Investment in the Latin American Telecommunications Sector: Assessing the Role of Political Institutions

Aldo Ponce, Profesor Investigador Titular de la División de Estudios Políticos del CIDE, y Peter R. Kingstone escribieron el artículo Investment in the Latin American Telecommunications Sector: Assessing the Role of Political Institutions en la revista Politics & Policy.

 

Abstract

Political economists have argued that the design of political institutions bears important consequences for the quality of public policy, especially in areas like the privatization and regulation of utilities. Our study looks at how variations in key institutional traits of executive and legislative branches (specifically presidents’ legislative powers, presidents’ prerogatives to designate the director of the regulatory agency, and legislative fragmentation) affect investment in Latin American telecommunications, a critical sector for economic development. Institutional factors influence how easily executives and important political (legislative) parties can alter policies related to the telecommunications sector. We find that resolute institutional designs foster investment in the sector, but only under private ownership. For state-owned firms, decisive institutional designs have better effects on investment.

 

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