Fiscal and democratic legitimacy in Latin America 27 October 2007 Javier SantisoEconomista JefeCentro de Desarrollo de la OCDE

Agenda de Desarrollo Iberoamericana 2007Barcelona

*

*Never has there been so much democracy on the continentSource: OECD Development Centre, 2007. Based on Polity IV project. Note: Polity2 score shown, average of available data for Latin America. Poilty2 is the sum of two indicators democracy (0 to10) and autocracy (0 to -10 ). These indicators focus on institutionalized aspects of the polity, i.e. de jure. Democracy is conceived as three essential, interdependent elements.One is the presence of institutions and procedures through which citizens can express effective preferences about alternative policies and leaders. Second is the existence of institutionalized constraints on the exercise of power by the executive. Third is the guarantee of civil liberties to all citizens in their daily lives and in acts of political participation. The autocracy index focuses on how restricted political participation is; whether chief executives are chosen in a regularized process of selection within the political elite, and once in office they exercise power with few institutional constraints; and whether theyexercise a high degree of defectiveness over social and economic activity.The 1980s represent a dramatic turn around for the region in terms of polity

*The region has left the 1980s behind and is recuperating growth in terms of GDP per capita Source: OECD Development Centre, 2007. Based on Angus Madison, Historical Statistics. The World Economy, Paris, OECD, 2003; and Polity IV project. Data is average of available data. The 1980s were lost in terms of GDP per capita but not in terms of political reform

*Democracy is alive and well: Elections are competitive affairsSource: OECD Development Centre, 2007. Based on Daniel Zovatto Balance Electoral Latinoamericano, in Malamud, Isbell, and Tjedor (eds.) Anuario Iberoamerciano, Political Database of the Americas and Wikipedia (when based on official results).Note: Support is the share of votes of the election winner and margin is the difference with the second highest recipient of votes.

Support(% votes)Margin(% victory)1st round50192nd round519

Number of countriesShare (%)Continuity844Change1056

*Source: OECD Development Centre based on CEPALSTAT y ECLACs Panorama Social de Amrica Latina 2006 and official press release of the Presidency of Chile, 23 September 2007.% GDP annual growthGrowth has resumed but it is still far behind other emerging economiesChinaIndiaLatin America

Chart1

5.79537068616.99999893581.7103084996

6.34493851543.8000013618-0.5781575959

7.96554201557.9000028453.1626978978

6.03151019972.29999469931.1879501314

2.54701462118.70000574249.1655115322

5.6697867984-1.60000348911.7072429043

5.10372470167.60000586817.2318810953

4.047866191111.69999766775.7350103921

6.45757607117.6000027009-5.2421794896

5.7651483517.79999438116.6895032446

0.20531511085.19999749246.3610431587

-1.10148421629.10000037463.6560293907

-2.170949048210.90000046047.0781596274

3.313471721415.20000270194.1241164562

2.616237085113.49999951145.6295838481

4.09015962458.79999956954.8368055076

3.302667164111.60000051444.2688110959

0.796108393111.30000206539.8595583713

0.83972261524.09999587476.4424294637

0.29805364773.80000088745.8087816305

4.2577593599.19999893870.9067462042

3.57775548214.20000809915.2716145925

3.907197119313.9999988184.8702051458

4.873361312313.09999970977.4636287421

0.540104082610.8999985247.6457488624

3.59353025579.99999669347.3946712967

5.5320930769.30000396794.4781680727

2.45055722497.79999460955.9873696358

0.16480526917.59999711717.1287269048

3.94279290288.40000294014.0384543869

0.28289085468.30000703225.2080208493

-0.51367824239.09999944463.7266506518

2.07460130419.99999814888.3919349063

6.229375390810.09999397528.3250362443

4.616871573310.20000059619.2321808871

5.544917778410.70000522239.1951092204

Amrica Latina

China

India

Sheet1

PasesAmrica LatinaChinaIndia

19715.79537068616.99999893581.7103084996

19726.34493851543.8000013618-0.5781575959

19737.96554201557.9000028453.1626978978

19746.03151019972.29999469931.1879501314

19752.54701462118.70000574249.1655115322

19765.6697867984-1.60000348911.7072429043

19775.10372470167.60000586817.2318810953

19784.047866191111.69999766775.7350103921

19796.45757607117.6000027009-5.2421794896

19805.7651483517.79999438116.6895032446

19810.20531511085.19999749246.3610431587

1982-1.10148421629.10000037463.6560293907

1983-2.170949048210.90000046047.0781596274

19843.313471721415.20000270194.1241164562

19852.616237085113.49999951145.6295838481

19864.09015962458.79999956954.8368055076

19873.302667164111.60000051444.2688110959

19880.796108393111.30000206539.8595583713

19890.83972261524.09999587476.4424294637

19900.29805364773.80000088745.8087816305

19914.2577593599.19999893870.9067462042

19923.57775548214.20000809915.2716145925

19933.907197119313.9999988184.8702051458

19944.873361312313.09999970977.4636287421

19950.540104082610.8999985247.6457488624

19963.59353025579.99999669347.3946712967

19975.5320930769.30000396794.4781680727

19982.45055722497.79999460955.9873696358

19990.16480526917.59999711717.1287269048

20003.94279290288.40000294014.0384543869

20010.28289085468.30000703225.2080208493

2002-0.51367824239.09999944463.7266506518

20032.07460130419.99999814888.3919349063

20046.229375390810.09999397528.3250362443

20054.616871573310.20000059619.2321808871

20065.544917778410.70000522239.1951092204

*Latin American economies have been loosing ground for some timeSource: OECD Development Centre, 2007. Based on Maddison (2003). GDP per capita absolute termsGDP per capita relative to USPlebiscite in Chile, 1988

