Political Institutions, Policymaking Processes, and Policy Outcomes: The Case of Uruguay

Uruguay generates a variety of policy outcomes. First, there are relatively stable policies, such as those allowing for the commercial and financial openness of the country. Then there are inflexible and low-quality policies, such as those related to social policies, some areas of state reform (civil servants wages and hiring mechanisms), the bankruptcy regime, etc. Finally, there are volatile outcomes resulting from economic shocks, such as those related to discretionary public spending. In the cases in which historical precedence or the availability of external enforcement devices do not lead to relatively stable policies, the main outer feature of Uruguayan policies is rigidity. The source of rigidity appears to be a mixture of institutional factors (multiple veto points, factionalized parties and direct democracy mechanisms) and political conflict (divergent policy preferences), in which it is very costly to move from the status quo due to the credible threat of policy reversal. Political institutions in Uruguay are conducive to achieving political compromise in the short run, but cannot effectively cooperate in establishing stable and flexible policies in the long run. The difficulty in achieving intertemporal political exchanges is consistent with the main characteristics of the political environment: a large number of key political actors and veto points, a relevant amount of unobservable political maneuvering, poor enforcement technologies in the economic arena, a politically influenced bureaucracy, political exchanges occurring outside the legislative arena, a particular constellation of parties and preferences and costly policymaking and institutional changes.