A previous post by Pablo on the political cost of market reforms suggests that the incentive to reform depends on the impact of such reforms on the re-election chances of the incumbent government, and how much the president or party in power cares about re-election relative to other (enlightened) objectives.
While these are important factors, existing studies show that they are not the only ones as far as the incentive to reform is concerned. Below, I report the list of possible reform triggers compiled by Williamson (1994, The Political Economy of Policy Reform) and based on various case studies and anecdotal evidence. Note that the list is not the final word on the determinants of reforms. Rather, it is more in the nature of popular beliefs with some supporting evidence. Williamson himself rejects some of the listed factors as true determinants of reforms, beyond a few specific cases.
- Policy reforms emerge in response to crisis
- Strong external support (aid) is an important condition for successful reform
- Authoritarian regimes are best at carrying out reform
- Policy reform is a right-wing program
- Reformers enjoy a “honeymoon period” of support before opposition build-up
- Reforms are difficult to sustain unless the government has a solid base of legislative support
- A government may compensate for the lack of strong base of support if the opposition is weak and fragmented
- Social consensus is a powerful factor impelling reform
- Visionary leadership is important
- A coherent and united economic team is important
- Successful reform requires economists in positions of political responsibility
- Successful reform requires a comprehensive program capable of rapid implementation
- Reformers should make their intentions to the general public
- Reformers should make good use of the media
- Reform becomes easier if the losers are compensated
- Sustainability can be enhanced by accelerating the emergence of winners
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Mohammed, Good. The list seem to have ‘hypotheses’ to be tested. Thanks for pointing out that the author himself rejected some of them. I see that in some cases some in the list are contradictory: eg. Number 3 and 9. It is almost unlikely to have an authoritarian leadership that is at the same time visionary (to the society). Strong external support is included as one factor which is important... for successful reforms. However, one can also safely argue that ‘lack of foreign financing (aid) can act as a crisis to trigger a need for reforms. ONE thing that did not directly appear in the list, which I believe is important, is the likelihood or perception by the policymakers that the ‘reform’ will be successful and will have the intended results. This is rather very important too – as that entails a careful assessment of reforms and their likelihood of success before launching them.
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