Chart1

0.4110.41

0.4100010000.41000

0.4250.415000.41500

0.4540.42816000.41600

0.5680.45917000.5271700

0.7590.6460.6941.2570.718

182118210.66318211821

182218220.66718221822

182318230.66418231823

182418240.64818241824

182518250.66718251825

182618260.67218261826

182718270.67518271827

182818280.6718281828

182918290.67418291829

183018300.6641.3761830

183118310.66318311831

183218320.67118321832

183318330.66918331833

183418340.68318341834

183518350.69818351835

183618360.69318361836

183718370.7118371837

183818380.71318381838

183918390.71418391839

184018400.7511.5881840

184118410.75218411841

184218420.76118421842

184318430.77518431843

184418440.77818441844

184518450.79318451845

184618460.81118461846

184718470.8218471847

184818480.84518481848

184918490.89518491849

18500.6860.9321.8061850

185118510.94818511851

185218520.96618521852

185318530.93618531853

185418540.95318541854

185518550.98718551855

185618560.98818561856

185718571.01118571857

185818581.04518581858

185918591.06818591859

186018601.0942.1781860

186118611.08318611861

186218621.06918621862

186318631.09818631863

186418641.14518641864

186518651.17218651865

186618661.18618661866

186718671.12818671867

186818681.17218681868

186918691.27618691869

0.6740.7131.292.4450.749

18710.7171.2742.5031871

18720.7211.3492.5411872

18730.7241.4172.6041873

18740.7281.3372.5271874

18750.7321.4262.5991875

18760.7361.392.571876

18770.741.3252.5951877

18780.7441.3852.6461878

18790.7481.5722.9091879

18800.7521.743.1841880

18810.7561.7753.2151881

18820.761.8953.3381882

18830.7641.8793.3391883

18840.7681.8693.321884

18850.7731.7883.271885

18860.7771.8373.2941886

18870.7811.9383.3681887

18880.7851.8363.2821888

18890.7891.8583.4131889

1.0110.7941.9663.3921890

18910.7732.0993.4671891

18920.732.033.7281892

18930.6222.1033.4781893

18940.6212.0423.3141894

1.1320.7832.1583.6441895

18960.712.1433.5041896

18970.6992.073.7691897

18980.7172.2923.781898

18990.7032.2794.0511899

1.3660.6782.1944.0911.206

1.4660.732.2234.4641.272

1.3480.7152.2934.4211.237

1.4830.7142.1394.5511.3

1.4920.7132.2874.411.333

1.630.7182.2594.6421.4

1.5940.772.4085.0791.434

1.6690.7552.5075.0651.457

1.6490.7342.7434.5611.488

1.680.7762.7265.0171.522

1.6940.76934.9641.562

1.7070.8362.8875.0461.582

1.7180.8092.9685.2011.617

1.7320.8112.9885.3011.618

1.7440.782.4974.7991.498

1.7570.7982.3894.8641.493

1.770.8042.8955.4591.518

1.7830.8422.9235.2481.515

1.7960.8082.9265.6591.558

1.810.8952.485.681.581

1.8230.9632.7685.5521.644

1.8360.9632.375.3231.631

1.851.0092.4265.541.692

1.8841.0462.8856.1641.789

1.8251.0243.0626.2331.822

1.9081.0073.1526.2821.837

1.9911.0082.856.6021.887

1.8751.062.766.5761.929

1.8571.1583.3326.5692.039

1.7571.1373.4556.8992.053

1.6181.0482.8596.2131.913

1.6431.0042.2185.6911.762

1.3731.0181.8444.9081.657

1.5011.0762.2364.7771.752

1.5741.1422.6555.1141.866

1.661.152.7615.4671.937

1.7681.2352.8476.2042.013

1.7961.253.1816.432.086

1.7941.2763.1616.1262.108

1.8581.2633.1696.5612.136

1.8521.253.2367.012.122

1.9491.3073.1418.2062.168

2.0321.2293.2269.7412.116

2.0511.3683.25611.5182.166

2.1591.3863.25612.3332.294

2.1341.393.47111.7092.304

2.2111.5013.6999.1972.465

2.2211.5183.248.8862.55

2.2481.5963.7129.0652.656

2.3041.6593.5698.9442.682

2.3651.6723.679.5612.696

2.4771.7023.73110.1162.765

2.5041.7523.89310.3162.774

2.4391.7844.11210.6132.814

2.6051.8483.90710.3592.909

2.7421.9263.97510.8973.026

2.8431.8963.95710.9143.06

2.9651.9944.26410.923.203

3.0252.1114.39210.6313.283

3.0162.2214.04211.233.259

3.1552.3354.2711.3283.387

3.1722.4374.36611.4023.457

3.2112.5114.46511.9053.489

3.3432.4634.63912.2423.485

3.5942.4724.63812.7733.629

3.7022.4484.57713.4193.709

3.8132.5274.98414.1343.785

3.9222.5545.04614.333.843

4.0732.7045.12814.8633.974

4.1852.865.2215.1794.127

4.323.0575.23115.034.309

4.3653.2795.59715.3044.451

4.6023.5395.42915.9444.62

4.8533.8825.03416.6894.875

5.0134.0834.99216.4915.044

5.1584.194.27316.2845.086

5.2444.4724.34716.9755.242

5.2934.5684.717.5675.358

5.5954.6815.01118.3735.455

5.9684.8925.34518.7895.696

6.325.1985.6818.5775.894

6.7174.8525.93218.8565.782

6.5144.7655.03518.3255.589

6.0884.54.8118.925.307

6.1624.6465.01120.1235.4

6.1944.9175.0320.7175.465

5.8345.2055.22821.2365.592

5.8185.2735.48121.7885.669

5.7715.1585.78122.4995.596

5.8995.2276.28323.0595.546

6.0854.9236.40223.2015.465

6.2264.8936.79522.8495.587

6.3334.8027.50623.2985.676

6.3394.9397.90623.6165.785

6.5045.1638.424.2795.999

6.0015.2968.97424.6035.969

6.2095.3669.50525.236.082

6.5255.4889.99726.0526.313

6.7395.42210.18726.8246.354

6.8915.3929.98527.6996.26

7.2495.55610.31128.4036.424

7.1525.55910.53828.3476.37

7.1215.59910.6528.5356.25

7.1375.56310.9529.0376.278

111

Mexico

Brazil

Chile

USA

Average LA8

1990 Geary-Khamis international Thousands of $

Sheet1

Absolute110001500160017001820182118221823182418251826182718281829183018311832183318341835183618371838183918401841184218431844184518461847184818491850185118521853185418551856185718581859186018611862186318641865186618671868186918701871187218731874187518761877187818791880188118821883188418851886188718881889189018911892189318941895189618971898189919001901190219031904190519061907190819091910191119121913191419151916191719181919192019211922192319241925192619271928192919301931193219331934193519361937193819391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003

Portugal0.450.4250.6060.740.8190.9230.9230.9910.9190.8830.8910.920.9410.9450.9640.9750.9330.9540.9880.9660.9590.9320.9690.9640.9590.9470.970.99211111111111111111111111111111111111111111111212222222222222222222222222223333333444445556677777788888889910101111111111121212131314141414

