in government, including by entering themselves as contenders for leadership.”<sup>75</sup> Effective accountability occurs when transparency and political engagement are mobilized to select better quality leaders or to motivate existing leaders to follow policies that are in the public interest— i.e., have technical merit and address key development objectives.

The quality of political engagement also matters. Government failures may occur when there is “unhealthy” political engagement; that is, “...when leaders are selected and sanctioned on the basis of their provision of private benefits rather than public goods.” The historical survey of Argentina in this paper established that, in the macroeconomic realm, the lack of central bank independence was combined with fiscal policies that often led to “buyouts” for political benefits. This was complemented at the microeconomic level by regulatory policies that were also influenced by organized special interests, either business, labor or populist movements.

The nature of political institutions also enters into how political engagement makes a difference in policy making. The institutional features of the Argentine policy-making process were discussed above. In addition, the relationship between political leaders and citizens has a role in reshaping the policy making process. In this regard, the informal beliefs and modes of behavior of citizens towards the public sector can evolve as policy actions are taken and access to information improved. Over time, the relationship can evolve from personalized paternalism and conflict to a more informed debate on what are the technically sound policies that are in the broader public interest. The transparency of information can play a critical role in supporting this process.

There is the possibility that the elections of late 2015 may have been the first step in establishing a greater degree of credibility in policy making via greater political accountability and “healthier” forms of citizen engagement. An emerging literature points to the scope for bottomup (popular movements) or top-down (leadership) shifts that bring in a new approach to policy making.<sup>76</sup> It is not by any means guaranteed. Political institutions do not change easily. The persistent policy volatility and accompanying economic volatility of the last twenty-five years was not an accident. That said, a minimal degree of “normalcy” to policy making could have an important impact in terms of signaling the administration’s commitment—where one can define “normalcy” in terms of publishing reliable macroeconomic data, assuring that government payments (including debt service) are reliable and timely, establishing a coherent monetary and exchange rate regime, and limiting reversals in policies at the microeconomic level. In addition, simply reverting to a renewed cycle of rapid policy reversals could reinforce the reputation that these cycles are to be expected in Argentina. For example, pragmatic reforms to state-owned enterprises or the national pension system that improve fiscal and financial sustainability might enhance a return to credibility more effectively than “re-privatizing” these entities.

> 75 World Bank 2016, page 3.

> 76 See, for example, Bidner and François (2013) on the emergence of political accountability.  Also see Persson and Tabellini (2009) and Besley and Burgess (2002).  See Açemoglu and Robinson (2001) for a model of more radical regime shifts from democratic to nondemocratic states, motivated by the degree of inequality and redistribution. Keefer and Vlaicu (2008) present a model of why some new democracies may stay in low credibility states whereby clientelism and patronage politics persist.

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