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Globalization and Strikes in Latin
America and the Carribean
Margit Bussmann/Gerald Schneider /Nina Wiesehomeier
Department of Politics and Management
University of Konstanz
Stiglitz and the „Washington Consensus“
The IMF is … «a curious blend of ideology and bad
economics», prescribing "standard" solutions to
economic crises «without considering the effects they
would have on the people in the countries told to
follow these policies.»
Joseph Stiglitz in Globalization and its Discontents
It was not just that IMF policy might be regarded
by softheaded liberals as inhumane. Even if one cared
little for those who faced starvation, or the children
whose growth had been stunted by malnutrition,
it was simply bad economics.
Joseph Stiglitz, Globalization and Its Discontents, p 119
Theoretical background
• Distributional theories of trade policy
making
1) Heckscher-Ohlin (Stolper-Samuelson)
• Cleavages along factor endowment
• Trade will benefit the abundant factor
2) Ricardo-Viner
• Cleavages along economic sectors
• Trade will benefit the export orientated industry
• Strategic explanations
1) Alesina/Drazen: War of attrition model to
explain the delay of economic reforms
2) Bargain models with outside options
Hypotheses
1) Economically open countries are less
prone to domestic instability (long term
effects)
2) The process of economic liberalization
increases the risk of protests driven by
the import competing sector (short-term
effects)
OPERATIONALIZATION OF VARIABLES AND DATA
SOURCES
Dependent variable:
STRIKES PER YEAR (Data from ILO)
Independent variables:
ECONOMIC OPENNESS: log Trade-to-GDP (Penn
World Tables 6.1) and CACAO (Konstanz)
PROCESS OF ECONOMIC LIBERALIZATION: Yearly
growth rate of Trade-to-GDP and annual change in
CACAO-Indicator (Konstanz)
FDI: Net inflows as percentage of GDP (World
Development Indicators)
Control variables:
DEVELOPMENT: log GDP per capita (PWT 6.1)
REGIME TYPE: DEMOC-AUTOC (Polity IV)
INFLATION: (World Development Indicators)
SIZE OF ECONOMY: GDP PPP (Penn World Tables
6.1)
Strikes in Latin America by Sector
Bolivia Brazil Chile Colombia
Costa Rica Ecuador El Salvador Guatemala
Honduras Jamaica Panama Peru
Puerto Rico Surinam Venezuela
Electricity, Gas, Water Agriculture, Hunting, Forestry, Fishing
Manufacturing Mining/ Quarrying
Graphs by country
Durchschnittliches Streikvorkommen
400
350
300
250
200
150
100
50
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Durchschnittlicher Handel/BIP
80
70
60
50
40
30
20
10
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Table 1. Expected influence of different variables on strikes
Independent variable Expected
influence on
civil war
Openness
Liberalization +
Level of development
Inflation +
Democracy +
Size of economy +
Table 2. Longitudinal Negative Binomial Regression of Foreign
Economic Openness and Liberalization on Strikes in Latin
America, 1980-2000
(1) (2) (3) (4) (5)
Inflation t-1 0.0001** 0.0001** 0.0001* 0.0001 0.0000
(0.0000) (0.0000) (0.0000) (0.0000) (0.0000)
Democracy t-1 0.0347** 0.0342** 0.0408** 0.0424*** 0.0348**
(0.0154) (0.0167) (0.0159) (0.0161) (0.0165)
Log GDP t-1 0.1625
(0.1641)
Log GDP per capita t-1 -0.5295
(0.4780)
