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Why Do Governments Lack “Political Will”? An Explanation

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  • Ajit Karnik

Abstract

This paper proposes “lack of political will” as the most important reason why a ruling political party is unable to commit itself to economically efficient choices or policies. The notion of political will is explicated using concepts from the transactioncosts perspective. The paper models the interactions between an interest group and the ruling party on the one hand and between general electorate and the ruling party on the other as quid pro quo relationships or transactions. In the first type of transaction, the ruling party offers the interest group of favourable policy (say, subsidised public sector output) in exchange for political support. In the second transaction, the ruling party offers the general electorate subsidised welfare amenities (say, basic health care) in exchange for political support. The analysis in the paper shows that the transaction-costs associated with the interest group-ruling party exchange will be lower than the transaction-costs in the case of the general electorate-ruling party exchange. Consequently, the ruling party will implement policies which are inefficient for the point of view of the economy but which work to the benefit of the interest group.

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:102.

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Date of creation: Aug 2005
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Handle: RePEc:ess:wpaper:id:102

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Keywords: Transaction-costs; Interest groups; Political will; transaction costs; political party;

References

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  1. Williamson, Oliver E, 1990. "Political Institutions: The Neglected Side of the Story--Comment," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(0), pages 263-66.
  2. Moore, Mick, 1997. "Leading the left to the right: Populist coalitions and economic reform," World Development, Elsevier, vol. 25(7), pages 1009-1028, July.
  3. Ajit Karnik, 2005. "Economic Reforms, Electrol Politics A Welfare," Working Papers id:103, eSocialSciences.
  4. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
  5. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1994. "Measuring the Costs of Protection in the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 77.
  6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  7. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  8. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 169-90, April.
  9. Moe, Terry M, 1990. "Political Institutions: The Neglected Side of the Story," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(0), pages 213-53.
  10. Buchanan, James M, 1988. "Contractarian Political Economy and Constitutional Interpretation," American Economic Review, American Economic Association, vol. 78(2), pages 135-39, May.
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