Implementing market-oriented reforms is often a contentious affair, especially in new democracies. It can be time-consuming when the democratic process permits many opportunities to examine (and to block) controversial proposals. Conversely, when debate is limited by various means, the pursuit of reform can undermine the democratic regime. How, then, can market-oriented reforms and democracy be consolidated simultaneously?

It is difficult to argue with success. Brazil’s public steel firms—once the crown jewels of a state-led model of development—were, by the late 1980s, heavily indebted, unproductive, and dependent on the financial support of a state in fiscal crisis. As if by a wave of the proverbial magic wand, their privatization in the period 1990–94 made them exponentially more productive, financially sound, and competitive. Of the eight major Brazilian steel enterprises, seven were returning profits by the end of 1994. One of the seven, Usiminas, became the most profitable private firm in Brazil in 1993, two years after it was privatized.

Until relatively recently, the small, poor countries of Central America were typically regarded as particularly poor candidates for democratization, despite a good measure of early and sustained success in Costa Rica (Ebel 1972, 1984; Rosenberg 1987). Nevertheless, over the years 1984–1996, “transitions to democracy” have been realized throughout the region. Given the extremely negative economic conditions of the 1980s and 1990s and the extent and historical intractability of political violence in Guatemala, El Salvador, and Nicaragua, these transitions via peace processes and “elections of the century” are remarkable achievements. Still, the fullness and consolidation of democracy remain very much up in the air, as is widely the case among countries that have experienced some degree of democratic transition during the last two decades (the so-called “third wave”). This situation raises the prospect of a historical era in which the poorer provinces of the globe are populated largely by “hybrid regimes” that are, at best, highly incomplete democracies.