Technical capacity relates centrally to the influence of science and reason in policy making, the role of ideas in the search for solutions to public problems, and the institutionalization of analytic problem solving within the public sector. Technical capacity varies among states and within states over time, and technical analysis is rarely the sole basis on which public decisions are made. Nevertheless, the ability to use scientific knowledge as an input into decision making, and into the management of public affairs, is a distinguishing characteristic of modern states. As the problems faced by modern governments have grown increasingly more complex, and as the informational and analytic bases on which to make decisions has increased, technical capacity is increasingly required to identify the origin and nature of public problems and assess possible solutions to them.

A wide range of activities carried out by the state can provide evidence of its technical capacity. A national statistics agency that is able to collect, process, analyze, and disseminate information about economic and social conditions is one example. Promoting policy-relevant research on important public health issues is another, as is the ability to build bridges and roads that meet reasonable construction and safety standards. Similarly, introducing and managing complex information systems, ensuring air traffic safety, monitoring inflation, regulating financial markets, carrying out research on new agricultural and livestock technologies, and providing for safe drugs and water supplies are all functions that imply the need for technical expertise in a variety of fields.

The 1980s and 1990s witnessed economic and political crises of historic significance in Latin America and Africa. Throughout both regions, economies that were already fragile were almost destroyed by debt, inflation, low commodity prices, high interest rates, and devastating natural disasters. Political systems faced grave challenges to their right to govern societies that were themselves torn by division and unrest. Regime changes, civil wars, civic protest, and demands for human rights and accountable public officials characterized the political history of this era. The evidence is extensive and unambiguous: economic and political distress were hallmarks of an unsettled and unsettling era. Repeatedly, crisis exposed the weakness of existing state capacities to manage economic and political relationships.

This chapter uses data from sixteen countries in Latin America and Africa to explore the scope, nature, and implications of economic and political crisis. It addresses four questions. First, what was the scope of the dual crises of economic and political development facing countries in these regions? Second, what factors explain the nature of the problems that confronted a wide range of governments? Third, what impact did economic and political collapse or near collapse have on various dimensions of state capacity? Finally, what consequences did crisis have for state–economy and state–society relationships? Subsequent chapters deal in greater detail with the same issues in Mexico and Kenya; this chapter indicates the extent to which these two countries shared in region-wide political and economic trends.

In the early 1980s, as governments and international financial institutions struggled to manage deep economic problems, the immediate tasks of establishing macroeconomic stability and initiating the process of structural adjustment received almost exclusive attention. Soon, however, policy makers, practitioners, and development specialists began to question why many reforms did not produce expected results more quickly. As they asked this question, the issue of the administrative capacity of the state acquired greater salience.

Some policy reforms required long chains of administrative action if they were to be implemented – improved tax collection, customs reform, health sector restructuring, and decentralization of decision making, for example. Some required public officials to be active managers and problem solvers – deregulation, tariff reform, and privatization, for example. And the success of other reforms required procedures and institutional structures to facilitate market activities and to encourage risk taking by the private sector – the development of financial sector institutions and economic regulation, for example.

Initial adjustment efforts in Latin America and Africa confirmed that if government institutions were to monitor public spending, stimulate trade, expand the revenue base, manage an effective foreign exchange regime, and encourage private sector investment, they had to be organized effectively to carry out routine functions and they had to be able to count on administrators able to perform assigned tasks willingly, competently, and efficiently. The same realization applied even more to efforts to decentralize government to local and regional levels and encourage reforms in agriculture, health, and education.

Prior to the 1980s, Mexico and Kenya had strong reputations for effective state-led economic development and sustained state-dominated political stability in their respective continents. This chapter documents the extent to which expectations based on these reputations eroded and then broke down. The experiences of the two countries differ, yet the combined effect of economic and political change altered the context for state action in similar ways. In Mexico, the interaction of economic and political conditions indicates that economic crisis sharpened and accelerated an emergent political crisis. In contrast, Kenya provides a case of a country whose political crisis contributed significantly to deepening its economic problems.

Deep and sustained economic crisis has farreaching consequences, as the case of Mexico explored here demonstrates. Although most frequently measured and discussed in terms of stagnant or declining rates of growth and indices of social welfare, extended economic crises also stimulate critical reassessment of the intellectual underpinnings of national development strategies. Such crises encourage citizens, policy makers, and politicians to question prior growth strategies and policy regimes, even those that had produced positive results in the past. In consequence, long-accepted notions about how development is best achieved become subject to greater skepticism and at times are held responsible for creating current conditions.

Along with this questioning of appropriate routes to development, sustained economic crisis also has a profound impact on the economic interests supporting and benefiting from existing policies.

Capable states must be responsive to citizen needs and demands. They must provide channels for interests to be represented in decision making and in monitoring the behavior of public officials. They must allow for societal participation in the allocation of public resources and the mediation of economic and political conflict. This political capacity differs from institutional capacity in that it deals not with the authoritativeness of broad rules of the game or with their normative content, but with the everyday interactions between citizens and public officials and the ability of civic society to demand access to the state, its officials, and its decision-making processes.

Capable states do not necessarily require democracy, but regimes must be able to receive, process, and satisfy at least some citizen demands for responsiveness, representation, and participation or they will either be short-lived or need to expend considerable resources on coercive activities to remain in power. In fact, states have an inherent interest in acquiring and maintaining political capacity because it is central to their security concerns. In practice, most governments treat the allocation of public resources at least in part as a way of maintaining the social peace among diverse interests in society and the stability and coherence of coalitions supporting the regime or the administration in power.

