The Political Pitfalls Of An Economic Windfall Commodity Cycles And Political Polarization In Latin America

Download or read book The Political Pitfalls of an Economic Windfall: Commodity Cycles and Political Polarization in Latin America written by Anna C. Prusa and published by . This book was released on 2017 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt: Commodity booms can provide a significant economic boost for a country, but also can create unsustainable expectations among both the elite and the general population. As this paper’s model shows, commodity cycles in Latin America are strongly correlated with political polarization: as commodity prices rise, polarization decreases; and as commodity prices fall, polarization increases. This paper argues that in Latin America perceptions of resource rents, economic redistribution, and inequality provide a critical link between political polarization and commodity prices. Commodity booms may temporarily reduce polarization through economic growth and expansionary spending, as the population begins to feel better off and various interest groups are satisfied with a share of the resource rents. As long as structural inequalities remain in place, however, the windfall is only papering over the factors contributing to polarization—once the boom ends, political polarization will reemerge.