POLITICS OF ECONOMIC STABILIZATION AND STRUCTURAL ADJUSTMENT I.
Lecturer: Bela Greskovits
Assistant: Attila Folsz
Fall 1995
Department of Political Science
CENTRAL EUROPEAN UNIVERSITY



Course Description

The course is designed to help to develop an understanding of the principles of the interaction between politics and economic policy making. It has the dual (political and economic) transformations of the 80s in its focus.

We shall concentrate on both the empirics, collected from the history of Third World stabilization and economic adjustment programs, and the theories analyzing and interpreting the experiences.

The lectures and seminars will provide a conceptual, and analytic underpinning for a better understanding of the political economy of the Post-Communist "Great Transformation", that will be the topic of a subsequent course.

While the lectures will give a basic insight, it will be the goal of the seminars to deepen the understanding, by an interactive and creative exploration of a carefully selected set of literature.

Requirements

Students are required to attend regularly and to participate actively in the course

Each student will be requested to pass a brief written test after every four lectures.

Students are also requested to prepare an essay by the end of the first semester, related to one or some of the topics of the course.

Grading

In class activity: 30%
Tests: 30%
Final essay: 40%

Week 1.

INTRODUCTION

Week 2.
THE 60s, THE 70s, AND THE 80s - AND THE CRISIS IN BETWEEN
(How the Crisis affected Regnant Policies for Development, and the Rise and Decline of Systems and Nations)

Required Readings:
Albert Fishlow "Revisiting the Great Debt Crisis of 1982" The Helen Kellogg Institute for International Studies. University of Notre Dame. Working Paper 37. May 1984.

Readings Recommended:
Albert O. Hirschman "The Political Economy of Import-Substituting Industrialization in Latin America" The Quarterly Journal of Economics. No. 1. February 1968.
Riordan Roett "How the 'Haves' Manage the 'Have-Nots': Latin America and the Debt Crisis" in Barbara Stallings and Robert Kaufman eds. Debt and Democracy in Latin America. Westview Press, 1989.

Week 3.
INTERNATIONAL POWERS - DOMESTIC AGENTS '
(How International Influence and Domestic Forces Shape Economic Policies)

Required Readings:
Barbara Stallings "International Influence on Economic Policy: Debt, Stabilization, and Structural Reform" in Stephan Haggard and Robert, R. Kaufman eds. The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State. Princeton University Press, Princeton, New Jersey, l992.
Miles Kahler "International Financial Institutions and the Politics of Adjustment' in Joan M. Nelson and contributors Fragile Coalitions: The Politics of Economic Adjustment. Transaction Books, New Brunswick (USA) and Oxford (UK), 1989.

Readings Recommended:
Miles Kahler "External Influence, Conditionality, and the Politics of Adjustment" in Stephan Haggard and Robert, R. Kaufman eds. The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State. Princeton University Press, Princeton, New Jersey, 1992.
Theodor H. Moran "Multinational Corporations and Dependency: a Dialogue for Dependentistas and Non-Dependentistas" International Organization, Winter, 1978.
Paul W. Drake "Introduction: The Political Economy of Foreign Advisers and Lenders in Latin America" in Paul W. Drake ed. Money Doctors, Foreign Debts, and Economic Reforms in Latin America from the 1890s to the Present. Scholarly Resources Inc. 1994.

Week 4.
THE WASHINGTON CONSENSUS ON POLICY REFORM
(The Regnant Policy-Mix for Stabilization and Structural Adjustment)

Required Readings:
John Williamson "What Washington Means by Policy Reform", Comments by Richard E. Feinberg, Stanley Fischer, Allan H. Meltzer, and Patricio Meller in John Williamson ed. Latin American Adjustment: How Much Has Happened? Institute for International Economics. Washington D. C. April 1990.

Readings Recommended:
John Williamson "Democracy and the 'Washington Consensus" World Development, Vol. 21, No. 8 1993.
Luis Carlos Bresser Pereira 'Economic Reforms and Economic Growth: Efficiency and Politics in Latin America' in Luis Carlos Bresser Pereira, Jose Maria Maravall and Adam Przeworski eds. Economic Reforms in New Democracies. Cambridge University Press 1993.
Demetrios Papageorgiou, Armeane M. Choksi, and Michael Michaely "Liberalizing Foreign Trade in Developing Countries. The Lessons of Experience." The World Bank. Washington D. C. 1990.

