Business Politics and Business Politics and Policy Making in Policy Making in

Latin AmericaLatin America

Ben Ross SchneiderBen Ross Schneider

Department of Political Department of Political ScienceScience

Northwestern UniversityNorthwestern University

A Tale of Two Coffee SectorsA Tale of Two Coffee Sectors

Brazil: state control, low quality, and Brazil: state control, low quality, and declining consumption, little dialogue declining consumption, little dialogue with growerswith growers

Colombia: high quality, private Colombia: high quality, private regulation, close collaboration regulation, close collaboration between growers and the statebetween growers and the state

Why? FederacafeWhy? Federacafe

OverviewOverview

Portfolio framework for analyzing Portfolio framework for analyzing business politicsbusiness politics

Comparative examination of patterns Comparative examination of patterns of business politics in Argentina, of business politics in Argentina, Brazil, Chile, Colombia, and MexicoBrazil, Chile, Colombia, and Mexico

Assessment of how various types of Assessment of how various types of policy encourage different political policy encourage different political responses from businessresponses from business

Portfolio analysis of Portfolio analysis of business investment in business investment in

politicspolitics

Business associationsBusiness associations Campaign contributions and lobbyingCampaign contributions and lobbying Personal networksPersonal networks Corruption Corruption

Strong Voluntary Encompassing Associations

Association Date Scope Staff

Mexico Coparmex 1929- Economy-wide 30

CMHN 1962- Economy-wide 0

CCE 1975- Economy-wide 80

Chile CPC 1935- Economy-wide 8

Sofofa 1883- Industry 50

Colombia Federacafe 1927- Coffee 3,500

ANDI 1944- Industry 150

Weak Voluntary Encompassing Associations

Association Date Scope Staff

Argentina ACIEL 1958-73 Economy-wide 0

APEGE 1975-6 Economy-wide 0

CGE 1952- Economy-wide 10

UIA 1886- Industry 50

Brazil UBE 1987-88 Economy-wide 5

IEDI 1989- Industry 8

Political Activities of Political Activities of AssociationsAssociations

Visibility in mediaVisibility in media Direct contacts with policy makersDirect contacts with policy makers Distant relations with politicians and Distant relations with politicians and

partiesparties Representation on consultative or Representation on consultative or

policy councilspolicy councils

Elections, Campaign Elections, Campaign Finance, and LobbyingFinance, and Lobbying

Legal framework greatly restricts Legal framework greatly restricts private sector fundingprivate sector funding

Yet millions of dollars flow from Yet millions of dollars flow from business to politiciansbusiness to politicians

Contributions may not buy much Contributions may not buy much influenceinfluence-- low reelection rate-- low reelection rate-- narrow impact, collective weakness-- narrow impact, collective weakness-- insurance contributions-- insurance contributions

Business Appointees in Recent Government Cabinets

President

Number of business ministers

Percent of business ministers

Argentina Kirchner 0 0

Duhalde 1 8

De la Rua 1 9

Chile Lagos 0 0

Colombia Uribe 7 54

Mexico Fox 5 25

Peru Toledo 7 27

Perceived Corruption in Latin America, 2004

Score Rank Percentile

Chile 7.4 20 .14

Uruguay 6.2 28 .19

Costa Rica 4.9 41 .28

Brazil 3.9 59 .41

Colombia 3.8 60 .41

Mexico 3.6 64 .44

Peru 3.5 67 .46

Argentina 2.5 108 .74

Venezuela 2.3 114 .78

Bolivia 2.2 122 .84

Estimates of Patterns of Business Politics

Lobbying & Elections

Associations Networks Corruption

Chile Low High Low Low

Brazil Medium Low Medium Medium

Colombia Low High High Medium

Argentina Medium Low Medium High

Mexico, 1990s

Low High Low Medium

Mexico, 2000-

Medium Medium Medium Medium

Negotiating Trade Negotiating Trade AgreementsAgreements

Chile, Mexico, and Colombia relied on Chile, Mexico, and Colombia relied on “cuarto al lado” model of “cuarto al lado” model of consultation between business and consultation between business and governmentgovernment

Business participation mediated by Business participation mediated by associationsassociations

In Brazil and Argentina negotiations In Brazil and Argentina negotiations for Mercosur excluded businessfor Mercosur excluded business

Scope and Implementation in Policy Making

Broad Scope Narrow Scope

Rapid

Implementation

Uniform changes in tariffs, pensions, or taxes;

fiscal decentralization

Privatization, deregulation

Lengthy

Implementation

Administrative reform, education policy, trade

agreements

Sectoral re-regulation

ConclusionsConclusions

Root causes of variation in patterns of Root causes of variation in patterns of business politics usually found in prior business politics usually found in prior government actionsgovernment actions

Patterns of business politics are fairly Patterns of business politics are fairly stable over time, yet still subject to stable over time, yet still subject to change through policychange through policy

Business influence on policy more likely to Business influence on policy more likely to be positive when its participation is formal, be positive when its participation is formal, encompassing, organized, and transparentencompassing, organized, and transparent