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Globalization, Democracy, and Mexican Welfare, 1988–2006

Like many Latin American countries, Mexico not only underwent significant economic and political liberalization over the last two decades, but also transformed its welfare regime. This transformation included extensive reforms and seemingly contradictory trends. While social insurance underwent retrenchment, social assistance was ex panded.1 Mexico's privatization of its public pension system is recognized as one of the most extensive in the region, and its social assistance program has been cited as an exemplar of poverty alleviation policy for the developing world. For these reasons, Mexico has been central in comparative and qualitative studies of pension privatization and targeted social assistance and included in cross-national, quantitative studies of social spending in Latin America, though no study has combined an explicit analysis of both social insurance and social assistance. While studies may explain either pension privatization or the expansion of targeted social assistance, social insurance and social assistance have different funding mechanisms and serve different constituencies.2 These differences limit the theoretical purview of studies that address only social insurance or only social assistance. Likewise, recent quantitative research on welfare in Latin America, which often uses combined social insurance and social assistance expenditure data, does not sufficiently disaggregate spending to isolate the opposite trends of social insurance retrenchment and social insurance expansion, leading to contradictory results in this literature.3 This article explains changes in both social insurance and social assistance in Mexico over the last two decades, elucidating some apparent contradictions in existing studies of globalization, democracy, and welfare in Latin America. A comparison of social insurance and social assistance policy outcomes during the Salinas (1988-1994), Zedillo (1994-2000), and Fox (2000-2006) administrations demonstrates that, though globalization may constrain welfare policy options, its impact is often indirect, through its effect on the relative political capacity of domestic actors. Further, political liberali zation changes incentives for politicians to supply welfare, while existing welfare insti tutions create policy legacies that influence the interests of domestic political actors. In Mexico the overall pattern is one of partial retrenchment of social insurance and the expansion of targeted social assistance, a pattern explained in light of economic liberaliza tion, democratization, and policy legacies. The effects of globalization and democratic