Publication: The Political Economy of Reform: Institutional Change as a Tool for Political Credibility
Loading...
Files in English
558 downloads
Published
2003
ISSN
Date
2012-06-26
Author(s)
Editor(s)
Abstract
It can be argued that reforms aimed at increasing political transparency and accountability can reinforce political credibility and thereby increase political support within a democracy for the implementation of economic reforms. This paper reviews the political economy of economic reforms and explores the role of elections, transparency and accountability in the reform process.
Link to Data Set
Citation
“Olofsgård, Anders. 2003. The Political Economy of Reform: Institutional Change as a Tool for Political Credibility. © World Bank. http://hdl.handle.net/10986/9232 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Political Economy of Labor Reform in Colombia(Washington, DC: World Bank, 2004)The Colombian experience with labor market reform that began in 1990 and ended with the issuing of a new labor code in 2002 provides important lessons about the difficulties of implementing policy changes. A successful reform has to surpass a set of "deals," during the design phase, consensus building with civil society, submission to Congress and parliamentary debate, before it gets approved. The paper presents the story of two failed attempts by the Colombian government to produce these "deals." It shows what economic and social considerations created the need for reform, describes the actual policy changes implemented and evaluates their impact. The paper delves deep into the political aspects of the reform effort.Publication How to Overhaul the Labor Market : Political Economy of Recent Czech and Slovak Reforms(Washington, DC: World Bank, 2004)The Czech and Slovak Republics – until 1993 two parts of former Czechoslovakia – offer a unique reform comparison. Even though Slovakia faced higher unemployment since early transition and it was subject to greater reform failures, the two countries experienced similar macroeconomic paths over the first decade of transition. However, since the currency crises of 1997(8), their depth of reforms has been very different, with Slovakia making major strides to improve the labor market. We suggest two explanations, one based on fiscal pressures, the other stemming from political developments. The Slovak reforms of 1998 to 2002 benefited from a window of opportunity created by pre-1998 policy failures. A small team of advisors working under an influential Cabinet member drafted and implemented many successful reforms in spite of resistance mounted by political opponents. After the 2002 electoral victory of pro-reform parties, the labor market administration has implemented a sweeping reform agenda, which benefits from the weakness of its opponents, notably the trade unions. In contrast, the post-1998 Czech governments are closely tied to trade unions and oppose radical reforms in the labor market despite rising fiscal pressures and unemployment.Publication Tools for Institutional, Political, and Social Analysis of Policy Reform : A Sourcebook for Development Practitioners(Washington, DC: World Bank, 2007)This Sourcebook deals with social analysis in policy reform, encompassing the transition from gaining a better understanding of the distributional impacts of proposed or continuing reform to influencing a more informed and locally embedded process of policy review and design. In a generic sense, the term "social analysis" encompasses institutional, political, and social analyses. These three overlapping areas, derived from different disciplinary backgrounds, focus on the rules and relations that underpin and influence reform outcomes: Institutional analysis looks at the rules that people develop to govern group behavior and interaction in political, economic, and social spheres of life. Institutional analysis is based on an understanding that these rules-whether formally constructed or informally embedded in cultural practice-mediate and distort, sometimes fundamentally, the expected impacts of policy reform. Political analysis looks at the structure of power relations and often-entrenched interests of different stakeholders that affect decision making and distributional outcomes. Political analysis is built on recognition that political interests underpin many areas of policy debate and economic reform, challenging assumptions about the technical nature of policy making. Social analysis looks at the social relationships that govern interaction at different organizational levels, including households, communities, and social groups. Social analysis is built on an understanding of the role of social and cultural norms in governing relationships within and between groups of social actors, with implications for the degree of inclusion and empowerment of specific social groups.Publication New Tools and New Tests in Comparative Political Economy : The Database of Political Institutions(World Bank, Washington, DC, 2000-02)This paper introduces a large new cross-country database on political institutions: the Database on Political Institutions (DPI). The authors summarize key variables (many of them new), compare this data set with others, and explore the range of issues for which the data should prove invaluable. Among the novel variables they introduce: 1) Several measures of tenure, stability, and checks and balances. 2) Identification of parties with the government coalition or the opposition. 3) Fragmentation of opposition and government parties in legislatures. The authors illustrate the application of DPI variables to several problems in political economy. Stepan and Skach, for example, find that democracy is more likely to survive under parliamentary governments than presidential systems. But this result is not robust to the use of different variables from the DPI, which raises puzzles for future research. Similarly, Roubini and Sachs, find that divided governments in the OECD run higher budget deficits after fiscal shocks. Replication of their work using DPI indicators of divided government indicates otherwise, again suggesting issues for future research. Among questions in political science and economics, that this database may illuminate: the determinants of democratic consolidation, the political conditions for economic reform, the political and institutional roots of corruption, and the elements of appropriate and institutionally sensitive design of economic policy.Publication New Tools in Comparative Political Economy : The Database of Political Institutions(Washington, DC: World Bank, 2001-01)This article introduces a large new cross-country database, the database of political institutions. It covers 177 countries over 21 years, 1975-95. The article presents the intuition, construction, and definitions of the different variables. Among the novel variables introduced are several measures of checks and balances, tenure and stability, identification of party affiliation with government or opposition, and fragmentation of opposition and government parties in the legislature.
