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A Theory of the Reform of Bureaucratic Institutions

  • Susanto Basu

    (University of Michigan)

  • David Li

    (Hong Kong University of Science and Technology)

By bureaucratic institutions or bureaucracy, we mean the rules and regulations that are implemented by government agencies. Burdensome bureaucratic institutions are leading obstacles to economic development and therefore the target of economic reform of many countries in today's world. In this paper, we provide a theoretical framework to analyze the reform of bureaucratic institutions. The analysis shows the key to the reform is to properly incentivize the incumbent generation of bureaucrats, whose cooperation is needed to reform the bureaucracy. However, a simple buy out strategy of reform may not always work. Under certain conditions, a delegation strategy that grants incumbent bureaucrats the decision rights to initiate and to reap the benefit of reform can be successful.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1271.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1271
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  1. Acemoglu, Daron & Verdier, Thierry, 1998. "Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach," Economic Journal, Royal Economic Society, vol. 108(450), pages 1381-1403, September.
  2. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1997. "Privatizing Russia," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522284, August.
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