The Politics of Economic Policy Reform in Developing Countries
Because of politics, some economic policy reforms are adopted and pursued in the developing world, and others are delayed, and resisted. Economic reform is inherently a political act: It changes the distribution of benefits in society, benefiting s...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/09/692847/politics-economic-policy-reform-developing-countries http://hdl.handle.net/10986/19783 |
| id |
okr-10986-19783 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-197832021-04-23T14:03:44Z The Politics of Economic Policy Reform in Developing Countries Adams, Richard H., Jr. BUDGET DEFICITS CONSUMER SUBSIDIES DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DIFFERENTIAL IMPACT DISTRIBUTIONAL CONFLICTS DISTRIBUTIONAL EFFECTS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC POLICY ECONOMIC POLICY REFORMS ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC RESOURCES EMPLOYMENT OPPORTUNITIES EXCHANGE RATE EXPORTS EXTERNAL VIABILITY FINANCIAL INSTITUTIONS FOREIGN EXCHANGE IMPLEMENTING POLICY INCOME INCOMES INDEXATION INFORMAL SECTOR INTERNATIONAL MARKET LAWS LIQUIDATION LIVING STANDARDS LONG TERM NEGATIVE EFFECT NET BENEFIT POLICY CHANGE POLICY CHANGES POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM POLITICAL INFLUENCE POLITICAL INSTITUTIONS POOR PEOPLE POVERTY REDUCTION PRIVATE SECTOR PRIVATE SECTORS PRIVATIZATION PUBLIC BUDGET PUBLIC ENTERPRISES PUBLIC GOOD PUBLIC GOODS PUBLIC SECTOR REAL WAGE REAL WAGE RATES REAL WAGES REFORM POLICIES RURAL AREAS RURAL RESIDENTS SECTOR EMPLOYEES SECTOR EMPLOYMENT SHORT TERM SOCIAL GROUP SOCIAL GROUPS STATE ENTERPRISES STATE- OWNED ENTERPRISES STATE-OWNED ENTERPRISES TECHNICAL ASPECTS UNEMPLOYMENT UNIVERSITY GRADUATES URBAN AREAS URBAN POOR URBAN STUDENTS UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE INCOME WAGE RATES WAGES WEALTH Because of politics, some economic policy reforms are adopted and pursued in the developing world, and others are delayed, and resisted. Economic reform is inherently a political act: It changes the distribution of benefits in society, benefiting some social groups, and hurting others. Social groups may oppose reform because of doubts about its benefits, or because they know it will harm their economic interests. The author shows how three types of reform - currency devaluation, the privatization of state enterprises, and the elimination of consumer (food) subsidies - affect the utility of nine different social groups (including international financial institutions). When governments try to privatize state-owned enterprises, for example, more social groups with greater political weight are likely to be disadvantaged than helped. Urban workers, urban bureaucrats, urban students, and the urban poor, are likely to "lose out" and will strongly oppose privatization. But the ruling elite, and urban politicians are also likely to at least partly resist privatization, fearing that such reform will reduce their economic "rents". More social groups, and power points thus oppose privatization than favor it, so this policy reform is likely to be delayed, or not implemented at all. However, social groups do not possess an absolute veto over economic reform, and policy reform can (and often does) occur, despite the opposition of certain social groups. It depends on the aggregate political weight of the groups opposing reform. For example, as the author shows, five social groups, either wholly or partly, oppose eliminating consumer (food) subsidies, but the combined weight of those groups is only roughly equal to the political weight of the four social groups - international financial institutions, the ruling elite, urban politicians, and urban capitalists - that favor this reform. Politically, consumer subsidies can be eliminated, or reduced, if the right kind of concern is shown for opposing social groups. 2014-08-27T20:31:28Z 2014-08-27T20:31:28Z 2000-09 http://documents.worldbank.org/curated/en/2000/09/692847/politics-economic-policy-reform-developing-countries http://hdl.handle.net/10986/19783 English en_US Policy Research Working Paper;No. 2443 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
BUDGET DEFICITS CONSUMER SUBSIDIES DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DIFFERENTIAL IMPACT DISTRIBUTIONAL CONFLICTS DISTRIBUTIONAL EFFECTS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC POLICY ECONOMIC POLICY REFORMS ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC RESOURCES EMPLOYMENT OPPORTUNITIES EXCHANGE RATE EXPORTS EXTERNAL VIABILITY FINANCIAL INSTITUTIONS FOREIGN EXCHANGE IMPLEMENTING POLICY INCOME INCOMES INDEXATION INFORMAL SECTOR INTERNATIONAL MARKET LAWS LIQUIDATION LIVING STANDARDS LONG TERM NEGATIVE EFFECT NET BENEFIT POLICY CHANGE POLICY CHANGES POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM POLITICAL INFLUENCE POLITICAL INSTITUTIONS POOR PEOPLE POVERTY REDUCTION PRIVATE SECTOR PRIVATE SECTORS PRIVATIZATION PUBLIC BUDGET PUBLIC ENTERPRISES PUBLIC GOOD PUBLIC GOODS PUBLIC SECTOR REAL WAGE REAL WAGE RATES REAL WAGES REFORM POLICIES RURAL AREAS RURAL RESIDENTS SECTOR EMPLOYEES SECTOR EMPLOYMENT SHORT TERM SOCIAL GROUP SOCIAL GROUPS STATE ENTERPRISES STATE- OWNED ENTERPRISES STATE-OWNED ENTERPRISES TECHNICAL ASPECTS UNEMPLOYMENT UNIVERSITY GRADUATES URBAN AREAS URBAN POOR URBAN STUDENTS UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE INCOME WAGE RATES WAGES WEALTH |
