Social welfare reform in the context of economic - Political liberalization: Latin American cases

In the 1980s most of Latin America suffered a fiscal crisis resulting from the heavy debt burden and the halting of external credit, and a deep recession induced by the implementation of structural adjustment policies. Both phenomena provoked social costs with divergent degrees of severity. The existing social welfare system (in particular social security) was incapable of coping with the ensuing social costs due to structural and conjunctural causes. The crisis of social security has worsened and most countries in the region have either reformed their systems (mainly pensions but also health case) or are considering laws or engaged in studies of reform. This paper is divided into three sections: (a) a brief assessment of the social costs of economic reform, and the inability of social security to cope with them; (b) an analysis of the divergent models of social security reform in pensions and health care, and their relationship with underlying political and economic models in eight countries (Argentina, Chile, Colombia, Costa Rica, Cuba, Mexico, Peru and Uruguay); and (c) a discussion on future viable types of reform in the region. (C) 1997 Elsevier Science Ltd.