Espaa0.4980.450.6610.8530.8531111111111111111111111112112222222222222222222222222222222222222222222222222223333332332222222222222222333333333344555566677888999999991010101111121212121213131314141516161717

Mexico0.40.40.4250.4540.5680.7590.6741111111222222222222222222222222222122222222222222222223233333333334444444455555566677666666666667667777777

Brazil0.40.4280.4590.6460.6860.7130.7170.7210.7240.7280.7320.7360.740.7440.7480.7520.7560.760.7640.7680.7730.7770.7810.7850.7890.7940.7730.730.6220.6210.7830.710.6990.7170.7030.6780.730.7150.7140.7130.7180.770.7550.7340.7760.7690.8360.8090.8110.780.7980.8040.8420.8080.8950.9630.96311111111111111111111111122222222222222223222333333444445555555555555555555555566661

Chile0.6940.6630.6670.6640.6480.6670.6720.6750.670.6740.6640.6630.6710.6690.6830.6980.6930.710.7130.7140.7510.7520.7610.7750.7780.7930.8110.820.8450.8950.9320.9480.9660.9360.9530.9870.988111111111111111111111122222222222222222222222222223333333223332322333333332223333333333334344444444444444455555555655544555665555556667888910101010101111111

USA0.40.40.40.40.52711222233333333333333333333343344444444545555555555555666566667777665555666778101212129999101010111011111111111111121213131414151515151617161617181819191918192021212222232323232424252526272828282929

Media UE150.4060.4610.6630.8150.9612222222221122222222222222222211222222222222222222222222222222222222222222222222222222333333333333333333333333333333333334444444444444555555566667777888999910101011111111111111121212131313131314141515161617171818

Average LA80.7180.749111111111222221122222222222222222222222222222223333333333333333344444444555555566665556666566666666666661

Chile0.6940.6630.6670.6640.6480.6670.6720.6750.670.6740.6640.6630.6710.6690.6830.6980.6930.710.7130.7140.7510.7520.7610.7750.7780.7930.8110.820.8450.8950.9320.9480.9660.9360.9530.9870.988111111111111111111111122222222222222222222222222223333333223332322333333332223333333333334344444444444444455555555655544555665555556667888910101010101111111

Chart1

1111

1100010001000

1.06115001500

1.131.0716001600

1.080.8701700

0.60.510.570.55

1821182118211821

1822182218221822

1823182318231823

1824182418241824

1825182518251825

1826182618261826

1827182718271827

1828182818281828

1829182918291829

1830183018301830

1831183118311831

1832183218321832

1833183318331833

1834183418341834

1835183518351835

1836183618361836

1837183718371837

1838183818381838

1839183918391839

1840184018401840

1841184118411841

1842184218421842

1843184318431843

1844184418441844

1845184518451845

1846184618461846

1847184718471847

1848184818481848

1849184918491849

18500.3818500.52

1851185118511851

1852185218521852

1853185318531853

1854185418541854

1855185518551855

1856185618561856

1857185718571857

1858185818581858

1859185918591859

1860186018601860

1861186118611861

1862186218621862

1863186318631863

1864186418641864

1865186518651865

1866186618661866

1867186718671867

1868186818681868

1869186918691869

0.280.290.310.53

18710.2918710.51

18720.2818720.53

18730.2818730.54

18740.2918740.53

18750.2818750.55

18760.2918760.54

18770.2918770.51

18780.2818780.52

18790.2618790.54

18800.2418800.55

18810.2418810.55

18820.2318820.57

18830.2318830.56

18840.2318840.56

18850.2418850.55

18860.2418860.56

18870.2318870.58

18880.2418880.56

18890.2318890.54

0.30.2318900.58

18910.2218910.61

18920.218920.54

18930.1818930.6

18940.1918940.62

0.310.2118950.59

18960.218960.61

18970.1918970.55

18980.1918980.61

18990.1718990.56

0.330.170.290.54

0.330.160.290.5

0.30.160.280.52

0.330.160.290.47

0.340.160.30.52

0.350.150.30.49

0.310.150.280.47

0.330.150.290.5

0.360.160.330.6

0.330.150.30.54

0.340.150.310.6

0.340.170.310.57

0.330.160.310.57

0.330.150.310.56

0.360.160.310.52

0.360.160.310.49

0.320.150.280.53

0.340.160.290.56

0.320.140.280.52

0.320.160.280.44

0.330.170.30.5

0.340.180.310.45

0.330.180.310.44

0.310.170.290.47

0.290.160.290.49

0.30.160.290.5

0.30.150.290.43

0.290.160.290.42

0.280.180.310.51

0.250.160.30.5

0.260.170.310.46

0.290.180.310.39

0.280.210.340.38

0.310.230.370.47

0.310.220.370.52

0.30.210.350.51

0.290.20.320.46

0.280.190.320.49

0.290.210.340.52

0.280.190.330.48

0.260.180.30.46

0.240.160.260.38

0.210.130.220.33

0.180.120.190.28

0.180.110.190.26

0.180.120.20.3

0.240.160.270.4

0.250.170.290.36

0.250.180.290.41

0.260.190.30.4

0.250.170.280.38

0.240.170.270.37

0.240.170.270.38

0.230.170.270.39

0.250.180.280.38

0.250.180.280.36

0.260.170.280.36

0.270.180.290.39

0.280.20.310.41

0.270.20.290.36

0.280.210.30.38

0.280.210.30.38

0.270.210.290.38

0.270.20.280.38

0.280.190.280.36

0.280.180.280.34

0.270.180.270.35

0.270.180.270.35

0.270.180.270.34

0.280.190.270.34

0.290.20.290.35

0.290.210.290.37

0.290.220.290.34

0.290.230.290.3

0.30.250.310.3

0.320.260.310.26

0.310.260.310.26

0.30.260.310.27

0.30.250.30.27

0.320.260.30.28

0.340.280.320.31

0.360.260.310.31

0.360.260.30.27

0.320.240.280.25

0.310.230.270.25

0.30.240.260.24

0.270.250.260.25

0.270.240.260.25

0.260.230.250.26

0.260.230.240.27

0.260.210.240.28

0.270.210.240.3

0.270.210.240.32

0.270.210.240.33

0.270.210.250.35

0.240.220.240.36

0.250.210.240.38

0.250.210.240.38

0.250.20.240.38

0.250.190.230.36

0.260.20.230.36

0.250.20.220.37

0.250.20.220.37

0.250.190.220.38

Chile

Mexico

Brazil

Average LA8

Mexico

Brazil

LA8

Chile

% GDP USA

Sheet1

Relative110001500160017001820182118221823182418251826182718281829183018311832183318341835183618371838183918401841184218431844184518461847184818491850185118521853185418551856185718581859186018611862186318641865186618671868186918701871187218731874187518761877187818791880188118821883188418851886188718881889189018911892189318941895189618971898189919001901190219031904190519061907190819091910191119121913191419151916191719181919192019211922192319241925192619271928192919301931193219331934193519361937193819391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003

