that the fiscal capacityof the state affects the size of the political coali-tions favoring different levels of redistribution.

Finally, rules pertaining to the design of dif-ferent programs also affect the strategies pur-sued by the pivotal sector and, hence, the com-position of the political coalitions supportingdifferent policies. Consider the consequences ofthe “policy externalities” of different programs(Roemer 2006). (Policies such as immunizationprograms have large externalities—they affectthe health status of all citizens.) An increase inthe magnitude of positive policy externalitiesis likely to affect the probability of a coalitionbetween middle classes and the poor. A sec-ond relevant feature of policy design is the lagtime between the payment of contributions and

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the receipt of social policy benefits. We expectpivotal groups to discount more strongly thepromised social policy benefits in policies witha high lag time and favor more limited social-ization of risks and income redistribution.

To summarize the above discussion, thefour outcomes identified in the policy spacein Figure 1 are distinct political equilib-ria supported by different political coalitions.Figure 2 presents these coalitions, showinghow their interaction with the level of state ca-pacity produces each of the distinct outcomes.They are “self-sustaining” in the sense that ac-tors supporting them have no incentives to de-fect. Contributory insurance policies (quadrant1) are supported by a coalition of middle and up-per classes in conditions of high state extractivecapacity. These Bismarckian policies—once themodal social policy adopted by developed anddeveloping countries alike—are rare in recentdecades. Changes in economic conditions, suchas the decline in the importance of full-timeemployment, make these policies less attractiveto urban workers than alternatives where ac-cess to benefits is not contingent on an unin-terrupted stream of contributions. In contrastto contributory insurance programs, universal-istic policies (quadrant 4) rely on a coalition ofthe middle classes and the poor in economieswith high extractive capacity. In these environ-ments, middle-class workers are likely to accepta policy outcome that redistributes to the poorif their economic prospects are secure and if thepoor have a better risk profile, which thus cre-ates gains from redistribution of risks (Mares2003). In countries with weak extractive capac-ity, we find either coalitions between the middleclass and the poor in support of means-testedprograms (quadrant 3) or coalitions betweenthe middle class and the rich in favor of pri-vate social policies (quadrant 2). The differencebetween these two outcomes can be attributedto differences in either (a) the risk profile oreconomic insecurity of the pivotal group or(b) policy feedbacks, such as lag times or pol-icy externalities, between programs.

By modeling individual preferences for dif-ferent policies and the conditions leading to

3Targeting M+L

4Universalism M+L

Poli

cy f

eedbac

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&D

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e

Low

H

igh

2Privatization M+U

1Contributory Insurance M+U

High Low

Extractive capacity of the state

Figure 2Extractive capacity of the state.

the formation of different political coalitions,the theory sketched here provides more explicitmicro-foundations for macro-level outcomes.As such, it complements earlier studies exam-ining social policy reforms in developing coun-tries, which have focused primarily on the po-litical incentives or ideational beliefs of elites. Italso highlights the effect of seemingly small dif-ferences in institutional design on the politicalincentives of actors. The observation that “pol-icy feedbacks” have different consequences forpolicy outcomes was initially developed by his-torical institutionalist scholars (Skocpol 1992,Pierson 1994). This research shows that policyfeedbacks have lasting political consequences.On the one hand, they create incentives forpivotal groups to defect from the policy sta-tus quo. On the other hand, they generate self-enforcing political equilibria around new poli-cies and contribute to the formation of differentpolitical alliances. This suggests that the studyof the recent dynamics of social policy reformin developing countries is an area of researchwhere insights of historical and rational choiceinstitutionalism can be fruitfully integrated.

CONCLUSION

We have written elsewhere of the need for“research on social policy to become moreunequivocally comparative in its orientation”(Carnes & Mares 2007, p. 882), and here we


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have pointed out some of the insights gainedfrom studying the social insurance programsof developing countries. This has allowed usto observe greater variation in social policyoutcomes—both across countries and regions,and across policy areas within individual coun-try cases—as well as a wider range of values onthe independent variables that are most studiedin the literature.

