The more recent literature, however, implies that bad economic times allow policy makers more freedom to maneuver so that they can overturn existing protectionist policies by blaming them for the bad times. For example, Rodrik (1992:88–89) finds it “paradoxical that the 1980s should have become the decade of trade liberalization in the developing countries. Thanks to the debt crisis, the 1980s have also been a decade of intense macroeconomic instability. Common sense would suggest that the conventional benefits of liberalization become muted, if not completely offset, under conditions of macro instabil- ity.” But he claims that “a time of crisis occasionally enables radical reforms that would have been unthinkable in calmer times” (1992:89). Rodrik argues that the prolonged macroeconomic crises of the 1980s were so bad that “the overall gain from restoring the economy’s health [in part via trade liberaliza- tion] became so large that it swamped distributional considerations [raised by such reforms]” (1994:79).
On the other hand, others, especially Haggard (1995), have argued that cri- ses reduce the maneuvering room of political leaders. They suggest that in the
1980s these leaders were almost forced to liberalize trade (and make other re- forms) because of the lack of options and international pressures. Noting the difference between the 1930s and 1980s crises, Haggard (1995:16–19) points out that