Log Openness t-1 0.6861** 0.4561*
(0.3045) (0.2458)
Growth in openness t-1 -0.9301* -0.8500*
(0.5151) (0.4877)
CACAO openness t-1 -0.165*** -0.1554** -0.165***
(0.0588) (0.0605) (0.0601)
Change in CACAO openness t-1 0.0882 0.0968 0.0941
(0.1429) (0.1421) (0.1422)
FDI/GDP t-1 -0.0246 -0.0060
(0.0376) (0.0368)
Total strikes t-1 0.0003***
(0.0001)
Constant -0.7220 -1.3992 0.5788*** 0.5960*** 0.6771***
(2.7010) (0.9132) (0.1741) (0.1759) (0.1819)
Observations 195 195 148 148 137
Number of state 14 14 12 12 12
Wald Chi2 41.60***
Table 2. Longitudinal Negative Binomial Regression of Foreign
Economic Openness and Liberalization on Strikes according to
Sectors in Latin America, 1980-2000
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Agric Mining Manufac ElecGasWa Construc Tourism TranspStorCom FinanBusi GovConsu
t m
Democracy t-1 0.0451* 0.0818*** 0.0331** 0.0035 0.0164 0.0211 0.0755*** 0.0822*** 0.0897***
(0.0265) (0.0251) (0.0130) (0.0509) (0.0282) (0.0226) (0.0246) (0.0317) (0.0222)
Inflation t-1 0.00004 0.00005** 0.00004 0.00007 -0.00001 -0.00006 0.0001*** 0.0001*** 0.0001***
(0.00006) (0.00003) (0.00003) (0.00004) (0.00006) (0.00008) (0.00004) (0.00004) (0.00003)
Log GDP t-1 -0.607*** -1.691*** -0.786*** -0.2826 -0.5816* -1.046*** -0.0664 -0.904*** 0.4787***
(0.1912) (0.3882) (0.1664) (0.4330) (0.3466) (0.2171) (0.1879) (0.2408) (0.1503)
Log GDP pc t-1 2.1861*** 3.8816*** 2.8716*** 0.7028 2.4302** 4.9253*** 0.9486 3.0274*** -0.4035
(0.7928) (0.9654) (0.5098) (1.2745) (0.9688) (0.8401) (0.6982) (0.7201) (0.5689)
CACAO t-1 -0.2509** -0.0003 -0.0636 -0.4249*** -0.287** -0.1472 -0.0316 -0.1585 -0.1713**
(0.1224) (0.0926) (0.0540) (0.1631) (0.1174) (0.1079) (0.0870) (0.1052) (0.0803)
chge CACAO t-1 0.3195 0.1610 -0.0063 0.3910* 0.0789 0.1393 0.2624 0.2253 0.2161
(0.2239) (0.1315) (0.1092) (0.2298) (0.2091) (0.1768) (0.1873) (0.2069) (0.1772)
FDI/GDP t-1 0.0150 -0.169*** -0.126*** -0.0948 -0.0452 -0.223*** -0.0013 -0.1422** 0.0405
(0.0610) (0.0614) (0.0354) (0.1037) (0.0625) (0.0661) (0.0512) (0.0645) (0.0474)
Constant -7.5732 -1.1245 -8.459*** 0.2249 -9.3045* -21.68*** -6.8264* -8.9163** -5.0853
(4.7435) (5.2599) (2.9702) (9.0674) (5.1992) (4.5556) (3.9992) (3.8719) (3.4201)
Observations 126 108 132 104 123 130 130 127 130
Number of state 11 9 12 11 12 12 12 12 12
Preliminary Conclusions/Next Steps
- Important liberalizing trade legislation leads to increased
strike activities in Argentine (S. Walter)
- The more open a state is, the less conflict occurs.
- No clear effect of opening.
- Inclusion of data on government turnover, important trade
legislation, IMF negotiations
- Case studies: Bolivia, Mexico (monthly data)
The Konstanz Contribution to PAC
a)Development of measures of political polarization
- Left-right polarization among voters (Source:
Eurobarometer)
- Left-right polarization among parties (Source:
Manifesto)
- Left-right polarization of parliaments
b) Causes and consequences of political polarization
c) Polarization, institutions, and conflict: Institutions
are NOT independent of the social structure
The Dissemination of PAC
1. Monograph summarizing the key findings
2. Seminars with Commission and Council officials and other
public policy makers
3. Teaching
4. Academic publications
