The political economy of redistribution and (in)efficiency in Latin America and the Caribbean

  • Latin America and the Caribbean faces many challenges, including high inequality, high poverty, and low growth.


  • The argument of this paper is that there are various possible political configurations (including elite domination and populism among others) that lead to different economic and social outcomes (including the degree of redistribution and others).


  • Different countries in the region are in different political economy equilibria, and hence have different combinations of political economy syndromes and of socioeconomic outcomes.


  • In this paper, we characterize the countries regarding the size of the public sector, how much fiscal redistribution there is, and how efficient this public action is.


  • We summarize various strands of literature that attempt to explain some elements of that fiscal vector one at a time; and then attempt to provide a simple framework that might explain why different countries present different configurations of size, distributiveness, and efficiency.

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