Week 5.
STATE: THE PRINCIPAL OBSTACLE TO DEVELOPMENT, OR A PREEMINENT CHANGE AGENT?
(On the Disputed Role of the State in Economy and the Society)

Required Readings:
Merllee S. Grindle "The New Political Economy. Positive Economics and Negative Politics" Policy Planning and Research Working Papers. No. 304. The World Bank. 1989.
Peter Evans "The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change" in Stephan Haggard and Robert, R. Kaufman eds. The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State. Princeton University Press, Princeton, New Jersey, 1992.

Readings Recommended
Peter Evans "Rethinking Embedded Autonomy" in Peter Evans, .... Chapter 10. 1994
Eun Mee Kim "Contradictions and Limits of a Developmental State: With Illustrations from the South Korean Case." Social Problems Vol. 40. Number 2. May 1993.
Thomas M. Callaghy "Towards State Capability and Embedded Liberalism in the Third World: Lessons for Adjustment" in Joan Nelson and contributors Fragile Coalitions: The Politics of Economic Adjustment. Transaction Books, New Brunswick (USA) and Oxford (UK), 1989.

Week 6.
POLITICAL REGIMES - POLICY EFFICIENCY
(Democracies' and Dictatorships' Abilities to Initiate, and Sustain Economic Reforms)

Required Readings:
Albert O. Hirschman "The Turn to Authoritarianism in Latin America and the Search for its Economic Determinants" in Albert O. Hirschman, Essays in Trespassing. Economics to Politics and Beyond. Cambridge University Press. 1981.
Stephan Haggard, and Robert R. Kaufman "Economic Adjustment in New Democracies" in Joan M. Nelson and contributors, Fragile Coalitions: The Politics of Economic Adjustment. Transaction Books, New Brunswick (USA) and Oxford (UK), 1989.

Readings Recommended:
Laurence Whitehead "Democratization and Disinflation: A Comparative Approach" in Joan M. Nelson and contributors, Fragile Coalitions: The Politics of Economic Adjustment Transaction Books, New Brunswick (USA) and Oxford (UK), 1989.
Hector E. Schamis "Reconceptualizing Latin American Authoritarianism in the 1970s. From Bureaucratic Authoritarianism to Neoconservatism" Comparative Politics January 1991.

Week 7.
WHO PAYS THE COSTS? SOCIOECONOMIC GROUPS, THEIR EXPOSURE AND DEFENCE
(Distributional Effects of Neoclassical Economic Reforms)

Required Readings:
Elaine Zuckerman "Adjustment Programs and Social Welfare" World Bank Discussion Papers No. 44, The World Bank. Washington D. C. 1989.
Ian Roxborough "Organized Labor: a Major Victim of the Debt Crisis" in Barbara Stallings and Robert Kaufman eds. Debt and Democracy in Latin America. Westview Press, 1989.

Readings Recommended:
Joan M. Nelson Poverty, Equity, and the Politics of Adjustment" in Stephan Haggard and Robert, R. Kaufman eds. The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State. Princeton University Press, Princeton, New Jersey, 1992.

Week 8.
THREATS TO REFORMS - ON THE POLITICAL ECONOMY OF PROTEST AND PATIENCE
(Various Socioeconomic Groups' Political and Economic Potential to Disrupt the Reform Process)

Required Readings:
Albert O. Hirschman "The Changing Tolerance for Income Inequality in the Course of Economic Development" in Albert O. Hirschman, Essays in Trespassing. Economics Jo Politics and Beyond. Cambridge University Press. 1981.
Carlos H. Acuna and William C. Smith "The Political Economy of Structural Adjustment: The Logic of Support and Opposition to Neoliberal Reform" in William C. Smith, Carlos H. Acuna, and Eduardo Gamarra eds. Latin American Political Economy in the Age of Neoliberal Reform. Theoretical and Comparative Perspectives for the 1990s. Transaction Publishers New Brunswick (USA) and London (UK) 1994.
John Walton "Debt, Protest, and the State in Latin America" in Susan Eckstein ed. Power and Popular Protest. Latin American Social Movements, University of California Press. Berkeley 1989.

Readings Recommended:
John Waterbury "The Political Management of Economic Adjustment and Reform" in Joan S{. Nelson and contributors, Fragile Coalitions: The Polities of Economic Adjustment. Transaction Books, New Brunswick (USA) and Oxford (UK), 1989.

Week 9.
POLITICAL MANAGEMENT OF ECONOMIC REFORMS: OPPRESSION, COMPENSATION AND PRO-REFORM COALITION BUILDING
(Governments' Means and Tactics to Overcome Opponents to Economic Reforms)

Required Readings:
Bela Greskovits "The Use of Compensation in Economic Adjustment Programmes" Acta Oeconomica, Vol. 45 (1-2) 1992.
Carol Graham 'From Emergency Employment to Social Investments Alleviating Poverty in Chile". The Brookings Institution, Washington D.C 1991.

