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Copyright by Katherine Schlosser Bersch 2015 The Dissertation Committee for Katherine Schlosser Bersch Certifies that this is the approved version of the following dissertation: When Democracies Deliver Governance Reform in Argentina and Brazil Committee: Wendy Hunter, Co-Supervisor Kurt Weyland, Co-Supervisor Daniel Brinks Bryan Jones Jennifer Bussell When Democracies Deliver Governance Reform in Argentina and Brazil by Katherine Schlosser Bersch, B.A. Dissertation Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy The University of Texas at Austin August 2015 Acknowledgements Many individuals and institutions contributed to this project. I am most grateful for the advice and dedication of Wendy Hunter and Kurt Weyland, my dissertation co- supervisors. I would also like to thank my committee members: Daniel Brinks, Bryan Jones, and Jennifer Bussell. I am particularly indebted to numerous individuals in Brazil and Argentina, especially all of those I interviewed. The technocrats, government officials, politicians, auditors, entrepreneurs, lobbyists, journalists, scholars, practitioners, and experts who gave their time and expertise to this project are too many to name. I am especially grateful to Felix Lopez, Sérgio Praça (in Brazil), and Natalia Volosin (in Argentina) for their generous help and advice. Several organizations provided financial resources and deserve special mention. Pre-dissertation research trips to Argentina and Brazil were supported by a Lozano Long Summer Research Grant and a Tinker Summer Field Research Grant from the University of Texas at Austin. A Boren Fellowship from the National Security Education Program funded my research in Brazil and a grant from the University of Texas Graduate School provided funding for research in Argentina. I am grateful for the generous support I received from the Eisenhower Institute, P.E.O. International, and the Mike Hogg Endowed Fellowship from the University of Texas for the writing stage of the dissertation. The impressive community of PhD students at the University of Texas at Austin enriched my work and life in many ways. Among them, Sandra Botero, Abby Blass, Manuel Balán, Danilo Contreras, Eduardo Dargent, Ilana Lifshitz, Dan McCormack, iv Greg Michener, Daniel Nogueira-Budny, Paula Muñoz, Rachel Sternfeld, Yuval Weber have been generous colleagues, collaborators, and friends. Last but not least, I am grateful to my family. My parents and siblings instilled in me a love of problem-solving and a curiosity about the world. I thank my father-in-law for his consistent support and his appreciation of higher education. Finally, I owe more than words can express to Keith Bersch. He was there when this journey began and took a leap of faith five years ago when he moved to Austin. Since then, our joint adventures have taken us from Austin to Madison, from Brazil to Argentina, and from the East to West Coast. In the midst of this, he found his dog a new home, sold his truck, learned Portuguese to join me in Brazil, became a father to our daughter Eva (a source of delight and joy to us both), and completed his Physician Assistant and Masters of Public Health degrees. Throughout it all, he has been a rock of patience and love. With admiration and love I dedicate this dissertation to him. v When Democracies Deliver Governance Reform in Argentina and Brazil Katherine Schlosser Bersch, PhD The University of Texas at Austin, 2015 Supervisors: Wendy Hunter and Kurt Weyland This dissertation assesses two competing approaches to public administration reform. Through an in-depth analysis of governance reforms in Argentina and Brazil, I demonstrate that, contrary to conventional wisdom, incremental changes sequenced over time (“problem-solving” reforms) are more effective in reducing corruption, increasing transparency, and enhancing accountability than swift, ambitious overhauls pushed through by political leaders (“powering”). Drawing on cognitive-psychological insights about decision making, I show that gradual, sustained changes are more promising because they allow for modifications and corrections along the way and do not depend on finding the right solution ex ante, a notoriously difficult task in the complex world of policy making. In addition, I examine the influence of political-organizational context on policymakers’ decisions to either embark on sweeping transformations or proceed more gradually. I argue that executive power concentrated in single-party cabinets facilitates large-scale change, while executive power sharing frustrates “big bang” reform attempts. The absence of repeated overhauls and the diverse actors involved in policy making in vi contexts of coalitional presidentialism, however, provides opportunities for technical experts within the state to advance individually small but often cumulatively significant changes. Paradoxically, political-organizational contexts that hinder grand reform attempts may facilitate greater long-term success. vii Table of Contents List of Tables ......................................................................................................... xi List of Figures ....................................................................................................... xii Chapter 1: Introduction ...........................................................................................1 The Puzzle: The Varied Advances in Quality of Governance .......................1 The Argument in Brief: The Tortoise Beats the Hare.....................................4 Theoretical Relevance .....................................................................................6 Research Design..............................................................................................7 Case Comparisons .........................................................................7 Process Tracing .............................................................................8 Organization ....................................................................................................9 PART I: THEORY 13 Chapter 2: Bounded Rationality and Governance Reform ....................................13 Insufficiency of Extant Approaches..............................................................17 Structural Theories ...............................................................................17 Institutional Theories ...........................................................................19 Interest Driven Theories and Political Insurance ........................19 Formal Institutional Theories ......................................................22 The Importance of Reform Strategy: A Theory of Effective and Enduring Reform .................................................................................................26 The Merits of Problem-Solving over Powering ...................................26 Tackling Problems versus Applying Power .........................................28 Decision makers’ limitations in designing wholesale change ....31 Challenges to the durability of powering ....................................35 Conclusion ....................................................................................................37 Chapter 3: An Explanation of Reform Type ..........................................................39 Historical Institutionalism and Bounded Rationality ....................................40 Established Patterns of Governing: An Explanation of Reform Strategy.....46 viii Exclusionary Governing Facilitates Powering.....................................53 Inclusionary Governing Frustrates Powering, Facilitates Problem-solving .....................................................................................................56 Conclusion ....................................................................................................61 PART II: POLITICAL INSTITUTIONS, BOUNDED RATIONALITY, AND GOVERNANCE REFORMS IN LATIN AMERICA 64 Chapter 4 Transportation in Argentina: Powering (Re-)Creates Crisis .................64 Menem Overhauls Transportation ................................................................67 Comprehensive Change, Unintended Consequences ...........................68 Institutional Capacity Destroyed..........................................................76 Coalitional Government, Powering Halted: the Alianza (1999-2001) .........79 Continued Deterioration of Transportation Reforms (2001-2012) ...............84 Powering Déjà vu: Fernández Reverses Menem’s Reforms (2012-2015)....94 Problem-solving Trampled ...........................................................................99 Conclusion ..................................................................................................103 Chapter 5 Health in Argentina: Impeded Powering Fosters Problem-Solving ....105 Health Reform in the 1990s ........................................................................107 Comprehensive Plans Generate New Performance Problems ...........112 The Credibility Problem: Initially Impressive, yet Unsustainable, PAMI Reforms (2003-2007) .........................................................................116 Episodic Political Will, Short-lived PAMI Reforms (2007-2014) ....118 Powering Halted, Gradual Advancements in the Ministry of Health .........121 Political Support Wanes, Powering Fails...........................................121 Absence of Powering, Opportunities