In this article, we have explored threeongoing areas of research on the social policiesof developing countries. The first concernsthe political origin of social programs. Inmany developing countries, social policieshave originated under authoritarian regimes.The large variation in the scope of theseprograms and the level of benefits is, so far,unaccounted for by existing studies. We haveproposed a political explanation for thesepolicies that is based on the strategies pursuedby authoritarian leaders in their struggle withthe political organizations that brought themto power. A second exciting area of researchexplores the linkages between developmentalstrategies pursued by various countries andtheir social policy regimes. In examining thisrecent literature, we have argued that a betterspecification of the social policy preferences ofrelevant political actors is needed to providea stronger micro-foundation for the observed

macro-level regularities. A third direction isthe study of recent developments in socialpolicies. We have demonstrated the existenceof significant variation across policy areas inthe trajectories and distributional implicationsof social policies in many developing countries,and we have proposed an explanation for theseoutcomes that identifies the different politicalcoalitions supporting these policies. Their sizeand their political composition are, in turn,affected by broader institutional factors and bythe underlying distribution of income and risk.

The study of social policy in develop-ing countries presents one of the most excit-ing research agendas in comparative politicaleconomy. Better data and more sophisticatedresearch methods now allow us to untangle as-pects of policy design and distributional con-sequences that could not have been detectedearlier. Yet many very basic questions are stillin need of systematic analysis and explanation.This growing line of study promises not onlyto give insights regarding a new class of cases—developing countries—but also to enrich ourunderstanding of important aspects of socialpolicy around the world. In the current worldcontext, the ability to adapt economically iscrucial. Policies of risk reduction and allevia-tion have never been more central to politicallife.

DISCLOSURE STATEMENT

The authors are not aware of any affiliations, memberships, funding, or financial holdings thatmight be perceived as affecting the objectivity of this review.

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Annual Review ofPolitical Science

Volume 12, 2009Contents

A Conversation with Robert A. DahlRobert A. Dahl and Margaret Levi � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1

Neorepublicanism: A Normative and Institutional Research ProgramFrank Lovett and Philip Pettit � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �11

Domestic Terrorism: The Hidden Side of Political ViolenceIgnacio Sánchez-Cuenca and Luis de la Calle � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �31

Women in Parliaments: Descriptive and Substantive RepresentationLena Wängnerud � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �51

Self-Government in Our TimesAdam Przeworski � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �71

Social Policy in Developing CountriesIsabela Mares and Matthew E. Carnes � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �93

Variation in Institutional StrengthSteven Levitsky and María Victoria Murillo � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 115

Quality of Government: What You GetSören Holmberg, Bo Rothstein, and Naghmeh Nasiritousi � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 135

Democratization and Economic GlobalizationHelen V. Milner and Bumba Mukherjee � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 163

Has the Study of Global Politics Found Religion?Daniel Philpott � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 183

Redistricting: Reading Between the LinesRaymond La Raja � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 203

Does Efficiency Shape the Territorial Structure of Government?Liesbet Hooghe and Gary Marks � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 225

Bargaining Failures and Civil WarBarbara F. Walter � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 243

Hobbesian Hierarchy: The Political Economy of PoliticalOrganizationDavid A. Lake � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 263

v

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AR377-FM ARI 7 April 2009 11:25

Negative CampaigningRichard R. Lau and Ivy Brown Rovner � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 285

The Institutional Origins of Inequality in Sub-Saharan AfricaNicolas van de Walle � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 307

RiotsSteven I. Wilkinson � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 329

Regimes and the Rule of Law: Judicial Independence in ComparativePerspectiveGretchen Helmke and Frances Rosenbluth � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 345

Field Experiments and the Political Economy of DevelopmentMacartan Humphreys and Jeremy M. Weinstein � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 367

Laboratory Experiments in Political EconomyThomas R. Palfrey � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 379

Field Experiments on Political Behavior and Collective ActionEline A. de Rooij, Donald P. Green, and Alan S. Gerber � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 389

Experiments on Racial Priming in Political CampaignsVincent L. Hutchings and Ashley E. Jardina � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 397

Elections Under AuthoritarianismJennifer Gandhi and Ellen Lust-Okar � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 403

On Assessing the Political Effects of Racial PrejudiceLeonie Huddy and Stanley Feldman � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 423

A “Second Coming”? The Return of German Political TheoryDana Villa � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 449

Group Membership, Group Identity, and Group Consciousness:Measures of Racial Identity in American Politics?Paula D. McClain, Jessica D. Johnson Carew, Eugene Walton, Jr.,and Candis S. Watts � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 471

Opiates for the Matches: Matching Methods for Causal InferenceJasjeet Sekhon � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 487

Indexes

Cumulative Index of Contributing Authors, Volumes 8–12 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 509

Cumulative Index of Chapter Titles, Volumes 8–12 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 511

Errata

An online log of corrections to Annual Review of Political Science articles may be foundat http://polisci.annualreviews.org/

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