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Globalization and Pension Reform in Latin America

While financial globalization has created powerful incentives for Latin American governments to privatize old age pension systems, reliance on short-term capital flows has also constrained the ability of cash-strapped governments to enact that reform. Analysis of the technocratic process of pension reform in Argentina and Brazil provides evidence. Instead of simply generating unidirectional pressures for structural pension reform, financial globalization has created a double bind for Latin America's capital-scarce governments, fostering long-term incentives to privatize pension systems while heightening the risk of punishment in the short term.