POVERTY THE WORLD BANK REDUCTION AND ECONOMIC MANAGEMENT NETWORK (PREM) Economic Premise MAY 2010 · Number 15 54721 Development Trajectories: An Evolutionary Approach to Integrating Governance and Growth Brian Levy This note introduces an evolutionary approach to economic and governance reform. It lays out two especially prevalent trajectories that differ starkly from one another in how they prioritize and sequence economic growth, state building, and the development of civil society and political institutions. The first trajectory focuses initially on investments in state capacity. The second initially prioritizes smaller, more catalytic entry points and addresses specific capacity and institutional constraints as and when they become binding. Over the longer term, both trajectories endogenously generate incentives to strengthen institutions that underpin economic competition and political accountability. But over the short to medium term, the strengths of one trajectory are mirrored as the weakness of the other. For many low-income countries, the combination of rapid growth plus a seeming excess of either order or chaos may thus be in the (medium-term) nature of things, rather than an aberration that requires fixing. Over the past two decades, governance has moved from the steps. This note suggests an alternative, evolutionary ap- fringes to the center of the development discourse. There is proach. Evolution being adaptive from a specific point of broad consensus that a well-performing economy rests on a departure, many of the details of an evolutionary approach foundation of good governance, including transparent and necessarily are country specific. Even so, there are some un- predictable decision making and implementation; oversight derlying patterns. mechanisms that guard against arbitrariness and ensure ac- This note, which builds on a longer paper jointly written countability in how resources are used; public officials com- by the current author and Francis Fukuyama (Levy and mitted to the achievement of social goals, including the Fukuyama 2010), delineates two especially prevalent trajec- efficient provision of public services; a political process that tories. The trajectories are very different from one another, is broadly viewed as legitimate; and the protection of prop- with different underlying drivers, different constraints and erty rights. risks, and different frontier challenges. Neither is "better" in This depiction has translated, seemingly naturally, into a some absolute sense; rather, each is likely to be a better fit "best-practices" recipe for governance reform. The difficulty, with some country circumstances than with others. But the though, is that, given country-specific realities, best-practices two trajectories differ sharply in their implications for pri- thinking--which works backward from a desired end state-- oritizing and sequencing both economic and governance re- is at best moderately helpful in identifying feasible next forms. Assessing which aligns better with a country's specific 1 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise circumstances thus can have profound implications for de- Figure 1. State Capacity Building as an Entry Point for Development velopment strategy. Two Trajectories Civil Society Growth 2b and 2c Development Empirical research has documented a myriad of causal rela- tionships that connect the different dimensions of develop- 2c Credibility and ment--economic, political, institutional, and social. These 2a Legitimacy 3 interconnections create an opportunity for thinking strate- gically, for prioritizing and sequencing, for seeking to do first that which is necessary or helpful to achieve later goals that Step 1: 2b Political can help initiate or sustain a virtuous spiral of cumulative Build State Institutions change. This implies assessing binding constraints--both Capacity economic and governance constraints--that prevent the Source: Author's illustration. achievement of development goals; and considering alterna- tive pathways, given both country-specific realities and the interconnections among the different dimensions. Though the details are country specific, two trajectories seem espe- politics don't work. The risks to private investors and entre- cially prevalent. preneurs--of failed infrastructure, of a dysfunctional and bur- Each of the trajectories is driven by interactions among densome bureaucracy, of political pressures to "share" profits, the following four sets of variables: of violence and instability--generally overwhelm any entre- · economic growth, defined as increases in per capita preneurial instinct to seek opportunities for productive in- GDP, noting that variations in the inclusiveness of that vestment. In environments such as these, a natural response growth can be relevant for the longer-term sustainabil- is to look for "political will"--for leadership ready to build ity of a country's development path; state capacity that responds to the public interest rather than · state building, which includes (1) defining territorial to private ends, improves policy making