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OECD World Bank Seminar Democratic Governance in Mexico: A Latin American Perspective

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Mexico suffers from 'interest group' politics, but so do many other Latin American countries. ... Source: OECD Latin American Economic Outlook (forthcoming) ... – PowerPoint PPT presentation

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Title: OECD World Bank Seminar Democratic Governance in Mexico: A Latin American Perspective


1
OECD World Bank Seminar Democratic
Governance in MexicoA Latin American
Perspective
Comments by Javier SantisoChief Economist and
Deputy Director OECD Development Centre
? Paris, 20th June 2007?
2
Overview
Is Mexico different?
1
Fiscal policy and legitimacy in Latin America
2
Conclusions and policy lessons
3
3
Democratic Governance in Mexico
  • A very Hirshmanian exercise in trespassing.
  • A welcome focus on legislative processes and the
    implementation of reforms
  • In a nutshell, many of the distortions observed
    in Mexicos policy sectors result from the role
    of special interests in capturing the
    policy-making apparatus. (page 1)
  • Mexico suffers from interest group politics,
    but so do many other Latin American countries.

4
Is Mexico different?
Institutional anchoring A key driver of
possibilism
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
Note Based on expert and enterprise surveys
5
Is Mexico different?
Institutional anchoring A key driver of
possibilism
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
Note Based on experts and enterprise surveys
6
Is Mexico different?
Institutional anchoring A key driver of
possibilism
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
Note Based on experts and enterprise surveys
7
The difference is in fiscal policy, revenue
generation
Tax revenue in Latin America
Tax revenue in OECD
50
of GDP
of GDP
Source OECD Latin American Economic Outlook
(forthcoming) based on ECLAC and OECD Revenue
statistics databases (2007) Note data are for
(2004) and include social security contributions
8
Overview
Is Mexico different?
1
Fiscal policy and legitimacy in Latin America
2
Conclusions and policy lessons
3
9
Latin America suffers from low fiscal legitimacy
of respondents who trust tax revenue is well
spent
  • Fiscal legitimacy is the confidence people place
    in fiscal policy
  • Citizens satisfaction with the governments job
  • Latin American countries, and Mexico in
    particular, suffer from low fiscal legitimacy
  • Fiscal legitimacy matters for democratic
    governance and fiscal performance

Source OECD Latin American Economic Outlook
(forthcoming) based on Latinobarómetro
(2003) Note index based is based on citizens
survey
10
Fiscal legitimacy enhances democratic governance
50
Costa Rica
45
Uruguay
40
Venezuela
Honduras
Nicaragua
35
Chile
Argentina
El Salvador
30
Brazil
Democratic legitimacy
Bolivia
( satisfied with democracy)
25
Panama
Ecuador
Colombia
Guatemala
20
Mexico
15
Peru
10
Paraguay
r 0.5
5
0
0
5
10
15
20
25
30
Fiscal legitimacy
( who trust taxes are well spent)
Source OECD Latin American Economic Outlook
(forthcoming) based on Latinobarómetro (2003)
11
Press freedom boosts fiscal accountability
Source OECD Latin American Economic Outlook
(forthcoming) based on Freedom House (2007) and
ECLAC and OECD Revenue Statistics (2007)
12
A political transition but not in the media
Venezuela
Free
Chile
LatAm avge
LatAm avge
Chile
Partially free
Mexico
Mexico
Venezuela
Not free
1988 Chiles plebiscite
Source OECD Latin American Economic Outlook
(forthcoming) based on Freedom House (2007)
13
Why is fiscal legitimacy low in Latin America?
  • Unlike Europe, in Latin America taxes and
    transfers play no redistributive role

Gini coefficient
Gini coefficient
Source OECD Development Centre based on data by
Goñi, López, and Servén (2006)
14
Why is fiscal legitimacy low in Latin America?
  • Poor quality of fiscal policy Low quality public
    spending

Source OECD Latin American Economic Outlook
(forthcoming) based on PISA (2003) and OECD
Education at a Glance (2005)
15
Overview
Is Mexico different?
1
Fiscal policy and legitimacy in Latin America
2
Conclusions and policy lessons
3
16
How can Latin America improve on fiscal
legitimacy?
  • Implementation is key
  • Less is more?
  • Brazil and Mexico It is not only a question of
    quantity
  • 1990s reform focused on technical issues but
    failed to get implemented because it became
    entangled in politics
  • Enhance checks and balances
  • More and more effective
  • More attention to media and think-tanks (Ulysses
    and the Sirens)
  • Peer review mechanism around LEO and Tax Centre
  • Corporate governance The case of Pemex
  • The OECD corporate governance roundtable

17
  • Thank you!
  • Presentation based on
  • The forthcoming
  • OECD Latin American Economic Outlook
  • http//www.oecd.org/dev/leo
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