Institutions and Development in Latin America: an Approach toward Quantitatively Describing Insti- Tutional Capacity in the Region

Mark Payne is a consultant and Carlos Losada a specialist in reform of the state in the State and Civil Society Division of the Sustainable Development Department at the Inter-American Development Bank. The opinions expressed in this paper are the responsibility of the authors and do not necessarily reflect those of the Inter-American Development Bank. The authors are grateful for the comments received from participants at the seminar " Human Development in Latin America " held at the Inter-American Development Bank in April 1999. Arturo Israel (SDS/SCS) provided helpful insights at several stages of work on this project and Carles Boix (Department of Political Science, University of Chicago) offered valuable comments as a discussant in the April seminar. We would also like to thank Edmundo Jarquín (SDS/SCS) for supporting and helping to conceive of the idea for the project and Landívar (SDS/SCS) for their insightful comments. Ana María Schuett (SDS/SCS) assisted in the preparation of this document. Foreword The advance of democracy and the successful implementation of stabilization policies and free market reforms have brought about a significant improvement in the economic performance and political conditions of countries in the Latin American region. But, it is increasingly acknowledged that institutional reforms are necessary in order to bring about higher sustained rates of economic growth, more substantial progress in poverty reduction, and the full consolidation of democratic systems of governance. Recognizing the importance of state reform to more rapid development and to the creation of more inclusive and institutionally consolidated democracies, Latin American governments have requested that multilateral development institutions assist them in their efforts to launch and implement public sector institutional reforms. The Inter-American Development Bank has provided major loans and technical cooperation funding for institutional strengthening and State reform, particularly for the executive branch of government. Since 1990, the Bank has approved several sector loans to help governments make structural adjustments that support a market economy, deregulate trade, and rationalize public administration and state intervention in the economy. In recent years the Bank has started to support national programs to modernize and strengthen judicial systems, the legislative branch, public records systems, and other areas outside the traditional sphere of the executive branch. At the same time, support has also increased for measures to strengthen civil society organizations. The Bank also has backed activities (meetings, seminars, conferences, studies) that seek to build a consensus for economic, social, and political reform …