Portugal-EU111%92%91%91%85%81%66%67%60%57%55%56%57%58%58%60%52%51%51%51%50%48%50%50%50%47%47%48%48%49%50%52%52%51%49%56%50%49%50%49%51%50%50%51%51%57%52%52%52%53%50%48%48%48%47%47%46%46%47%47%45%44%45%43%43%44%48%51%51%48%48%46%52%46%48%48%52%54%57%56%51%46%52%52%50%47%49%47%48%51%50%53%55%53%52%51%51%50%51%52%52%52%53%53%54%55%56%57%58%58%60%61%63%66%64%68%71%73%77%76%70%71%72%72%74%75%76%77%76%73%73%74%76%79%81%82%85%85%83%81%82%82%82%82%82%81%81%80%78%

Spain-EU123%98%100%105%89%89%77%74%70%70%69%79%69%67%67%69%69%80%71%72%70%76%78%78%71%71%74%72%79%83%77%78%79%85%83%79%82%82%81%81%81%79%77%74%75%74%80%75%79%77%77%77%69%69%73%72%78%78%76%75%74%72%72%73%77%77%73%75%73%77%75%74%75%77%76%74%78%83%82%79%80%81%79%82%81%82%80%81%84%81%81%79%61%53%53%55%61%57%59%58%61%59%59%58%56%54%53%56%59%56%58%58%61%61%63%59%57%62%66%69%71%72%74%75%75%78%79%80%82%84%88%89%89%89%88%86%86%86%87%87%86%85%85%87%89%90%92%93%92%91%91%91%90%90%90%91%92%93%94%96%

Mexico100%100%106%113%108%60%28%30%31%33%33%30%33%34%35%31%33%36%33%34%34%33%33%36%36%32%34%32%32%33%34%33%31%29%30%30%29%28%25%26%29%28%31%31%30%29%28%29%28%26%24%21%18%18%18%24%25%25%26%25%24%24%23%25%25%26%27%28%27%28%28%27%27%28%28%27%27%27%28%29%29%29%29%30%32%31%30%30%32%34%36%36%32%31%30%27%27%26%26%26%27%27%27%27%24%25%25%25%25%26%25%25%25%

Brazil100%107%87%51%38%29%29%28%28%29%28%29%29%28%26%24%24%23%23%23%24%24%23%24%23%23%22%20%18%19%21%20%19%19%17%17%16%16%16%16%15%15%15%16%15%15%17%16%15%16%16%15%16%14%16%17%18%18%17%16%16%15%16%18%16%17%18%21%23%22%21%20%19%21%19%18%16%13%12%11%12%16%17%18%19%17%17%17%17%18%18%17%18%20%20%21%21%21%20%19%18%18%18%18%19%20%21%22%23%25%26%26%26%25%26%28%26%26%24%23%24%25%24%23%23%21%21%21%21%21%22%21%21%20%19%20%20%20%19%

LA80%57%31%29%29%28%29%30%30%28%29%33%30%31%31%31%31%31%31%28%29%28%28%30%31%31%29%29%29%29%29%31%30%31%31%34%37%37%35%32%32%34%33%30%26%22%19%19%20%27%29%29%30%28%27%27%27%28%28%28%29%31%29%30%30%29%28%28%28%27%27%27%27%29%29%29%29%31%31%31%31%30%30%32%31%30%28%27%26%26%26%25%24%24%24%24%24%25%24%24%24%24%23%23%22%22%22%

Chile55%52%53%51%53%54%53%55%54%51%52%54%55%55%57%56%56%55%56%58%56%54%58%61%54%60%62%59%61%55%61%56%54%50%52%47%52%49%47%50%60%54%60%57%57%56%52%49%53%56%52%44%50%45%44%47%49%50%43%42%51%50%46%39%38%47%52%51%46%49%52%48%46%38%33%28%26%30%40%36%41%40%38%37%38%39%38%36%36%39%41%36%38%38%38%38%36%34%35%35%34%34%35%37%34%30%30%26%26%27%27%28%31%31%27%25%25%24%25%25%26%27%28%30%32%33%35%36%38%38%38%36%36%37%37%38%

01

* while other regions are accelerating their convergence processes with richer economiesSource: OECD Development Centre, 2007. Based on Groningen Growth and Development Centre and The Conference Board, Total Economy Database, 2005.

Note: Annual growth (%) calculated as the average annual rate for the last six decades. Deviation (%) at the beginning of each decade.1950196019701980199019801950196019702000/0619902000/06-4.0-3.0-2.0-1.00.01.02.03.04.05.06.0-30-101030507090GDP deviation (%) with respect to world average ($ 1990)GDP per capita Growth minus average world GDP per capita (% yearly) .MexicoBrazil195019601970198019902000/06195019601970198019802000/06-4.0-3.0-2.0-1.00.01.02.03.04.05.06.0-85-75-65-55-45GDP Deviation (%) with respect to world average ($ 1990)GDP per capita Growth minus average world GDP per capita (% yearly) .ChinaIndiaConvergence process in Brazil and Mexico compared with other emerging economies

*Source: OECD Development Centre, 2007. Based on IMF , Globalization and Inequality, 2007. OECD* includes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, Netherlands, Norway, Singapore, Spain, Sweden, UK, US.The poorest segments of the population have not shared in the prosperityUnlike other regions, growth in Latin America has left out the poorGDP per capita by quintileGDP per capita by quintileGDP per capita by quintileGDP per capita by quintileQuintile annual growth in GDP per capitaQuintile annual growth in GDP per capitaQuintile annual growth in GDP per capitaQuintile annual growth in GDP per capita

*Source: OECD Development Centre, 2007. Based on CEPALSTAT y ECLACs Panorama Social de Amrica Latina 2006.% population in povertyPoverty is falling but it still affects a large part of the population Millions of people in poverty

