Multilateral Lending Institutions and Transnational Policy Networks in Mexico and Chile

By Teichman, Judith | Global Governance, October-December 2007 | Go to article overview

Multilateral Lending Institutions and Transnational Policy Networks in Mexico and Chile


Teichman, Judith, Global Governance


The impact of economic globalization for the countries of Latin America was profoundly shaped by the impact of the debt crisis of the early 1980s. For these countries, the emergence of transnational policy networks involving multilateral and domestic technocrats was instrumental in ushering in market reforms. By 2007, a variety of factors would seem to place middle-income countries such as Mexico and Chile beyond the policy reach of multilateral lending institutions. I argue, however, that the Inter-American Development Bank and the World Bank have, in fact, become closely entangled in the development of conditional cash transfer programs through closed transnational policy networks. The nature and extent of that involvement has been shaped by the different institutional legacies and cultures of the two institutions. While both multilaterals tended to bolster the objectives of domestic policymakers and the exclusion of civil society organizations from the policy process, the greater rhetorical commitment of the World Bank to civil society participation did allow civil society organizations to pry open a small space for policy inclusion in the Chilean case. KEYWORDS: Mexico, Chile, World Bank, Inter-American Development Bank, poverty.

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Economic changes since the mid-1970s, involving the elimination of economic borders and an increase in international exchange particularly in trade and investment flows, are at the heart of what has become known as economic globalization. These changes were accompanied by a new policy direction that took as its primary article of faith the reduction in the role of the state. For Latin America (and for most countries of the Global South), this new policy direction became closely associated with the debt crisis and with World Bank structural adjustment programs. For at least a decade, the main ideas of neoliberalism (particularly, trade liberalization and privatization) were transmitted through "policy dialogue" in which protracted discussions between lending institutions and borrower governments established close working relationships between domestic and multilateral technocrats. Multilateral officials now had an opportunity to influence policy in important ways and did so through these transnational policy networks. (1)

This article is an analysis of the role of transnational policy networks in the development of conditional cash transfer programs in two Latin American countries: Mexico and Chile. (2) Such programs have become increasingly popular in the region. (3) The policy network that originated and drove the conditional cash transfer payment programs in each case can best be described as a "policy community," a particular kind of policy network characterized by a tightly integrated set of actors, restricted membership, insulation from the public, and a clear consensus on basic policy assumptions. (4) Like the earlier market reform versions, policy networks may not be strictly defined by institutional affiliations--personal links and nonstate/multilateral actors may also be important. Unlike the market reform policy process, however, the global arena is now the setting of contradictory pressures: while it bolsters exclusionary domestic elites, it can also provide an opportunity for civil society organizations to push open domestic policy space. In the cases dealt with here, it did both--restructuring and opening the policy process in complex ways. This study suggests that a more institutionalized policy culture may, because it downplays the importance of personal ties, afford more policy opportunity for civil society groups.

One would expect international organizations to have little impact on the social policies of middle-income countries such as Chile and Mexico. The leverage afforded by the debt crisis has long since passed; the neoliberal economic model, propounded so strongly by international lending institutions, has faced rising criticism undermining the credibility of multilateral advice; and private capital flows have increased, removing the need to borrow from multilateral institutions inclined to ask for policy conditionalities. …

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