29
may not provide sufficient information about fluctuations in willingness to
privatize. Thus, a right-wing government may privatize a number of industries
then give way to a left-wing government that stops the privatization process, but
the index would not fully capture the change between the two governments. As
a result, the lagged value of privatization may be suppressing other effects. The
political interaction term is nearly statistically significant and in the expected
direction lending some support for this claim.
Commercial Liberalization
The commercial liberalization index is not correlated with any of the
variables besides the lagged value of commercial reform and debt-servicing.
Commercial reforms may work in the same way as privatization, i.e. once the
process is initiated, deviations from the reform in any given year may not be big
enough to register. The negative sign on the debt-servicing variable conforms
with our hypothesis that high levels of debt are an incentive to reform. In
general, commercial reforms were among the very first launched in the
neoliberal reform process and generally met little opposition from any quarter.
Once initiated, a government may adjust tariffs for select sectors, but overall is
unlikely to substantially change the tariff structure.
Capital Account Liberalization
Convention