What We Know (or Think We Know) about CCT Adoption

A large body of in- depth single- country case studies and a handful of cross- national quantitative analyses have sought to explain why, starting in the late 1990s, Latin America, a region with a history of severe income inequal-ity and “reverse Robin Hood” social policies, innovated the use of highly progressive poverty- reduction policies, the most notable of which were CCTs.¹ Existing explanations can be categorized as political, economic, and related to policy diffusion.

2.1.1 Political Explanations

Explanations based on politics encompass both the incentives faced by pol-iticians and the policy preferences of the broader population. PRT predicts that left- leaning governments will be more likely to both adopt new social policies and make existing policies more generous and universal. Thus, some scholars have assumed a connection between the region’s left turn and the adoption of CCTs (Lavinas 2013a). However, none of the prior cross- national quantitative analyses has found evidence of such a relationship (Díaz- Cayeros and Magaloni 2009; Sugiyama 2011; Brooks 2015).

Given its initial focus on industrialized countries, PRT takes the exis-tence of a democratic government as a given. Yet democracy cannot be assumed in developing countries. Having a democratic government is a necessary precondition for PRT. Democracy affects social policy through two channels: electoral competition, which provides politicians with incen-tives to deliver popular social programs, and interest group freedom, which allows groups to lobby and protest on behalf of their preferred policies (Haggard and Kaufman 2008).

Several studies find a positive relationship between democracy and adoption. Analyzing 114 developing countries, Brooks (2015) finds that more democratic countries are more likely to adopt CCTs. Relatedly, Diáz- Cayeros and Magaloni (2009) find that long- standing regimes are also more likely to adopt such programs. Given the sample they study, which consists of 21 Latin American and Caribbean countries during the 1990s and 2000s, regime duration serves mainly as a proxy for cumulative years of democ-racy, a factor associated with higher levels of social spending among Latin American countries (Huber and Stephens 2012).

Both cross- national quantitative research and case studies have found that political competition influenced adoption. Brooks (2015) finds that countries with divided governments— those in which the legislature is con-trolled by a party different from that of the president— are more likely to adopt CCTs.² Case studies of Mexico and Brazil, both of which adopted programs during periods of increasing political competition, emphasize the importance of elite competition for votes. Research on Mexico’s pioneering program stresses the importance of growing electoral competition during the final years of the Institutional Revolutionary Party (PRI) regime (Dion 2009, 2010; De La O 2015; Díaz- Cayeros, Estévez, and Magaloni 2016;

Garay 2016). In Brazil, increasing competition from the left- wing Workers’

Party (PT) may have pushed the centrist Fernando Henrique Cardoso (1995– 2002) to enact federal funding for municipal CCTs in 1997 and launch the Bolsa Escola Federal CCT in 2001 (Melo 2008; Coêlho 2012a, 2012b; Garay 2016).

It is worth noting that the widespread adoption of CCTs followed two decades of sharply increasing income inequality (López- Calva and Lustig 2010; Cornia 2014). The median voter theory predicts that in a democracy redistribution will increase in line with income inequality (Meltzer and Richard 1981). The more unequal a society is, the lower the pivotal median voter’s income will be relative to the mean income level and, thus, the more the median voter stands to gain from redistribution. Single- mindedly focused on getting elected (and thus pleasing the median voter), politicians could thus be expected to respond to rising inequality through increased redistribution in the form of a CCT, which, as noted, is among the most redistributive policies available to Latin American policymakers (Lindert, Skoufias, and Shapiro 2006; Goñi, López, and Servén 2008). In line with this argument, there is evidence that more unequal countries were more likely to adopt CCTs (Diaz- Cayeros and Magaloni 2009; Osorio Gonnet 2018, chap. 4).

PRT also predicts that redistributive policies will be the result of popu-lar mobilization. Thus, governments facing high levels of protest could be expected to adopt CCTs as means of diffusing social tensions and expand-ing their electoral support.³ In a related argument, Britto (2008, 187) specu-lates that increasing urban violence could explain CCT adoption. In her words, “fear encourages elites to favor public policies that tackle poverty directly and, in particular, that keep poor children and adolescents in school.” This provocative claim has not been tested systematically.

2.1.2 Economic Explanations

CCT adoption has also been interpreted as a response to market reforms enacted during the 1980s and 1990s, which significantly increased eco-nomic vulnerability in the region (Dion 2010; Barrientos 2013) and, in turn, increased demand for safety net policies (De La O 2015). Vulnerabil-ity increased demand for social assistance through two channels. First, increased labor- market informality, a product of trade liberalization, de- industrialization, and public- sector downsizing, increased the share of workers excluded from traditional contributory social insurance. Second,

slow growth and periodic financial crises during the 1990s increased the need for emergency safety nets.

Economic stagnation and financial crises that disproportionality hurt the poor increased public demand for safety nets. Mexico’s CCT is widely seen as a response to the country’s 1994– 95 Tequila Crisis (Cortés and Rub-alcava 2012; Díaz- Cayeros, Estévez, and Magaloni 2016, 163). Similarly, Brazil’s federal CCTs were, at least in part, a response to the economic hard-ship caused by the country’s 1999 currency devaluation (Melo 2007, 39;

Fenwick 2009, 111). Several early CCTs, most notably those in Colombia (Brearley 2011) and Honduras (Moore 2008), were originally meant as tem-porary responses to downturns. Though envisioned as permanent, Argen-tina’s Asignación Universal por Hijo (Universal Child Allowance) was enacted in response to the 2008– 9 global financial crisis (see chapter 7).