Chart1

18.621.940.5

22.525.848.3

18.725.243.9

18.124.442.5

18.524.743.2

19.424.644

19.125.144.2

16.925.142

15.424.439.8

Indigence

Poor non indigent

total

Sheet1

IndigencePoor non indigenttotal

198018.621.940.5

199022.525.848.3

199918.725.243.9

200018.124.442.5

200118.524.743.2

200219.424.644

200319.125.144.2

200416.925.142

200515.424.439.8

Chart1

67.77449479.799001147.573495

99.960975114.621918214.582893

96.402614129.911544226.314158

94.671688127.623712222.2954

98.10513130.983606229.088736

104.237558132.177522236.41508

103.936852136.587172240.524024

93.12407138.30853231.4326

85.928766136.146876222.075642

83.062056134.481424217.54348

Indigents

Poor non indigents

total

Sheet1

Amrica LatinaIndigentsPoor non indigentstotal

198067.77449479.799001147.573495

198685.38356793.220706178.604273

199099.960975114.621918214.582893

199498.992192118.505076217.497268

199794.96694122.45737217.42431

199996.402614129.911544226.314158

200094.671688127.623712222.2954

200198.10513130.983606229.088736

2002104.237558132.177522236.41508

2003103.936852136.587172240.524024

200493.12407138.30853231.4326

200585.928766136.146876222.075642

200683.062056134.481424217.54348

*Source: OECD Development Centre, 2007. Based on CEPALSTAT y ECLACs Panorama Social de Amrica Latina 2006.Improvements in inequality are modest or absentdeteriorationsimprovementsChanges in inequality during the last decade

*Source: CEPALSTAT y ECLACs Panorama Social de Amrica Latina 2006 and official press release of the Presidency of Chile, 23 September 2007.There is no mature and constructive democracy when equity and social justice are not tackled our democracies have not been efficient they have not managed to rapidly improve the living condition of the people, especially of those in most need, and the political consequences are visible today.

President Michelle Bachelet at the European Union - Latin America Forum on Social Cohesion

*

*Source: OECD Development Centre, 2007. Based on data by Goi, Lpez, and Servn (2006)Fiscal policy plays a very limited redistributive role, especially taxationGini coefficientInequality before and after taxes and transfers

Chart1

51.5965967249.58079142

45.8916112531.11801934

Inequality before taxes and transfers

Inequality after taxes and transfers

Sheet1

Inequality after transfersInequality after taxes and transfersInequality before taxes and transfersInequality after taxes and transfers

Chile45.7565155245.5733580847.2324035145.57335808

Peru48.7870543447.9376532748.5938417647.93765327

Argentina48.5789547548.1054258149.9856741448.10542581

Mexico50.3439653749.4370502850.9799502149.43705028

Brazil54.1333213854.270311456.0261325354.2703114

Colombia53.3417689152.1609496956.7615781952.16094969

LatAm avge50.1569300449.5807914251.5965967249.58079142

Austria30.4231984624.781010837.5432714424.7810108

Netherlands29.6762230826.0883453738.6698978926.08834537

Luxemburg30.123009923.805912441.2468597823.8059124

France34.5303963530.8612754841.9563345930.86127548

Germany33.2905434328.18606242.9763913828.186062

Sweden32.8187673829.036430545.1696706329.0364305

Belgium36.3782864429.1987716446.5306775529.19877164

Spain39.5664995734.7647907646.7770014434.76479076

Greece39.9870239236.3267803947.3460940736.32678039

Italy40.9511502737.4403172347.5056481737.44031723

Denmark34.8665385728.534602948.5929903128.5346029

Finland36.2511853831.6407434749.2982005331.64074347

Portugal42.9670520238.059949349.3525648938.0599493

UK38.7512846734.2905691852.2729560234.29056918

Ireland38.8990513933.7547287353.1356100233.75472873

Europe avge35.9653473931.1180193445.8916112531.11801934

*Source: OECD Development Centre, 2007. Based on data by Goi, Lpez, and Servn (2006).Gini coefficientThere is no Latin curse:Quality fiscal policy is not a matter of DNA Inequality before and after taxes and transfers

Chart1

47.2324035145.57335808

48.5938417647.93765327

49.9856741448.10542581

50.9799502149.43705028

56.0261325354.2703114

56.7615781952.16094969

46.7770014434.76479076

47.5056481737.44031723

49.3525648938.0599493

Inequality before taxes and transfers

Inequality after taxes and transfers

Sheet1

Inequality after transfersInequality after taxes and transfersInequality before taxes and transfersInequality after taxes and transfers

Chile45.7565155245.5733580847.2324035145.57335808

Peru48.7870543447.9376532748.5938417647.93765327

Argentina48.5789547548.1054258149.9856741448.10542581

Mexico50.3439653749.4370502850.9799502149.43705028

Brazil54.1333213854.270311456.0261325354.2703114

Colombia53.3417689152.1609496956.7615781952.16094969

LatAm average50.1569300449.5807914251.5965967249.58079142

Austria30.4231984624.781010837.5432714424.7810108

Netherlands29.6762230826.0883453738.6698978926.08834537

Luxemburg30.123009923.805912441.2468597823.8059124

France34.5303963530.8612754841.9563345930.86127548

Germany33.2905434328.18606242.9763913828.186062

Sweden32.8187673829.036430545.1696706329.0364305

Belgium36.3782864429.1987716446.5306775529.19877164

Spain39.5664995734.7647907646.7770014434.76479076

Greece39.9870239236.3267803947.3460940736.32678039

Italy40.9511502737.4403172347.5056481737.44031723

Denmark34.8665385728.534602948.5929903128.5346029

Finland36.2511853831.6407434749.2982005331.64074347

Portugal42.9670520238.059949349.3525648938.0599493

UK38.7512846734.2905691852.2729560234.29056918

Ireland38.8990513933.7547287353.1356100233.75472873

Europe average35.9653473931.1180193445.8916112531.11801934

*Overall Balance 1990-2006Latin America averageCountry forecast 2006Source: OECD Development Centre, 2007. Based on ECLAC, Economic Survey of Latin America and the Caribbean, 2006-2007, June 2007. Fiscal reform has achieved fiscal discipline