and implementation, reach and extending enforcement power over that ter- makes wise public investments, and puts in place an environ- ritory; and (2) creating public bureaucracies capable ment capable of attracting private investment. of extracting taxes, budgeting and spending money, Figure 1 depicts how leadership along these lines could and enforcing the state's rules; set in motion a virtuous development spiral. The first step · civil society and private sector development, defined is an investment in state capacity building. In the second broadly to describe the transition from ascriptive, in- step, this newly built capacity helps facilitate economic herited social relationships and a limited division of growth, via three complementary channels: labor in the economy to more fluid and accessible hi- · Channel 2a highlights the direct links between im- erarchies, with social groups able to freely organize on provements in state performance and economic per- the basis of shared passions and interests and with pri- formance. Better policies, more efficient infrastructure, vate firms becoming more complex organizations that a transactionally more efficient bureaucracy, transpar- operate at arm's length from politics; and ent and participatory approaches to service provi- · development of political institutions, including (1) the sion--all of these can contribute to a better investment emergence of rule-of-law institutions that reduce the climate, and thus potentially to growth. Improving in- state's discretionary use of force and provide the basis frastructure and the bureaucracy takes time, with little for the protection of a private sphere and individual opportunity for quick wins; policy, however, can be human rights; and (2) popular sovereignty via institu- turned around quite rapidly. tional arrangements, such as elections, separated pow- · Channel 2b highlights the expectations-driven impact ers, and a media and civil society outside of the formal of the emergence of leadership perceived to have the political system that can monitor and check govern- political will to build state capacity. Even before public ment's performance. sector performance actually improves, belief in the How actions across these four sets of variables are prioritized productive potential of the economy can rise among and sequenced differs starkly between the two trajectories. private investors--with the credibility gain itself some- times sufficient to achieve renewed economic activity Trajectory I: State Capacity Building and accelerated growth. (One common way to secure When a low-income country is not growing, some of the such credibility has been to rapidly adopt far-reaching proximate reasons can be plainly visible. Government and "stroke-of-the-pen" economic reforms.) 2 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise · As channel 2c of figure 1 suggests, political leaders can Trajectory II: "Just Enough" Governance make the capacity and credibility channels mutually Underlying the state capacity building is the presumption reinforcing by asserting a broader commitment to that institutional reform is necessary to unlock development "fairness"--to inclusive growth with broadly shared in hitherto poorly performing countries. In sharp contrast, benefits. Insofar as citizens believe this commitment, recent empirical work on "growth accelerations" has demon- both state legitimacy and stability will be enhanced, strated that far-reaching reforms--either institutional or eco- contributing more broadly to improvements in the in- nomic--are not necessary to kick-start growth. Looking at vestment climate and hence to growth. worldwide data over the 1950­90 period, Hausmann, Note that none of these channels involves political institu- Pritchett, and Rodrik's (2004) careful empirical analysis tions. The route from state capacity building to transforma- identified more than 80 growth accelerations that lasted for tion of political institutions is a long-term and indirect one, eight or more years . Rodrik (2007) highlights some of the with social change (perhaps via wealth creation, the rise of key implications: a middle class, and participatory approaches to service pro- Countries do not need an extensive set of institu- vision) generating new pressures for the rule of law to man- tional reforms in order to start growing. Instigating age inter-elite conflicts (both among firms and between growth is a lot easier in practice than the standard businesses and the state) and for political reform more recipe. . . . When a country is far below its potential . . . broadly. Step 3, the dotted line in figure 1 illustrates this even moderate movements in the right direction can longer-term dynamic. produce a big growth payoff. . . . (p. 39) Readers familiar with the development literature will rec- The onset of economic growth does not require ognize the sequence described above as that of the "devel- deep and extensive institutional reform. . . . Moderate opmental state." The past 50 years offer no shortage of changes in country-specific circumstances (policies and countries and political