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Why Reforms Fail

Author

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  • Polterovich, V.

    (CEMI RAS, Moscow, Russia
    MSE MGU, Moscow, Russia
    IE RAS, Moscow, Russia)

Abstract

Failure of reforms is typical, and a success is extremely rare. This article analyzes the causes of this phenomenon. Many reform proposals are based on mistakable postulates concerning, in particular, interconnections of economic and political institutions. Reform often used as a tool for rent seeking and administrative struggle, hampering social welfare growth. Finally, the most important cause of the failure is the expert community underdevelopment, which is supported by the prevailing system of the reform preparation. This system leads to conflicts of interest and does not promote higher qualification of experts, so that there is a kind of analogue with institutional trap. To exit from the "bad equilibrium", it is advisable to seek the adoption of regulations for the reform designing, the formation of specialized expert institutions with long-term financing and introduction of open competitive procedures for the selection of projects.

Suggested Citation

  • Polterovich, V., 2014. "Why Reforms Fail," Journal of the New Economic Association, New Economic Association, vol. 23(3), pages 169-173.
    • Handle: RePEc:nea:journl:y:2014:i:23:p:169-173
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    References listed on IDEAS

    as
    1. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
    2. Natalia Dinello & Vladimir Popov (ed.), 2007. "Political Institutions and Development," Books, Edward Elgar Publishing, number 12689.
    3. Law, Siong Hook & Lim, Thong Cheen & Ismail, Normaz Wana, 2013. "Institutions and economic development: A Granger causality analysis of panel data evidence," Economic Systems, Elsevier, vol. 37(4), pages 610-624.
    4. Victor Polterovich, 2012. "Reform Design: How To Search For Interim Institutions," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 8(2), pages 25-44.
    5. Polterovich, V., 2014. "Industrial Policy: Recipes or Institutions?," Journal of the New Economic Association, New Economic Association, vol. 22(2), pages 190-195.
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    Cited by:

    1. Polterovich, V., 2017. "Designing the Strategies for Socio-Economic Development: Science vs. Ideology," Journal of the New Economic Association, New Economic Association, vol. 35(3), pages 198-206.
    2. Victor Polterovich, 2018. "Towards a general theory of social and economic development: Evolution of coordination mechanisms," Russian Journal of Economics, ARPHA Platform, vol. 4(4), pages 346-385, December.

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    More about this item

    Keywords

    institutions; sequence of reforms; democratization; rent seeking; institutional trap; reform design;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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