Partisan Preferences and Skill Formation Policies: New Evidence from Turkey and Argentina

Following a switch to export-oriented industrialization, reorganization of production in the automobile industry demanded a new worker profile in developing economies like Turkey and Argentina. Yet, the process of transforming worker skills unfolded differently across industrial clusters. The paper explains this variation by highlighting formal political dynamics at the sub-national level. It finds that when local politicians have limited fiscal capacities, they are compelled to build partisan coalitions to advance industrial reform policies. Evidence from Bursa (Turkey), Istanbul (Turkey), and Cordoba (Argentina) shows that under these circumstances, governors who mobilize partisan loyalties can resolve disputes between business and labor, while others who are unable to do so cannot implement the proposed changes. (C) 2012 Elsevier Ltd. All rights reserved.