| spellingShingle |
BUDGET DEFICITS CONSUMER SUBSIDIES DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DIFFERENTIAL IMPACT DISTRIBUTIONAL CONFLICTS DISTRIBUTIONAL EFFECTS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC POLICY ECONOMIC POLICY REFORMS ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC RESOURCES EMPLOYMENT OPPORTUNITIES EXCHANGE RATE EXPORTS EXTERNAL VIABILITY FINANCIAL INSTITUTIONS FOREIGN EXCHANGE IMPLEMENTING POLICY INCOME INCOMES INDEXATION INFORMAL SECTOR INTERNATIONAL MARKET LAWS LIQUIDATION LIVING STANDARDS LONG TERM NEGATIVE EFFECT NET BENEFIT POLICY CHANGE POLICY CHANGES POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM POLITICAL INFLUENCE POLITICAL INSTITUTIONS POOR PEOPLE POVERTY REDUCTION PRIVATE SECTOR PRIVATE SECTORS PRIVATIZATION PUBLIC BUDGET PUBLIC ENTERPRISES PUBLIC GOOD PUBLIC GOODS PUBLIC SECTOR REAL WAGE REAL WAGE RATES REAL WAGES REFORM POLICIES RURAL AREAS RURAL RESIDENTS SECTOR EMPLOYEES SECTOR EMPLOYMENT SHORT TERM SOCIAL GROUP SOCIAL GROUPS STATE ENTERPRISES STATE- OWNED ENTERPRISES STATE-OWNED ENTERPRISES TECHNICAL ASPECTS UNEMPLOYMENT UNIVERSITY GRADUATES URBAN AREAS URBAN POOR URBAN STUDENTS UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE INCOME WAGE RATES WAGES WEALTH Adams, Richard H., Jr. The Politics of Economic Policy Reform in Developing Countries |
| relation |
Policy Research Working Paper;No. 2443 |
| description |
Because of politics, some economic
policy reforms are adopted and pursued in the developing
world, and others are delayed, and resisted. Economic reform
is inherently a political act: It changes the distribution
of benefits in society, benefiting some social groups, and
hurting others. Social groups may oppose reform because of
doubts about its benefits, or because they know it will harm
their economic interests. The author shows how three types
of reform - currency devaluation, the privatization of state
enterprises, and the elimination of consumer (food)
subsidies - affect the utility of nine different social
groups (including international financial institutions).
When governments try to privatize state-owned enterprises,
for example, more social groups with greater political
weight are likely to be disadvantaged than helped. Urban
workers, urban bureaucrats, urban students, and the urban
poor, are likely to "lose out" and will strongly
oppose privatization. But the ruling elite, and urban
politicians are also likely to at least partly resist
privatization, fearing that such reform will reduce their
economic "rents". More social groups, and power
points thus oppose privatization than favor it, so this
policy reform is likely to be delayed, or not implemented at
all. However, social groups do not possess an absolute veto
over economic reform, and policy reform can (and often does)
occur, despite the opposition of certain social groups. It
depends on the aggregate political weight of the groups
opposing reform. For example, as the author shows, five
social groups, either wholly or partly, oppose eliminating
consumer (food) subsidies, but the combined weight of those
groups is only roughly equal to the political weight of the
four social groups - international financial institutions,
the ruling elite, urban politicians, and urban capitalists -
that favor this reform. Politically, consumer subsidies can
be eliminated, or reduced, if the right kind of concern is
shown for opposing social groups. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Adams, Richard H., Jr. |
| author_facet |
Adams, Richard H., Jr. |
| author_sort |
Adams, Richard H., Jr. |
| title |
The Politics of Economic Policy Reform in Developing Countries |
| title_short |
The Politics of Economic Policy Reform in Developing Countries |
| title_full |
The Politics of Economic Policy Reform in Developing Countries |
| title_fullStr |
The Politics of Economic Policy Reform in Developing Countries |
| title_full_unstemmed |
The Politics of Economic Policy Reform in Developing Countries |
| title_sort |
politics of economic policy reform in developing countries |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/09/692847/politics-economic-policy-reform-developing-countries http://hdl.handle.net/10986/19783 |
| _version_ |
1764440710755385344 |