Chart1

-1.0190532

0.770315142

0.794691428

-0.36978925

-0.23644057

-1.47027644

-1.51466712

-1.43882086

-2.99278061

-3.77059066

-2.27852387

-2.75913271

-3.48341879

-1.86725429

-0.90575862

-1.30979505

-0.2

-1.0190532

%

Sheet1

19901991199219931994199519961997199819992000200120022003200420052006

Overall balance-1.01905320.7703151420.794691428-0.36978925-0.23644057-1.47027644-1.51466712-1.43882086-2.99278061-3.77059066-2.27852387-2.75913271-3.48341879-1.86725429-0.90575862-1.30979505-0.2

1990199119921993199419951996199719981999200020012002200320042005

-1.01905320.7703151420.794691428-0.36978925-0.23644057-1.47027644-1.51466712-1.43882086-2.99278061-3.77059066-2.27852387-2.75913271-3.48341879-1.86725429-0.90575862-1.30979505

000000000.2

Chart1

-3.5

-3.1

-1.9

-1.6

-1.3

-1.1

-1

-1

-0.4

-0.2

0

0

0.2

0.2

0.5

1

1.4

4.5

2006

Sheet1

2006

Colombia-3.5

Brazil-3.1

Guatemala-1.9

Mexico-1.6

Honduras-1.3

Costa Rica-1.1

Dominican, R.-1

Uruguay-1

El Salvador-0.4

Ecuador-0.2

Nicaragua0

Venezuela0

Bolivia0.2

Panama0.2

Paraguay0.5

Argentina1

Peru1.4

Chile4.5

*Source: OECD Development Centre, 2007. Based on Filc and Scartascini (2007), Budgetary Institutions in Lora, The State of State Reform in Latin America, IADB and Stanford University PressNote: To construct the figure, the reforms were weighted in accordance with their relevance and direction and were normalized between 0 and 1. So, each curve shows the transition of the institutions from their initial situation in 1990 to their situation in 2005. The slope measures the number of reforms and their relative importance. The path of reform for fiscal institutionsReform has succeeded in strengthening fiscal institutions

Chart1

000

0-0.07692307690

0.0096153846-0.15384615380

0.0096153846-0.07692307690

0.00961538460.11538461540

0.03846153850.19230769230

0.04807692310.26923076920.0285714286

0.03846153850.42307692310.0285714286

0.10576923080.57692307690.0285714286

0.25961538460.57692307690.1428571429

0.59615384620.80769230770.4

0.58653846150.88461538460.4285714286

0.750.92307692310.7714285714

0.83653846150.96153846150.9142857143

0.89423076920.96153846151

111

Fiscal Rules

Procedures Rules

Transparency Rules

Sheet1

Column1Fiscal RulesProcedures RulesTransparency Rules

1990000

19910-0.07692307690

19920.0096153846-0.15384615380

19930.0096153846-0.07692307690

19940.00961538460.11538461540

19950.03846153850.19230769230

19960.04807692310.26923076920.0285714286

19970.03846153850.42307692310.0285714286

19980.10576923080.57692307690.0285714286

19990.25961538460.57692307690.1428571429

20000.59615384620.80769230770.4

20010.58653846150.88461538460.4285714286

20020.750.92307692310.7714285714

20030.83653846150.96153846150.9142857143

20040.89423076920.96153846151

2005111

*Source: OECD Development Centre, 2007. Based on ECLACs ILPES Database and OECD Revenue Statistics Database.But reform has failed to raise significantly more revenueTax revenue (Central Government, % GDP, 2006)

Chart1

10.03212675

11.00007888

12.08190553

12.57525175

13.48619902

14.14959385

14.18324192

14.22837959

15.04946722

15.86379822

16.41069144

17.54737452

18.45272209

18.63549793

19.29658011

21.2940584

24.61456042

25.58897312

25.67522756

29.6

32.6

2006 (p)

Sheet1

19901991199219931994199519961997199819992000200120022003200420052006 (p)

Haiti7.3326469637.455357614.3964645644.7254059892.5088355255.5218777216.8555631318.7491973728.3478819528.7613948427.9265136627.3794632448.2110647898.8534377668.8853668799.67250675510.03212675

Mexico12.6491235912.6974241913.3826723113.662471713.6635692711.2663984710.8772636711.633537612.0184257112.8790903612.1202651812.8781650313.1774487312.6133797111.4555931211.0112816211.00007888

Guatemala7.6195703629.3062501939.4390029929.0390880577.7382837249.1276573239.99872968510.1696853910.0033597510.736352110.8814444111.1193391312.1615179911.9425583511.8213707211.4539382712.08190553

Venezuela4.3863076244.8326076875.9258325137.1460040679.4243139878.8868971698.17170076610.0909776711.6296288611.599619999.3908919119.61340169210.2997692410.4108786711.5103424212.2590165612.57525175

Paraguay9.8755483589.7542858639.91707709210.2084484412.0470455613.5909555112.6924282612.7491108512.6460791311.7939530512.035781411.958301711.2025454211.34358112.9302841713.021287313.48619902

Dominican Rep.8.2215252449.29724463310.8714791911.246683810.6809124510.7818343310.4006308711.8082891611.9186063612.8188006712.6772431913.9282151113.7511005412.3512716113.0305078114.0813714714.14959385

Ecuador10.0663993610.226811939.8570842249.4862274369.485897019.6036017448.7291307249.90795225510.5292869510.263579211.6178447513.2910930914.1251574112.8824196412.8360004313.2915742714.18324192

Costa Rica11.0236361611.2956787211.8785506411.9934264611.5938228612.3369237712.5529836512.5259214112.5649720211.9409616712.2850342213.2158957113.2229248413.3472445313.3369248713.5890884614.22837959

El Salvador8.923014649.99312035710.6456635211.4270559912.3751565413.7856695713.5038722812.9999435912.8313376812.7955139712.9708275512.320730712.9582643113.3142599613.243878814.2209808915.04946722

Panama14.7303643915.3146228215.0153891616.1060624416.2338019417.4300920517.1394428316.8246529216.1988291816.5952183516.0243965414.9872419814.7754449514.5989566514.4019884914.2474343315.86379822

Peru11.5973860313.1009252214.1233584314.3284039114.9396105415.424626315.7813524816.0228440515.7137340614.3725364413.943603314.1649115813.6466150614.4473887714.6702815315.1402574216.41069144

Argentina12.114481713.3372812814.3030246513.899857413.6119461812.9088497712.2607915712.7253470512.8663480612.8514422513.0869076213.1780249912.7547984314.7678725816.6228759717.08359317.54737452

Chile15.4144249717.1500543817.6831466518.2265418817.4531472316.7456741517.9389406617.6177591717.6242662417.0108963917.6814833418.0839597418.0443403517.2906931717.0182098918.1932303618.45272209

