This study explores variations in macroeconomic policy and performance in contemporary Latin America on the basis of a theoretical model that emphasizes the complex interplay of partisan control of the government, labor strength, and electoral competition. The plausibility of the model is assessed on the basis of a cross-national time series analysis of economic policy choice and performance in nineteen nations. Contrary to the view that internationalization of the world economy leaves limited room for domestic actors and institutions to influence public policy, the findings suggest that macroeconomic performance in contemporary Latin America reflects eminently political processes of policy formation shaped by partisanship, electoral competition, and union strength. The study thereby points to the broader relevance of the literature on the political economy of the advanced industrial democracies, which has emphasized the impact of domestic political institutions, particularly political parties and trade unions, on policy choice and performance.