States vary in their ability to make positive contributions to economic and political development. They also vary over time in their capacity to manage essential tasks of development. And they vary along distinct dimensions of capacity for contributing to development. In previous chapters, I considered the extent to which the economically and politically difficult period of the 1980s and 1990s was a watershed for states in Latin America and Africa. A series of exogenous and endogenous shocks severely affected the ability of state leaders and institutions to mediate economic and political conflict. In many countries, the combined impact of economic and political crisis undermined institutional, administrative, and political capacities, even while it encouraged increased technical capacity.

At the same time, however, the crises of the 1980s and 1990s destabilized preexisting relationships among state, economy, and society in ways that opened up opportunities for redefining critical linkages among them. By undermining the viability of established development strategies and policies, weakening the coalitions of support for such public actions, discrediting prevailing ideas about the appropriate role of the state in development, encouraging new interests and groups to develop, and enhancing demands for participation and responsiveness, the period was historic in the sense of opening up possibilities for significant change. In the midst of difficulties, then, states in Latin America and Africa also experienced moments in which new departures seemed possible.

The 1980s and 1990s posed great challenges to governments in Latin America and Africa. Deep economic crisis and significantly heightened pressure for political reform severely taxed their capacity to manage economic and political tasks. In fact, the era was a critical moment in which existing state–economy and state–society relations were challenged and, at times, redefined. This book is about the significance of these challenges and redefinitions for the capacities – institutional, technical, administrative, and political – that states in Latin America and Africa require if they are to encourage economic development and provide effective governance for their societies. It explores the roles that political leaders and institutions played in a decade-long drama of crisis and change.

There is little question that this period will be remembered as an era of crisis for countries in Latin America and Africa. An economic crisis, often rooted in development policies adopted in prior decades and greatly increased prices for oil in the 1970s, was precipitated in the early 1980s by a series of external shocks, principal among which were a sharp rise in real interest rates, a rapid decline in the availability of international credit, and a sharp fall in international commodity prices. As a consequence, external terms of trade became highly unfavorable for many developing countries, budget deficits escalated, and foreign debt burdens became unmanageable. International conditions as well as domestic policies explain these problems.

The impact of such conditions on developing country economies was extensive and often extreme.

States are unique among social institutions in that they seek to ensure that their rules predominate over the rules of other institutions such as the family, the community, the tribe, or the market. In fact, the capacity to exert authoritative control has long been a defining feature of states. Characteristically, modern states must make and enforce sets of rules related to property rights, contracts, civil and criminal justice, and the selection of those who make and implement the rules. Part of their purpose is to “reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction.” The most authoritative states are those in which the right to make and enforce rules is based on widespread acceptance of their legitimacy to do so.

But the history of economic and political development in Latin America and Africa is a useful reminder that institutions of state dominance are not always authoritative. The 1980s and early 1990s were replete with conflict and uncertainty over whose rules would predominate and be accepted as legitimate. Informal markets, ethnic conflict, armed subversion, sectarian claims on personal loyalties, corruption, and other evidence of institutional instability recalled the notion of the soft state, initially used by Gunnar Myrdal to refer to states that lacked capacity to enforce obligations on citizens – states unable to govern. As many states failed in authoritativeness, rival sets of institutions often set the terms for economic and political interactions.

In the previous chapter we set out a stylized description of the government formation process in parliamentary democracies. This description is, in effect, a logical model of government formation. In this chapter, we begin to unfold some of the implications of our model, exploring ways in which it might increase our understanding of what it takes to make and break a government.

Since we are interested in what it takes for a government to form and stay formed, an important thread running through the rest of the argument of this book is the concept of an equilibrium cabinet – a notion that we hope is more or less intuitive. An equilibrium cabinet, once it is formed, stays formed because no political actor with the ability to act in such a way as to bring down the cabinet and replace it with some alternative has the incentive to do so. Conversely, no actor with the incentive to replace the cabinet with some alternative has the ability to do so. Thus we expect an equilibrium cabinet to be stable, remaining in place until a change in the external environment transforms either the incentives of some pivotal actor or the “pivotalness” of some actor already possessing the appropriate incentives. (For example, an opposition party may, as a result of by-elections or defections from other parties, increase its weight and thereby the extent to which it is pivotal.) We do not expect a cabinet that is out of equilibrium to be stable, since at least one actor who has an incentive to bring down the government also has the ability to do so.

Political equilibriums can be attractive, retentive, or both.

The preceding chapter gave a glimpse of our model at work. The main purpose of that chapter, however, was to illustrate the model rather than to explore its empirical implications in a systematic way. Here we set off on a more comprehensive exploration with the ultimate objective of turning the model loose, so to speak, on the real world of government formation in particular countries. We do not do this because we have ambitions to take over the turf of the country specialists – we have no intention of trying to reproduce the qualitative analyses at which they excel. Rather we hope that an operational version of our model will provide a technology that allows us to be more systematic in how we go about specific aspects of particular country analyses. In this chapter, we begin the process of applying our model systematically to the formation of actual governments. After first presenting a series of theoretical implications of our model for government formation in the real world, we then turn to matters of operationalizing the model and using it to engage in comparative empirical analysis.

THEORETICAL IMPLICATIONS

The most fundamental principle of our entire approach states that, when the government formation process is triggered for some reason, either the status quo government remains in power or it is replaced by some alternative that is preferred to this by a parliamentary majority. We state this “ground zero” implication as: