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Where Are We in the Political Economy of Reform?

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Author Info

  • Mariano Tommasi

    ()
    (Department of Economics, Universidad de San Andres)

  • Andres Velasco

Abstract

We review the experiences of developing countries with market-oriented reforms, using the tools of modern political economy. We impose intellectual discipline by requiring that actors behave rationally using available information and that basic economic relationschips such as budget constraints be accounted for. We attempt to integrate two approaches, one based on dynamic games played by interest groups, with one that focus on limited information and the dynamic of learning. We describe the "starting point" as the set of "old" policies and we attempt to explain the dynamics (political, economic and informational) that lead to reform (section II). We analyze strategies for reformers subject to political constraints (section III). We evaluate the aggregate and distributional costs of reforms, emphasizing the importance of looking at the right counterfactuals (section IV). We conclude by pointing to the challenges ahead: the second-stage institutional reforms necessary to take off from underdevelopment.

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Bibliographic Info

Paper provided by Universidad de San Andres, Departamento de Economia in its series Working Papers with number 11.

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Length: 52 pages
Date of creation: Nov 1995
Date of revision: Apr 1996
Publication status: Published in Journal of Policy Reform, Vol. 1, April 1996: 187-238. Translated into Spanish as “La Economía Política de las Reformas Economicas: una revisión del enfoque económico.” POSDATA, Revista de Reflexión y Análisis Político. Buenos Aires, November 1999.
Handle: RePEc:sad:wpaper:11

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Keywords: political economy; reform;

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