Users also downloaded
Showing related downloaded files
Publication The State of Economic Inclusion Report 2024: Pathways to Scale(Washington, DC: World Bank, 2024-11-20)The State of Economic Inclusion Report (SEI) 2024 explores efforts to scale up economic inclusion programs - bundles of coordinated, multidimensional interventions that support individuals, households, and communities to sustainably increase their incomes and assets - in the context of overlapping crisis. These programs transform the economic lives of the poorest and most vulnerable people, building their resilience and creating job opportunities. The report features data from 405 programs across 88 countries, benefiting over 70 million individuals either directly or indirectly. This marks almost doubling in the number of programs and nearly a 50 percent increase in coverage since the SEI 2021 report. Governments continue to lead in scaling up these economic inclusion programs, covering nearly three-fourths of program participants. However, non-governmental programs have also significantly contributed to the increase in coverage in recent years, in addition to serving as both service providers and capacity building providers for governments. The report offers five important contributions: 1) Positioning economic inclusion programs as crucial for building resilience and providing job opportunities for the poor and vulnerable in the face of overlapping crises. 2) Analyzing the global landscape over the past three years, highlighting the extent to which economic inclusion programs are being customized for diverse contexts and groups, including a cross-cutting focus on gender. 3) Reviewing progress and challenges in the design and implementation of government-led programs, including the interplay with communities, non-governmental organizations, and the private sector. 4) Examining the emerging agenda of designing economic inclusion programs to enhance the long-term climate resilience of poor and vulnerable individuals and communities. 5) Featuring three spotlights that unpack emerging evidence from government-led programs, customization strategies targeting youth, and the increasing role of digital tools and technologies in program delivery. Data from the report are available on the PEI Data Portal (www.peiglobal.org).Publication A Product Space Perspective on Structural Change in Morocco(World Bank, Washington, DC, 2015-10)Drawing on international trade data, this paper uses the product space approach to analyze changes in Morocco’s goods exports in 1990–2010 and future export priorities. The level of Morocco’s gross domestic product and its moderate growth match the predictions of product space analysis, informed by changes in the income potential of Morocco’s export basket, reflecting relatively strong capabilities (a high density) in products with relatively low potentials in income and diversification. Morocco’s peripheral position in the product space map matches its slow growth and points to the difficulty of diversification into more sophisticated products. Encouraging changes since 1990 include the development of a revealed comparative advantage for medium- and high-tech manufactures, which in 2010 represented around 40 percent of total goods exports. However, the number of goods involved is relatively small and this transformation has not sufficed to raise per capita growth to the average for middle-income countries. Export projections up to 2025 suggest that future developments will follow the trends of the past. Among sectors, high growth is likely for phosphate-based fertilizer exports. However, like edible oil products, which also may grow rapidly, phosphates are hampered by low income and diversification potentials. Along with various other manufactured products, electronics and the automotive industry are promising sectors that may offer more lasting positive contributions to Morocco’s future development. Beyond goods, Morocco’s policy makers should also consider the potential contributions of service exports, which in recent years have enjoyed rapid growth.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication World Development Report 2024(Washington, DC: World Bank, 2024-08-01)Middle-income countries are in a race against time. Many of them have done well since the 1990s to escape low-income levels and eradicate extreme poverty, leading to the perception that the last three decades have been great for development. But the ambition of the more than 100 economies with incomes per capita between US$1,100 and US$14,000 is to reach high-income status within the next generation. When assessed against this goal, their record is discouraging. Since the 1970s, income per capita in the median middle-income country has stagnated at less than a tenth of the US level. With aging populations, growing protectionism, and escalating pressures to speed up the energy transition, today’s middle-income economies face ever more daunting odds. To become advanced economies despite the growing headwinds, they will have to make miracles. Drawing on the development experience and advances in economic analysis since the 1950s, World Development Report 2024 identifies pathways for developing economies to avoid the “middle-income trap.” It points to the need for not one but two transitions for those at the middle-income level: the first from investment to infusion and the second from infusion to innovation. Governments in lower-middle-income countries must drop the habit of repeating the same investment-driven strategies and work instead to infuse modern technologies and successful business processes from around the world into their economies. This requires reshaping large swaths of those economies into globally competitive suppliers of goods and services. Upper-middle-income countries that have mastered infusion can accelerate the shift to innovation—not just borrowing ideas from the global frontiers of technology but also beginning to push the frontiers outward. This requires restructuring enterprise, work, and energy use once again, with an even greater emphasis on economic freedom, social mobility, and political contestability. Neither transition is automatic. The handful of economies that made speedy transitions from middle- to high-income status have encouraged enterprise by disciplining powerful incumbents, developed talent by rewarding merit, and capitalized on crises to alter policies and institutions that no longer suit the purposes they were once designed to serve. Today’s middle-income countries will have to do the same.