Still, although the first CCTs emerged during the region’s so- called lost half decade (1997– 2002), half of Latin America’s CCTs were enacted during 2005– 8, in the middle of a once- in- a- generation economic boom fueled by high international commodity prices. Cross- national statistical research on this question has been inconclusive. Díaz- Cayeros and Magaloni (2009) do find a negative relationship between growth and adoption. Looking at a wider sample of countries, however, Brooks (2015) finds a positive, though not robust, relationship.

In an argument that combines political and economic factors, Barrien-tos (2013, 12) posits that the spread of cash transfers in the developing world may be explained by a shift in the composition of government reve-nues away from payroll and corporate taxes toward consumption taxes, which fall heavily on the poor. This echoes earlier work by Timmons (2005), who argues that government spending tends to reflect the interests of those who pay for it. As such, countries highly dependent on consumption taxes should spend more on policies benefiting the poor. CCT adoption could be an example of this.

2.1.3 Diffusion Explanations

The rapid spread of similar anti- poverty programs across the region raises the possibility that, in adopting CCTs, governments were responding not only to domestic pressures but also learning from or emulating neighboring countries, or both. Policy diffusion offers an explanation as to why neigh-boring countries facing different conditions sometimes adopt strikingly

similar policies and institutions. Shared political, economic, and cultural traits, as well as constant interaction at the governmental and societal levels, make Latin American governments keenly aware of policies innovated by their regional peers. Thus, it should be no surprise that Latin American governments emulate successful or politically popular policies, or both, that have been enacted by neighboring countries, CCTs among them.

There are strong a priori reasons to suspect that the spread of CCTs constitutes a diffusionary process. Weyland (2006, 18– 19) defines policy diffusion as having three characteristics: an S- shaped curve pattern, geo-graphic clustering of policies, and commonality among diversity. First, the black line in figure 1– 2, which provides a tally of the number of CCTs oper-ating in the region, resembles the famous S- shaped curve. Second, it consti-tutes an example of geographic clustering whereby, over the span of little more than a decade, the vast majority of the region’s countries came to pos-sess a similar policy that had not even existed years earlier. Third, given that CCTs were adopted by governments of the left (Bolivia and Guatemala) as well as the right (El Salvador and Mexico) and by the region’s richest (Argentina and Chile) as well as its poorest (Bolivia and Honduras) coun-tries, their proliferation offers a clear example of commonality among diversity.⁴

This is not be the first time Latin America has been at the epicenter of a wave of social policy diffusion that ultimately went global. The widely stud-ied diffusion of Chile’s private pension system during the 1990s placed Latin America at the forefront of the debate between domestic and interna-tional explanations of social policy adoption (Madrid 2003; Weyland 2006;

Brooks 2009).⁵

Prior quantitative research on Latin America (Sugiyama 2011; Osorio Gonnet 2018, chap. 4) and developing countries more broadly (Brooks 2015) finds that countries become more likely to adopt CCTs as the share of neighboring countries with such programs increases. Furthermore, the case study literature provides substantial evidence that, in adopting CCTs, late adopters were emulating the pioneering experiences of Mexico and Brazil (Brearley 2011; Lana and Evans 2004; Martínez Franzoni and Voorend 2011). These experiences were widely publicized by the media, academics, and international financial institutions. The latter, most notably the World Bank and Inter- American Development Bank (IDB), provided substantial technical and financial support for the adoption and operation of CCTs across the region (Lana and Evans 2004; Martínez Franzoni and Voorend

2011; Sugiyama 2011; Ancelovici and Jenson 2013; Brooks 2015; Osorio Gonnet 2018, chap. 5). These institutions funded 44 CCT- related loans and projects in the Americas between 2000 and 2011 (Sugiyama 2011, 247– 77) and hosted dozens of seminars and workshops on the topic (Osorio Gonnet 2018, 289– 90).⁶

Garay (2016, 14) outright rejects diffusion as an explanation for the recent adoption and expansion of propoor social policies in Latin America, CCTs included, based on three arguments. First, adoption was not the result of direct pressure or strong incentives by an international actor. Addition-ally, there exist important cross- national differences in the design of the programs that were adopted. And, finally, some countries in the region did not adopt the policies in question, most notably Venezuela.

On the first point, Hunter (2021, 95) argues that, although IFIs did not take the lead in promoting CCTs, let alone impose them, “the ‘first mover’

cases of Mexico and Brazil commanded the attention of policy makers from other countries within the region,” and their example was crucial in explain-ing the rapid spread of these programs. With regard to the second point, Garay’s definition of diffusion is excessively restrictive. Diffusion need not entail the spread of a “neat, concrete, well- defined blueprint, largely repli-cating the original model” (Weyland 2006, 71). Imitator countries may sim-ply follow the original policy’s general guidelines or principles. Indeed, as the remainder of this book will demonstrate, there exist systematic design differences between CCTs operated by left- wing and nonleft governments.

Yet, despite these differences, all of the region’s CCTs are based on the same general principle: relieving today’s poverty through regular cash stipends and in the process “nudging” families receiving them into keeping their children in school with the ultimate goal of preventing tomorrow’s poverty.

Finally, nothing in the existing diffusion literature implies that all peer countries will ultimately adopt a particular policy innovation.⁷