leaders that have put themselves for- institutional arrangements, often interacting with the ward as aspirant developmental states. It was the dominant external environment), . . . can produce discontinuous model underlying East Asian development. It was an aspira- changes in economic performance. . . . Once growth is tion of many Latin American countries (including Brazil and set into motion, it becomes easier to maintain a virtuous Mexico) prior to the 1980s. The former centrally planned cycle, with high growth and institutional transforma- economies offered a (failed) radical variant for much of the tion feeding on each other. (pp. 190­91) 20th century. Contemporary examples range from Ethiopia, Rwanda, and Uganda in Africa, to Azerbaijan in Central Asia Consistent with this pattern, figure 2 delineates a second and Vietnam in Southeast Asia. In each of these cases, gov- development trajectory--one in which the first step is the ernments combine efforts to win legitimacy by highlighting initiation of growth itself. the competence of their rule, on the one hand, with a con- Steps 2a­2c in figure 2 illustrate how a just-enough- tinuing wariness of greater political participation and ac- governance virtuous cycle might evolve incrementally. All of countability, on the other. Each has achieved quite strong these steps are depicted by dotted lines, here intended to sig- economic performance (relative to its peers, and/or its pre- nify that sustaining growth in a strategy of just enough gov- ceding historical experience). ernance remains the primary objective. As growth proceeds, A few developmental states have been spectacularly suc- cessful, with the Republic of Korea and Taiwan, China, two classic examples. In both economies, development was led by Figure 2. Sustaining Growth through Incremental Institutional interventionist, competent states that used proactive indus- Reforms trial policies to fuel growth. In both, the initial decades of ac- celerated development were under authoritarian rule--but Civil Society "fairness" provided a basis of legitimacy in each case. Land re- Step 1: Growth 2c Development forms ensured rural equity; growth was oriented toward labor- intensive exports and was employment creating; high public investment in education provided opportunity for all. And, in 2a 3 both economies, inclusive growth set in motion profound so- 2b cial transformation--facilitating the emergence of a middle class and an eventual transition to democracy. However, for Build State Political reasons that will be explored later in this note, sustained suc- Capacity Institutions cess in traversing the state capacity-building trajectory re- mains more the exception than the rule. Source: Author's illustration. 3 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise though, one or another institutional constraint may threaten Note that the just-enough-governance sequence should to short-circuit expansion--perhaps weaknesses in the deliv- not be construed as a relatively painless (if nerve-racking) ery of infrastructure or key public services, perhaps a rise in development strategy. For one thing, there are many coun- corruption as public officials seek their share of the growing tries where the economic environment is too dysfunctional economic pie, perhaps rising social alienation with a growing and institutions are too weak for incremental reforms to be sense on the part of citizens that government doesn't care enough to kick-start growth. And not all binding constraints about their everyday problems, perhaps the need for more can be eased through incremental measures. Over the longer sophisticated laws and institutions to underpin an increas- term, a complex economy requires complex institutions; so, ingly sophisticated economy. With a just-enough-governance at some point, the longer-term constraints must be ad- strategy, the goal is not to anticipate and address in advance dressed. At some point, channel 3 (identical in figures 1 and all possible institutional constraints. Rather, the focus is on 2) is likely to become dominant, setting the stage for a non- addressing specific capacity and institutional constraints as incremental transformation of political institutions. and when they become binding. Hausmann, Rodrik, and Ve- Even so, at least in some circumstances (those where the lasco (2006) provide a heuristic framework for distinguishing underlying growth drivers are strong and/or capacity and in- among alternative binding constraints. stitutional constraints are not overwhelmingly constraining), Sustaining growth thus becomes something of a "high- just enough governance would appear to be a viable short- wire act"--continually managing crises and putting out fires term development strategy. Moreover, as figure 2 suggests, the in an environment that the casual observer would consider longer a just-enough-governance strategy can be sustained, quite dysfunctional, but one that nonetheless defies the odds the broader is the likely constituency with a stake in stronger by sustaining continuing dynamism. institutions, and hence the better may be the prospects for in- Bangladesh offers a vivid example of the relevance of a stitutional reform proceeding in a cumulative fashion. just-enough-governance development strategy. Over the past decade, Bangladesh has made major gains in develop- Sequences and Structures ment performance. In the three decades following the coun- The two trajectories should not be viewed as a pair of tech- try's independence in the early 1970s, per capita income nocratic alternatives between which putative reformers in more than doubled; the poverty rate fell from 70 percent to low-income countries are free to choose. On the contrary, 40 percent; child immunization rates rose from negligible choice is path dependent to a significant extent, with coun- levels to close to 80 percent; life expectancy at birth went try-specific history and politics limiting the scope for ma- from 45 years to 63 years. But over the same period, the neuvering and shaping the trajectory of change. An country rated consistently among the most corrupt countries influential book (Violence and Social Orders: A Conceptual in the world; other governance indicators also rated poorly. Framework for Interpreting Recorded Human History by Key to Bangladesh's paradoxical achievement were a series North, Wallis, and Weingast [2009]) and related work by of just-enough development reforms: good macroeconomic Khan (2010) suggest what might be the key variables that management, targeted trade policy reforms that provided shape and constrain this choice. They highlight the central just enough openness to enable the garment export sector role of political stability as a platform for economic devel- to take off (and similarly focused policies that facilitated opment. North, Wallis, and Weingast focus on the organiza- rapid expansion in aquaculture, the introduction of a winter tion of "elite bargains" as key to securing stability. Khan rice crop, and remittances from Bangladeshis working frames the key variable more broadly in terms of the "polit- abroad)--plus an unusually strong role for the country's ical settlement." well-developed nongovernmental institutions in the provi- Consistent with these contributions, the first row of table sion of public services. This strong overall performance has 1 distinguishes between two modes of organizing the elite occurred against the backdrop of continuing crisis--includ- bargain: ing, between 2006 and 2010, a chaotic lead-in to a presiden- 1. a bargain organized around a dominant political party tial election, subsequently aborted by a de facto military (or dominant individual), with clear boundaries be- coup; legal action against the country's two leading politi- tween elites who are incorporated into the dominant cians on suspicion of corruption; and a new round of elec- structure and outsiders; or tions (with the established leaders again leading their 2. a bargain underpinned by competition, where the parties). Throughout this upheaval, growth has continued. boundary between political insiders and outsiders is Other countries that have moved along the just-enough- more blurred--with a realistic prospect among outsiders governance trajectory--and currently are at very different that they could become part of an insider coalition. stages in the journey--include Albania, Costa Rica, India, As Levy (2010) illustrates in a comparative assessment of Mauritius, Thailand, and Zambia. Mozambique and Zambia, considering together the structure of the elite bargain and the two trajectories outlined in figures 4 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise Table 1. Governance Structures and Development Trajectories: A the implied trajectory of change is the high-wire act of com- Mapping petitive just enough governance (C-JEG). State capacity- Just-enough- The Governance Knife-edge: Frontier building trajectory governance trajectory Challenges and Risks Structural features: · How the elite bargain Dominant leader Competitive · is organized or party Framing the governance-development nexus in terms of two · Mode of government Coordinated Clientelistic (heuristic) trajectories that contrast sharply with one another · decision making provides an orienting framework to help identify and address Risks and challenges: priority, country-specific governance challenges. It does so in · Principal governance Dominance becomes Institutional decay · risks increasingly predatory two ways. First, as highlighted by North, Wallis, and Weingast · Frontier governance How to evolve toward How to strengthen (2009), the notion of trajectory signals the importance of · challenges more competitive capacity of state clarifying whether a country is at the early, middle, or later polity and economy institutions stage in its development of sophisticated institutions and or- Country examples Ethiopia, Republic of Albania, Bangladesh, ganizations. Second, clarifying which of the two trajectories Korea, Mozambique, Costa Rica, India, Tunisia, Uganda, Kenya, Mauritius, better aligns with a country's circumstances can offer impor- Vietnam Zambia tant pointers for the priority reform agenda. Source: Author's compilation. Frontier Challenges and Risks At the most aggregate level, the challenges and risks associ- ated with the two trajectories are similar: 1 and 2 suggests the possibility of two underlying (and possi- · The frontier challenge for both trajectories is to con- bly quite ubiquitous) clusters. First, consider country settings tinue moving forward--to identify binding economic where elite authority has converged around a dominant leader or governance-related constraints to continuing posi- or dominant party. In such settings, even if public institutions tive evolution, and to find ways to alleviate them. remain relatively weak, coordination among insider elites is · The common risk is going backward, falling off the relatively straightforward. This ability to coordinate provides knife-edge of development progress. It concerns insti- both the incentives and opportunities for fostering develop- tutional decay, a diminution of collective action and a ment through the state capacity-building trajectory: strength- rise of opportunism; rising conflict; a progressive loss ening state capability can enhance the ability of this dominant of the platform of stability. From this risk perspective, grouping to achieve its objectives, whatever they may be. the priority governance task is to identify where might Thus, as table 1 signals, one plausibly ubiquitous cluster com- be the highest risks of reversal (these generally will be prises a "dominant" elite bargain, coordinated decision mak- governance related), and how they can be forestalled. ing, and state capacity development--that is, (dominant) state But the details of these challenges and risks vary starkly across capacity development (D-STATCAP). the two trajectories and within a given trajectory over time. In the second hypothesized cluster, the elite bargain is un- Consider first D-STATCAP. Embedded in the claim to derpinned by an agreement that elite groupings will com- power of D-STATCAP's dominant leadership is an implicit pete periodically for power through competitive elections. commitment to excluded groups (elite and nonelite) that Where public institutions already are strong--that is, gener- decision making will be guided by a long-run view of the ally in middle- and high-income countries--electoral com- broader interest. Continued investment in public adminis- petition can credibly be organized around competing trative capability is thus likely to be consistent with the D- "programmatic" visions for public action. But where formal STATCAP logic. However, the accountability relationships public institutions are weak--as is the norm in most low-in- that underpin that commitment are (at best) limited to come countries--governing elites generally rule by discre- checks and balances within the dominant party. Therein lie tion. In such settings, in return for continuing support, elites both the risks and the frontier challenge. can more credibly promise to direct public resources as pri- The risks are that a D-STATCAP vision becomes increas- vate goods to favored clients than to commit to govern for ingly chimerical. This can happen in several ways: the public good (Keefer and Khemani 2005). The recent · An exclusive dominant party might increasingly focus country examples of Albania, Bangladesh, and Zambia and only on its own narrowest interests (as arguably hap- the historical example of Mexico (Haber, Razo, and Maurer pened in Zimbabwe). 2003) demonstrate that this combination of competition · Within-party accountability might weaken, and lead- and clientelism can provide the credible commitments ership might become increasingly personalized (as in, needed to attract private investment. But as table 1 indicates, say, Uganda). 5 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise · Personalized leadership might become increasingly ate than for D-STATCAP. C-JEG's combination of contend- self-seeking and predatory. ing elite groups and weak formal institutions generally pro- · From the outset, a seeming commitment to "develop- duces a fraught environment, seemingly teetering on the mentalism" and associated state capacity building edge of chaos. By definition, no single group of actors is might be a useful cover for the perpetuation of long- hegemonic; decision making continually is contested; and standing patterns of corrupt, patrimonial rule. The narrowly oriented interest seeking (including, at the limit, rhetoric has the virtue of being long on ambitious and individual corruption) is ubiquitous. Conflict continually fine-sounding objectives, but so soft and supposedly threatens to spiral out of control, with an ever-present risk long term in its impact that busy work can proceed for that fragile institutional gains will be reversed. In this setting, extended periods of time before it becomes evident economic growth--and the shared incentive it generates that nothing much is being achieved. (Examples over among competing elites for continuing forward momen- the past few decades are offered by Marcos in the tum--is the primary counterweight to the risk of reversal. Philippines, Mobutu in Zaire, and Moi