Colombia8.69544301710.6531157511.3137979411.7818693712.7718176713.4350399214.2173423915.172339314.3713504314.1705953414.0842181816.0121453615.9520827916.1773803417.0341873217.5713858118.63549793

Honduras15.341926316.3388378115.762198416.446615115.5833341416.947495414.7799208614.2405661617.2230611318.2663101217.0310653116.9248925117.088435517.5621964918.1821162618.3486186219.29658011

Nicaragua9.03439842212.3658916613.6226341112.9568199313.7171081114.1612864314.2267581115.6991500617.1975399817.0642814817.5048101215.9647769116.8278569418.644409219.3137988420.3505713821.2940584

Brazil17.8856891414.6580228615.5597144816.8826788819.0461641318.7764061718.3059587118.6348964919.5160556420.6966253221.4865508822.0837992322.7923553822.2849681323.0831476524.0672475624.61456042

Uruguay22.4080298623.1038498924.6464244423.8284671123.2618771723.1340804423.0778672523.5879577924.1131381424.0837365323.6323615223.5724680122.7969956622.9889696924.4009023426.191979525.58897312

Bolivia8.1688962518.45477660510.2493049510.6012762711.0990576511.7512160313.08709114.3815795814.7869142714.0141737213.9934913613.5792005113.9113373414.4273313916.4009454522.8535080925.67522756

OECD29.6

EU1532.6

*Source: OECD Development Centre, 2007. Based on data by Goi, Lpez, and Servn (2006) for tax productivity, Lora (2007) for tax exemptions (original source: Gmez-Sabaini) and Schneider and Enste (2005) for shadow economy.Tax productivity has increased, but remains low for income taxes due to widespread loopholes and informalityTax productivity (rate/revenue)Shadow economy (%GDP)Tax exemptions (% GDP)

Chart1

833

1534

Income

VAT

Sheet1

IncomeVAT

East Asia Pacific1536

LATAM Avge833

Middle East North Africa732

OECD Avge1534

South Asia518

Sub Saharan Africa1133

Chart1

1.4

2.4

2.5

4.2

4.9

5.3

6.3

7.3

9.2

Tax exemptions in Latin America (percent of GDP)

Sheet1

Tax exemptions in Latin America (percent of GDP)

Brazil1.4

Argentina2.4

Peru2.5

Chile4.2

Ecuador4.9

Uruguay5.3

Mexico6.3

Guatemala7.3

Colombia9.2

Chart1

16.3

43.35714286

20.9

28.9

33.2

36.7

42.3

43.4

51.9

60.9

Shadow Economy

Sheet1

Shadow Economy

OECD(21)16.3

Latin America43.35714286

LA839.775

Chile20.9

Costa Rica27.8

Argentina28.9

Puerto Rico30.7

Paraguay31.4

Mexico33.2

Dominican Republic34.1

Ecuador36.7

Venezuela36.7

Jamaica38.9

Brazil42.3

Colombia43.4

Nicaragua48.2

El Salvador48.3

Honduras51.6

Uruguay51.9

Guatemala52.4

Haiti58.6

Peru60.9

Panama65.3

Bolivia68.3

*Source: OECD Development Centre, 2007. Based on Jimnez, J. P. V. Tromben. Fiscal policy and the commodities boom: the impact of higher prices for non-renewables in Latin America and the Caribbean. Cepal Review 90. December 2006.Revenues from non-renewable as a share of total fiscal revenue (1990-2005)Coefficient of Variation in fiscal revenues (1990-2005)The reliance of revenue systems on commodities produces unpredictability

Chart1

55.2

30.9

30

25.3

11.3

7.4

%

Sheet1

VenezuelaMexicoEcuadorBoliviaColombiaChile

55.230.93025.311.37.4

Revenue from non-renewables

Chart1

16.633.2

7.512.5

10.726.4

10.624.7

16.938.3

5.977.2

Total

Non-renewables

%

Sheet1

VenezuelaMexicoEcuadorBoliviaColombiaChile

Total16.67.510.710.616.95.9

Non-renewables33.212.526.424.738.377.2

*% of citizens who trusttax revenue is well spent (2003-05)Source: OECD Development Centre, 2007. Based on Latinobarmetro (2003, 2005) and World Bank Institute, Governance Indicators Database. Based on World Economic Forum, Global Competitiveness Report, 2003-2006.The result is very limited political capital to work with fiscal legitimacy is lowFirms assessment of the neutrality/composition of government decisions/spending (2003-2006)Fairer/WiserUnfair/ Wasteful

Chart1

9.5

9.5

12

12

13

13.5

13.5

15

15

15.5

16.5

19

23

26

28

31.5

32

Sheet1

20032005minmax-minaverage

Ecuador712759.5

Peru910919.5

Guatemala101410412

Mexico9159612

Bolivia121412213

Costa Rica151212313.5

Panama141313113.5

Brazil181212615

Paraguay141614215

Colombia112011915.5

Nicaragua191414516.5

Argentina172117419

Dominican Republic2323123

Honduras262020623

El Salvador232923626

Venezuela1838182028

Uruguay1449143531.5

Chile2737271032

Cuba

Latin American average152115618

Chart1

2.63861111112.6014814815

4.0633620693.7614942529

Neutrality

Composition

Sheet1

CountriesNeutralityComposition

Venezuela, RB1.67751.6233333333

Paraguay1.7751.6766666667

Ecuador1.85251.9066666667

Dominican Republic2.05751.9566666667

Bolivia2.07252.3433333333

Honduras2.122.56

Argentina2.17252.3566666667

Guatemala2.432.59

Nicaragua2.50752.4566666667

Panama2.66252.4

Colombia2.723.1133333333

Peru2.73752.4533333333

Mexico3.05753.26

Brazil3.1352.2733333333

Costa Rica3.20252.89

El Salvador3.55753.8133333333

Uruguay3.742.9733333333

Chile4.01754.18

Latin America2.63861111112.6014814815

OECD4.0633620693.7614942529

To resize chart data range, drag lower right corner of range.

