Political Economy of Reform
This paper reviews the literature relevant to understanding political constraints to economic reforms. Reform refers to changes in government policies or institutional rules because status quo policies and institutions are not working well to achie...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/290071508764607858/Political-economy-of-reform http://hdl.handle.net/10986/28584 |
| Summary: | This paper reviews the literature
relevant to understanding political constraints to economic
reforms. Reform refers to changes in government policies or
institutional rules because status quo policies and
institutions are not working well to achieve the goals of
economic well-being and development. Further, reforms refer
to the alternative policies and institutions that are
available that would most likely perform better than the
status quo. The main question examined in the political
economy of reform literature has been why reforms are not
undertaken when they are needed for the good of society. The
succinct answer from the first generation of research is
that conflict of interest between organized socio-political
groups is responsible for some groups being able to stall
reforms so that they can extract greater private rents from
status quo policies. The next generation of research is
tackling a more fundamental question: why does conflict of
interest persist; or, why do some interest groups exert
influence against reforms if there are indeed large gains to
be had for society? These are questions about norms and
preferences in society for public goods. The next step is to
examine where norms and preferences for public goods come
from, and which institutional arrangements are more
conducive to solve the public goods problem of pursuing
reforms. After reviewing the available and future directions
for research, the paper concludes with what all of this
means for policy makers who are interested in understanding
the factors behind successful reforms. |
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