In 2004, Latin America and the Caribbean grew 6 percent, the highest rate
since 1980. And the party is not over yet. In its most recent report dated
August 2005, the United Nations Economic Commission for Latin America
(ECLAC) forecasted that Latin America and the Caribbean will grow
4.3 percent in 2005. For 2006, ECLAC is forecasting 4 percent growth. If
these predictions come true, the region would complete 4 consecutive years of
growth, accumulating an increase of 10 percent in income per capita between
2003 and 2006. So after nearly a decade beginning with the Mexican crisis
of 1994, when talk of stagnation dominated the headlines, growth is back.
ECLAC is not alone in its optimism. Earlier, in its World Economic
Outlook dated April 2005, the International Monetary Fund had predicted
4.1 percent for Latin America in 2005, and 3.7 percent in 2006. The Fund
writes that “the strength of the recovery in Latin America has continued to
exceed expectations.” (p. 37)
That Latin America should be growing at a time of record high commodity
prices, record low international interest rates, and robust global demand,
is not surprising. What is surprising is that the region is not growing more in
this environment of the fastest world growth in 30 years. Indeed, according
to the same IMFWorld Economic Outlook, the region will post the slowest
average growth in 2005-06 of any developing region. Developing Asia will
grow by 7.4 and 7.1 in each of those two years, according to the Fund. Even
Africa, at 5.1 and 5.4 percent, will amply outgrow Latin America. And this
is even though recent Latin growth is overstated by the ongoing recoveries in
Argentina, Uruguay and Venezuela, countries that experienced large absolute
declines in output earlier this decade.
In this paper we present historical evidence and a theoretical analysis of the
origins of political stability and instability in Colombia for the period 1850-1950,
and their relationship to political, particularly electoral, institutions. We show that
the driving force behind institutional change over this period, specifically the move
to proportional representation (PR), was the desire of the Conservative and Liberal
parties to come up with a way of credibly dividing power to avoid civil war and
conflict, a force intensified by the brutal conflict of the War of a Thousand days
between 1899 and 1902. The problem with majoritarian electoral institutions was
that they did not allocate power in a way which matched the support of the parties
in the population, thus encouraging conflict. The strategic advantage of PR was that
it avoided such under-representation. The parties however could not initially move
to PR because it was not 'fraud proof' so instead, in 1905, adopted the 'incomplete
vote' which simply allocated 2/3 of the legislative seats to the winning party and
1/3 to the loser. This formula brought peace. The switch to PR arose when the
Liberals became condent that they could solve problems of fraud. But it only
happened because they were able to exploit a division within the Conservatives.
The switch also possibly reflected a concern with the rising support for socialism
and the desire to divide power more broadly. Our findings shed new light on the
origins of electoral systems and the nature of political con
ict and its resolution.