Description:

EDGS Research Talk: The Mass Political Economy of Capital Controls: Evidence from Argentina

Stephen Nelson, Political Science

Capital controls – policy-induced barriers to the flows of money and financial assets across national borders – have been used by governments in many low- and middle-income countries to insulate their economies from the vagaries of international market forces (and capital controls have recently been used by some advanced industrial countries, as well). The choice to tighten or remove capital controls is both consequential and highly controversial. In this paper we seek to better understand the politics of capital controls by looking at the issue from a different vantage point. Most previous work posits that choices about capital controls are taken in the domain of “quiet politics,” debated and crafted by knowledgeable and interested experts who are largely shielded from the glare of public attention. Under some conditions, however, the issue of capital controls can migrate from the realm of the quiet to noisy, publicly contested mass politics. We draw on original, nationally representative survey evidence collected in Argentina in 2015 and 2016 to examine three main questions related to the mass politics of capital controls. First, are capital controls a salient issue for average citizens? Second, what are the determinants of individual preferences over the controls? And third, do individual attitudes toward controls have behavioral implications – namely, do attitudes influence vote choices? Our evidence suggests that in the Argentine case the controls were highly salient to average individuals, economic self-interest and partisan attachments were the main correlates of preferences over the policies, and attitudes indeed influenced voting in the country’s recent Presidential election. We extend the single-country, survey-based findings to a broader discussion of the conditions under which a mass political debate around capital controls policy may emerge.