Why do institutions matter? Global competitiveness and the politics of policies in Latin America

Abstract

This paper subjects to critique the ‘new institutionalism’ in development policy literature. It highlights the way ‘second generation’ institutional reform processes in the Latin American region are to be engineered through a politics of global competitiveness while their success is to be gauged, first and foremost, in capital-functional terms. The paper culminates in the focused critique of an Inter-American Bank flagship report, The Politics of Policies, which demonstrates the new institutionalism's prejudice against any form of political leadership that does not seek to guarantee a competitive investment climate as well as an uncompromising commitment to a politics of global competitiveness. Over the past decade, a broad consensus has emerged that ‘institutions matter’. (Fukuyama, 2007: xv)