Reversal of fortune : the ephemeral success of adjustment in Venezuela, 1989-93
Navarro, Juan Carlos
This paper examines the political and institutional determinants of the early success and later derailment of economic reforms following the structural adjustment program put in place by the Venezuelan government in 1989. The focus is on the effect of governance capacity on adjustment responses, in keeping with the hypothesis that government capacity is a prime determinant of successful economic reform in developing countries. This paper is based on technical reports and recent political and economic analyses of different aspects of the Venezuelan reform process, as well as interviews with privileged witnesses. It is organized into six sections: 1) background information about the development of political and economic conditions in Venezuela prior to the launching of structural reforms; 2) presentation of the critical conditions of 1988 and the circumstances that shaped the campaign message and early policy signals of the Perez administration; 3) description of the stabilization package and the structural reform program, along with their adequacy and shortcomings; 4) unraveling political stability: the antiadjustment's political entrepreneurs and the triggering effect of a coup d'etat; 5) brief review of the fate of reforms under the administration of R.J. Velazquez and the first months of the tenure of Rafael Caldera; and 6) general conclusions.
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