*

*Source: OECD Development Centre, 2007. Based on Latinobarmetro (2003). ArgentinaBoliviaBrazilChileColombiaCosta RicaEcuadorEl SalvadorGuatemalaHondurasMexicoNicaraguaPanamaParaguayPeruUruguayVenezuela05101520253035404550051015202530Fiscal legitimacy (% who trust taxes are well spent)Democratic performance (% satisfied with democracy)Fiscal legitimacy enhances democratic governance

*Source: OECD Development Centre, 2007. Based on Latinobarmetro (2003, 2005) and ECLACs Panorama Social Social cohesion and fiscal legitimacy go hand in handInequality (Gini coefficient 2000s)Fiscal legitimacy (% trust taxes well spent)

*Source: OECD Development Centre, 2007. Based on PISA (2003) and OECD Education at a Glance (2005)It is not (only) a question of quantity but of quality (efficiency)

*Source: OECD Development Centre, 2007. Based on Latinobarmetro (2003) and ECLACs Panorama Social. But equity matters as well: Regressive fiscal policies damage legitimacy

*Source: OECD Development Centre, 2007. Based on Latinobarmetro (2003) and ECLACs Panorama Social .Social spending is regressive,especially social security

*Source: OECD Development Centre, 2007. Based on Freedom House (2007) and ECLAC and OECD Revenue Statistics (2007).Policy dialogue and openness is key for financial accountability

*Source: OECD Development Centre, 2007. Based on Freedom House (2007).VenezuelaVenezuelaChileChileLatAm avgeLatAm avgeNot freePartially freeFree1988 Chiles plebisciteThe democratic transition has not resulted in an overall transition in the media

Chart1

558563.9

558568.4

558570.9

705160.6

736659.5

762857.4

742856.7

Chile

Venezuela

LatAm average

Media quality and independence

Sheet1

Country1980198519901995200020052006

Chile55555570737674

Uruguay20558575717172

Bolivia85705583786567

Brazil70708570676061

Peru55858543336061

Ecuador85858559565959

Nicaragua7037.52047605856

Argentina37.5708571595955

Mexico55555546505852

Colombia85858552413739

Venezuela85858551662828

LatAm average63.968.470.960.659.557.456.7

*Source: OECD Development Centre, 2007. Based on ECLACs ILPES and Latinobarmetro (2003, 2005).Relying more on taxes to finance public spending enhances fiscal legitimacyRelative price of government services(share of taxes on total spending)Fiscal legitimacy (% trust taxes well spent)

*Source: OECD Development Centre, 2007. Based on ECLAC ILPES database and Payne et al. (2007) Democracies in Development - Politics and Reform in Latin America International IDEA.Fiscal policy is a powerful tool to promote democratic participationRelative price of government services(share of taxes on total spending)Voter turnout(2000-05 presidential elections)

*Conclusions Democracy puts fiscal policy at the heart of the relationship between the state and its citizens

Building broad consensus is paramount to success in the implementation of fiscal reforms

Local think-tanks can play a crucial role in fostering constructive dialogue over policy options, if they can count on financial independence

It is not a technical but rather a political issue

*Follow ups Latin American Economic Outlook 2009

Policy Dialogue event

OECD-Club de Madrid sponsored policy dialogues

Current and past Ministers of Finance

Best practices, mutual learning

Fiscal and democratic legitimacy in Latin America 27 October 2007 Javier SantisoEconomista JefeCentro de Desarrollo de la OCDE

Agenda de Desarrollo Iberoamericana 2007Barcelona

**************A central reason why fiscal legitimacy is so low in Latin America is that fiscal systems do not have a progressive distributional impact.

Here, it is useful to compare Latin America with Europe: => Inequality in Latin America before taxes and transfers is similar to that in Europe.

But the impact of taxes and transfers in reducing inequality is significant in Europe.This is not the case in Latin America.

This difference in fiscal impact explains why inequality is much lower in Europe than in Latin America. *A central reason why fiscal legitimacy is so low in Latin America is that fiscal systems do not have a progressive distributional impact.

Here, it is useful to compare Latin America with Europe: => Inequality in Latin America before taxes and transfers is similar to that in Europe.

But the impact of taxes and transfers in reducing inequality is significant in Europe.This is not the case in Latin America.

This difference in fiscal impact explains why inequality is much lower in Europe than in Latin America. ******We define fiscal legitimacy as the % of survey respondents who trust that tax revenue in their country is well spent.

Because this information is from household surveys, it is more representative of taxpayers views than are indicators of the quality of public policies, which are based on surveys of the opinions of business managers and experts.

We would have liked to compare our results for Latin America with a number of countries in Europe, like Spain, and Ireland, but unfortunately Euro-barometer does not seem to collect such information.

**Fiscal legitimacy interacts closely with democratic legitimacy, in both directions. (Even though there are, of course, other determinants of democratic legitimacy as well.)

For example: when populists in Peru -- or perhaps even in Mexico -- win the support of a significant proportion of the population, despite strong growth and good economic conditions, it reflects a lack or weakness of democratic and fiscal legitimacy. *Fiscal legitimacy interacts closely with democratic legitimacy, in both directions. (Even though there are, of course, other determinants of democratic legitimacy as well.)

For example: when populists in Peru -- or perhaps even in Mexico -- win the support of a significant proportion of the population, despite strong growth and good economic conditions, it reflects a lack or weakness of democratic and fiscal legitimacy. *This difference also shows up in comparisons of quality and quantity of public spending on eductation.*Fiscal legitimacy interacts closely with democratic legitimacy, in both directions. (Even though there are, of course, other determinants of democratic legitimacy as well.)

For example: when populists in Peru -- or perhaps even in Mexico -- win the support of a significant proportion of the population, despite strong growth and good economic conditions, it reflects a lack or weakness of democratic and fiscal legitimacy. *Fiscal legitimacy interacts closely with democratic legitimacy, in both directions. (Even though there are, of course, other determinants of democratic legitimacy as well.)

For example: when populists in Peru -- or perhaps even in Mexico -- win the support of a significant proportion of the population, despite strong growth and good economic conditions, it reflects a lack or weakness of democratic and fiscal legitimacy. *Another issue that deserves close attention is that of the role of the media, and freedom of the press.

This is a point the Report did not develop as fully as it might have.*The Report rightly speaks of the need in Mexico for a second democratic transition. This is also true because the first transition has not yet resulted in more free media in Mexico.

The contrast between Mexico and Chile, on the positive side, and Venezuela on the negative, shows that change can take place in these conditions, in both directions*This difference also shows up in comparisons of quality and quantity of public spending on eductation.*This difference also shows up in comparisons of quality and quantity of public spending on eductation.*This difference also shows up in comparisons of quality and quantity of public spending on eductation.*This difference also shows up in comparisons of quality and quantity of public spending on eductation.*