in Kenya.) Addressing the frontier challenge of strengthening insti- Within the logic of the D-STATCAP trajectory, some tutions is likely to be difficult along the C-JEG trajectory. workable mechanisms for mitigating these risks of reversal Short of discontinuous political change (on which more is and sustaining a programmatic, developmental orientation presented below), C-JEG settings do not provide strong in- are (for insiders) to continue to press for intraparty account- centives for elites to invest in far-reaching improvements in ability and (for donors also) to help nurture citizen knowl- either administrative capability or checks-and-balances insti- edge and expectations of effective and efficient public tutions. Rather, entry points for institutional improvement services provision by government. along the C-JEG trajectory are more likely to be incremen- Insofar as the risks of reversal are managed effectively and tal--focused on very specific entry points where collabora- D-STATCAP successfully supports rapid economic growth, tion among powerful elite groups can offer evident win-wins. the frontier challenge is to help build institutions capable of Though (again) the details must be country and time specific, supporting both an increasingly sophisticated economy and examples of the kinds of initiatives with the potential for a wealthier, more empowered citizenry. In the earlier stages traction in "hothouse" C-JEG settings include the following: of development, as figure 1 suggests, credible commitment export processing zones that incorporate streamlined cus- plus administrative capability alone can be sufficient to en- toms administration, high-performing central banks, public sure continuing forward movement along the D-STATCAP health campaigns to limit the spread of infectious disease, in- trajectory. With success, though, pressure will rise for invest- frastructural improvements that offer gains to businesses and ment in institutions capable of supporting enhanced eco- middle-class residents (with perhaps some spillover to poorer nomic and political competition. But these institutions both neighborhoods), and streamlined arrangements for impar- reduce the discretion and progressively challenge the lead- tially resolving disputes among private parties. Initiatives such ership of the dominant elite, and so are less incentive com- as these can help begin to build a track record that demon- patible with D-STATCAP than is public administrative strates the gains from collaboration rather than conflict. Cru- reform. cially, they also can help sustain the forward momentum of Korea and Taiwan, China, offer examples of a seemingly inclusive, labor-demanding economic growth. As long as that successful later-stage D-STATCAP catch-up of institutions of momentum is sustained, deeper currents will continue to be accountability and competition; but other trajectories also are at work reshaping interests, incentives, and alliances--and feasible. Singapore, for example, generally has been included building a groundswell for further rounds of institutional im- with Korea and Taiwan, China, as an example of East Asian provement over time. success--but (unlike the latter two economies), for all of its contemporary economic prowess, Singapore shows no sign of Hybrids, Resets, and Zig-zags making a transition to democracy. Alternatively, as Indonesia's The D-STATCAP and C-JEG trajectories are conceptual difficult political evolution over the past decade illustrates, constructs--"ideal types" used to bring analytical order to the transition to greater openness can be an unusually fraught messy, multifaceted reality. The aim is to highlight some key affair proceeding against the backdrop of an earlier lack of in- common features across multiple country-level processes, vestment in political institutions and associated underdevel- not to suggest that these features capture the whole of a opment of the social expectations that support such country's development evolution. In practice, a country's institutions. How this process will play out for China is one governance arrangement could be a hybrid combination of of the key global imponderables for the coming decades. the two: a competitive system where one party wins a large, For the C-JEG trajectory, the process of identifying and sustained mandate and de facto governs as a dominant party; alleviating binding constraints is likely to be far less deliber- a system where a dominant party becomes increasingly per- 6 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise sonalized under the sway of a charismatic leader; and a dom- The discussion above suggests the following final specu- inant party system that gradually expands the space for po- lation. Perhaps everywhere--in the historical experience of litical competition. contemporary Organisation for Economic Co-operation and Nor need a country remain on the same trajectory Development countries and, more recently, for today's throughout the course of its development. "Resets" become emerging economies--the development path is a profoundly relevant in settings where