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Escaping the Under-Reform Trap

Author

Listed:
  • Anders ‰slund

    (International Monetary Fund)

  • Peter Boone

    (International Monetary Fund)

  • Simon Johnson

    (International Monetary Fund)

Abstract

Most former Soviet republics have fallen into an economic and political under-reform trap. An intrusive state imposes high tax rates and drives entrepreneurs into the unofficial economy, which further aggravates the pressure on official businessmen. Tax revenues and public goods dwindle, further reducing incentives to register business activity. This economic under-reform trap has a political counterpart. Remarkably, Communist parties remain popular and opposed to establishing the rule of law precisely in those places where they were able to delay and derail reform. No electoral backlash prompts the reforms necessary to leave the under-reform trap. The best way out of the trap in countries such as Russia and Ukraine is increased economic and political competition among the elite. Copyright 2002, International Monetary Fund

Suggested Citation

  • Anders ‰slund & Peter Boone & Simon Johnson, 2001. "Escaping the Under-Reform Trap," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-5.
    • Handle: RePEc:pal:imfstp:v:48:y:2001:i:4:p:5
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    Citations

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    Cited by:

    1. Pauline Grosjean & Claudia Senik, 2011. "Democracy, Market Liberalization, and Political Preferences," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 365-381, February.
    2. Thomas Apolte, 2011. "Democracy and prosperity in two decades of transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 693-722, October.
    3. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," PSE Working Papers halshs-00586284, HAL.
    4. Stefano Bosi & Guillaume Girmens & Michel Guillard, 2005. "Optimal Privatization Design and Financial Markets," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(5), pages 799-826, December.
    5. Fu-Lai Yu, Tony, 2004. "Toward a Cognitive Perspective on Transition," Philippine Journal of Development PJD 2003 Vol. XXX No. 2-e, Philippine Institute for Development Studies.
    6. Grosjean, Pauline & Senik, Claudia, 2007. "Should Market Liberalization precede Democracy ? Causal Relations between Political Preferences and Development," CEPREMAP Working Papers (Docweb) 0704, CEPREMAP.
    7. Grosjean, Pauline & Senik, Claudia, 2008. "Why Populist Democracy Promotes Market Liberalization," IZA Discussion Papers 3527, Institute of Labor Economics (IZA).
    8. Barlow, David & Radulescu, Roxana, 2005. "The sequencing of reform in transition economies," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 835-850, December.
    9. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," Working Papers halshs-00586284, HAL.
    10. Pauline Grosjean & Claudia Senik, 2007. "Should market liberalization precede democracy? Causal relations between political preferences and development," Working Papers halshs-00588060, HAL.
    11. Gorodnichenko, Yuriy & Grygorenko, Yegor, 2008. "Are oligarchs productive? Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 17-42, March.
    12. Boldrin, Michele & Canova, Fabio, 2003. "Regional Policies and EU Enlargement," CEPR Discussion Papers 3744, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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