The relationship betwen institutional instability and economic growth is explored by studying the economies i the process of reform towrads markets in Latin America, particularly the recent Argentina experience. Based on this, some exceptions are made to the theoretical framework of "neo-institutional" literature, and future perspectives are discussed. The traditional analysis of Latin American economic policy gives the subject of macro - economic instability a central place. At the present time, following the implementation of important adjustment programmes, institutional hindrances seem to restrict possbile economic growth. The question is, therefore, how feasible is it to sustain growth in the context of representative democracies characterised by poor institutionalisation. In this regard, "neo-institutional" literature states tath every prgramme intended to lay the foundations of sustained economic growth should first enhance trust in State institutions. That in Latin America the prevailing way of thinking concerning ecnomic liberalisation, is not necessarily linked with better political legitimacy, and institutional uncertainty is apparent when the Executive branch maintains a high discretionary level. In spite of this, in many cases, reforms have sparked significant ecnomic growth. Therefore , it is time to compare these premises to the recent experience in the hemisphere, particularly the Argentinean case, to take some objections to the analytical framework presented by professor Noth and developed in the "New Institutional Economics." For this purpose, the following is discussed:1) ecnomic growth in post reform Argentina was the result of a dramatic , reather than increasing, swift with high discretionary actions; 2) sustaining investiment demanded more, rather than less, politicaldiscretionary actions; 3) economic growth came from a breach in the status quo. This resulted in institutionalisation of economic rules that did not find and answer in the political area; 4) two legal kinds of legitimancy live together; one which puts in order the economic game, with more rules and less uncertainty, and one which prevails in the political game, characterised by discretionary actions and patronage. In the mid 90's, Latin America seems to have entered a new stage in the process , which is slower and faces difficulties in the creation and rehabilitation of it's government institutions. Institutional reconstruction, no less paiful than shock therapies to stabilise economy, is more complex and uncertain. In this new stage, governments should gather efforts to build the State organization structure and dampen the negative effects of reform afecting the social sector. In this way, it is necessary to strengthen the administrative capacity of the public sector

Febreco 2000