incremental efforts to sustain a tra- discomfiting one. The strengths of one trajectory are mir - jectory's momentum--working "with the grain" of the tra- rored as the weakness of the other: D-STATCAP is top- jectory's logic to ease binding economic and governance down, tightly controlled, and exceedingly orderly (insofar as constraints and guard against governance reversals--fail to be it is implemented effectively). C-JEG is haphazard and effective. In such settings, more fundamental political trans- seemingly chaotic--but also can be a "good enough" plat- formations are likely to be needed to unlock developmental form for accelerated economic growth and incremental im- dynamism. For much of the 20th century, these political re- provements in governance. Perhaps, for countries moving sets took the form of organized revolutionary movements or along the path of development, economic growth combined military coups. Over the past quarter century, the ubiquitous with a seeming excess of order or a seeming excess of reset has been provided via democratic elections. chaos--or even a zig-zag, back-and-forth motion between In the first wave of enthusiasm, democratic transitions the two--may be in the (medium-term) nature of things were accompanied by high expectations that well-function- rather than an aberration that requires "fixing." ing institutions could be put in place rapidly and that open markets and competing, programmatic political parties About the Author could quickly become the norm. In practice, as Carothers (2002) documents, the far more common result was one of Brian Levy is an adviser, Public Sector Governance Group, two more ambiguous patterns: Poverty Reduction and Economic Management Vice Presidency, World Bank Group, Washington, DC. · "Dominant-power politics" . . . countries have limited but still real political space, some contes- References tation by opposition groups, and most of the basic institutional forms of democracy. Yet one Carothers, Thomas. 2002. "The End of the Transition Paradigm." Journal of political grouping dominates the system in such Democracy 13 (1): 5­21. a way that there appears to be little prospect of Haber, Stephen, Armando Razo, and Noel Maurer. 2003. The Politics of Prop- erty Rights: Political Instability, Credible Commitments, and Economic alternation of power. (p. 10) Growth in Mexico, 1876­1929. New York: Cambridge University Press. · "Feckless pluralism" . . . countries enjoy alterna- Hausmann, Ricardo, Dani Rodrik, and Andres Velasco. 2006. "Getting the tion of power between genuinely different group- Diagnosis Right: A New Approach to Economic Reform." Finance and ings . . . but the alternation of power seems only Development 43 (1): 12­15. to trade the country's problems back and forth Hausmann, Ricardo, Lant Pritchett, and Dani Rodrik. 2004. "Growth Ac- celerations." Working Paper 10566. National Bureau of Economic Re- from one hapless side to the other. (pp. 11­12) search, Cambridge, MA. Certainly, these results fell far short of initial, ambitious Keefer, Philip, and Stuti Khemani. 2005. "Democracy, Public Expenditures hopes. But, contrary to Carothers' pessimistic depiction, the and the Poor: Understanding Political Incentives for Providing Public Services." World Bank Research Observer 20 (1): 1­27. trajectories framework suggests that it is too negative to de- Khan, Mushtaq H. 2010. "Political Settlements and the Governance of scribe the results as dysfunctional. Growth-Enhancing Institutions." Paper prepared for the U.K. Depart- Insofar as the political reset results in the de facto domi- ment for International Development, London. nance of political actors who perceive themselves to enjoy Levy, Brian. 2010. "Seeking the Elusive Development Knife-Edge: Zambia stable incumbency and take a long-term view--that is, and Mozambique--A Tale of Two Countries." Paper presented at Stan- ford University, Palo Alto, CA, January. Carothers' dominant power politics variant--the result ap- Levy, Brian, and Francis Fukuyama. 2010. "Development Strategies: Inte- proximates quite closely the D-STATCAP trajectory. And grating Governance and Growth." Policy Research Working Paper 5196. insofar as the democratic and civil society transformations World Bank, Washington, DC. are more turbulent--that is, look more like feckless plural- North, Douglass C., John J. Wallis, and Barry R. Weingast. 2009. Violence ism--they might nonetheless unlock a dysfunctional equi- and Social Orders: A Conceptual Framework for Interpreting Recorded librium. This could help unleash quite rapid economic Human History. New York: Cambridge University Press. Rodrik, Dani. 2007. One Economics, Many Recipes: Globalization, Institu- growth, with the resulting chaotic dynamism very closely tions, and Economic Growth. Princeton, NJ: Princeton University Press. resembling the C-JEG trajectory. The Economic Premise note series is intended to summarize good practices and key policy findings on topics related to economic policy. It is produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank. The notes are available at www.worldbank.org/economicpremise.