Readings Recommended:
Joan M. Nelson "The Politics of Pro-Poor Adjustments" in Joan M. Nelson and contributors, Fragile Coalitions: The Politics of Economic Adjustment, Transaction Books, New Brunswick (USA) and Oxford (UK) 1989.

Week 10.
A NON-FEASIBLE ALTERNATIVE: ECONOMIC POPULISM
(Populism in Politics and in the Economy)

Required Readings:
Robert, R. Kaufman, and Barbara Stallings "The Political Economy of Latin American Populism," in Rudiger Dornbusch, and Sebastian Edwards eds. The Macroeconomics of Populism in Latin America. Chicago/London: The University of Chicago Press. 1991.
Rudiger Dornbusch and Sebastian Edwards "The Macroeconomics of Populism in Latin America". World Bank Policy, Planning and Research Working Papers 316. 1989

Readings Recommended:
Jeffrey D. Sachs "Social Conflict and Populist Policies in Latin America." ICS Press San Francisco, California. 1990.
Boeckh, Andreas "Populism in Latin America: Economic Crises and the Rise of New Development Coalitions" Central European University, Political Science Department. Working Paper Series 1993.

Week 11.
LABOR AND BUSINESS ATTITUDES TO STABILIZATION, AND ECONOMIC ADJUSTMENT
(Towards Consulted Policies, and Social Pacts)

Required Readings:
Robert R. Kaufman, Carlos Bazdresch, and Blanca Heredia "Mexico: Radical Reform in a Dominant Party System" in Stephan Haggard and Steven B. Webb eds. Voting for Reform. Democracy, Political Liberalization, and Economic Adjustment. Published for the World Bank. Oxford University Press. 1994.
Joan M. Nelson "Organized Labor, Politics and Labor Market Flexibility in Developing Countries" The World Bank Research Observer, Vol. 6. No. 1. January 1991.

Readings Recommended:
Samuel, J. Valenzuela "Labor Movements and Political Systems: A Conceptual and Typological Analysis" The Helen Kellogg Institute for International Studies. Working Paper No 167. 1991.
Juan J. Lopez "Business Elites and Democracy in Latin America: Reflections on the May 1991 Kellogg Institute Conference" The Helen Kellogg Institute for International Studies. Working Paper No 185. 1992.

Week 12.
POLITICAL PARTIES - PARTY SYSTEMS - POLITICAL BUSINESS CYCLES
(How Do Political Parties Affect Stabilization and Structural Adjustment?)

Required Readings:
Brian Barry "Does Democracy Cause Inflation? Political Ideas of Some Economist" in Leon N. Lindberg, and Charles S. Maier eds. The Politics of Inflation and Economic Stagflation. Theoretical Approaches and International Case Studies. The Brookings Institution. Washington D. C. 1985.

Readings recommended:
Alberto Alesina "Political Models of Macroeconomic Policy and Fiscal Reforms" in Stephan Haggard and Steven B. Webb eds. Voting for Reform. Democracy, Political Liberalization, and Economic Adjustment. Published for the World Bank. Oxford University Press. 1994.
Stephan Haggard, and Robert R. Kaufman "The Political Economy of Inflation and Stabilization in Middle-lncome Countries" in Stephan Haggard and Robert, R. Kaufman eds. The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State. Princeton University Press, Princeton, New Jersey, 1992.

Week 13.
THE CHANGING ECONOMIC ROLE OF NON-GOVERNMENTAL, AND GRASSROOTS ORGANIZATIONS IN TRANSFORMING LDC-S
(From Substitution to Complementarity)

Required Readings:
Carol Graham "The Politics of Protecting the Poor During Adjustment. Bolivia's Emergency Social Fund" Foreign Policy Studies Program. The Brookings Institution. Mimeo. 1992.
Getubig, I. P., M. Yaakub Johari, and Angela M. Kuga Thas eds. "Overcoming Poverty through Credit. The Asian Experience in Replicating the Grameen Bank Approach" Chapter 1, 2. Asian and Pacific Development Centre 1993.

Readings recommended:
Norman Uphoff "Grassroots Organizations and NGOs in Rural Development: Opportunities with Diminishing States and Expanding Markets" World Development Vol. 21. No 4. 1993.



CRC-Curriculum Resource Center
CEU Budapest, Hungary
Modified: July, 1996

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