Research on the political implications of economic conditions is separated into two relatively distinct bodies of literature. I bridge the theoretical gap between them by examining the effects of economic crisis on electoral outcomes in Latin America from 1982 to 1990. An analysis of 21 competitive elections indicates that crisis conditions undermine support for incumbents and provoke high levels of electoral volatility but without necessarily fostering the growth of political extremism or the exhaustion of elite consensus associated with the breakdown of democracy. The results also suggest that the relationship between economic conditions and electoral instability is mediated by party system structure rather than democratic age. Paradoxically, the findings buttress prior research on electoral outcomes in the comparatively stable and homogeneous Organization for Economic Cooperation and Development (OECD) nations while undercutting theoretical frameworks elaborated with specific reference to the breakdown and consolidation of Third World democracy.

Building on the literature on public finance, I seek to advance our understanding of variations in government size by exploring the impact of official development assistance on fiscal policy. I hypothesize that foreign aid operates in accordance with the "flypaper effect," systematically generating incentives and opportunities for the expansion of government spending. Results from a time-series cross-sectional regression analysis of growth in government spending over the 1970-99 time period are consistent with the hypothesis. For middle-and lower-income nations, aid represents an important determinant of government expansion. Looking at the tax and revenue side of the equation, however, reveals a more perverse pattern of response: aid promotes not only increased spending but also reduced revenue generation. The results have important implications from both a theoretical and policy perspective. Inter alia they point to the potentially self-defeating nature of efforts to promote market-oriented programs of state retrenchment via development assistance as well as to the importance of incorporating international transfers into future research on government spending.

Under what conditions do politicians emphasize patronage allocations over the provision of public goods? Building upon research on democratic policy management, this paper aims to improve our understanding of patronage politics by focusing upon the political incentives influencing the ability and willingness of politicians to target public sector allocations to political supporters. Drawing upon data on spending priorities at the provincial level in post-1983 Argentina, the statistical analysis provides evidence that the relative importance of patronage allocations fluctuates with partisanship, electoral cycles, revenue sources, and public sector investment in economic development. The findings underline important and largely neglected parallels between clientelistic and programmatic politics and thereby have important implications for the study of the political economy of democracy.

The debt crisis has raised serious concerns about the future of democratic governance in Latin America. The prevailing assumption is not merely that economic decline undercuts prospects for democratic consolidation; because of their vulnerability to popular political pressures, democracies—particularly new democracies—have been seen as incapable of mounting effective policy responses to critical economic challenges. A comparative study of policy outcomes in Latin America since the outbreak of the debt crisis challenges this assumption. If we control for the magnitude of the debt burden at the outbreak of the crisis, no statistically significant differences emerge between democratic and authoritarian regimes, or between new democracies and more established regimes. The findings suggest that the conventional wisdom about democracy and economic crisis exaggerates the relationship between political regime characteristics and policy choice, and fundamentally misconstrues the strengths and weaknesses of liberal democratic forms of governance.

Over the past decade the contours of political party competition in Latin America have been dramatically altered by an upsurge of support for leftist–populist parties and the related weakening of established parties on the center and right end of the political spectrum. Drawing on both aggregate and individual-level evidence, this article explores the roots of this swing of the political pendulum. Contrary to the conventional wisdom, which attributes the rising “pink tide” to citizen dissatisfaction with market-oriented policies, economic performance, and/or social inequality, the analysis focuses on the role played by improving external economic conditions during the early 2000s, which relaxed the preexisting constraints on policy choice, enhanced the credibility of anti–status quo political actors, and created new opportunities for the pursuit of statist, nationalist, and redistributive political projects and associated challenges to U.S. hegemony. Consistent with this line of theoretical argument, the macro-level evidence indicates that the odds of electing a leftist–populist president in the region rose with improvements in the terms of trade. At the micro level, survey data also show that support for leftist–populist presidents in the region has been positively associated with citizen satisfaction with democracy and the state of the economy as well as with anti-Americanism. The results underline the potential significance of economic fluctuations for understanding electoral dynamics and party system change, particularly under conditions in which government policy choice is constrained by the operation of international markets.