Democratisation and economic policy — the experiencé of selected countries

ABSTRACT

In South Africa, the parliamentary majority of the former political outsiders who represent the majority of the poor, strengthened the expectation of extensive changes in economic policy. One way of establishing what the future holds for South Africa under the new dispensation is to analyse the experience of recently democratised countries. Five countries were selected, namely Argentina, Brazil, Chile, Peru and Spain. Of the selected countries only the macroeconomic policies of Brazil and Spain could be described as expansionary. The experience of the selected countries therefore does not confirm the arguments put forward in wide a priori reasoning that transitional democracies necessarily implement expansionary macroeconomic policies. The experience of the selected countries furthermore indicates that transitional democracies tend to perpetuate their poor economic performance. The indications are that, should this exercise be repeated in three years time, South Africa would probably have joined the three countries in our sample who did not adopt expansionary macroeconomic policies. However, muddling through and a decline in economic performance will place South Africa in the company of four of the five countries studied. Political transitions do not promise an economic rose garden.