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How politics and institutions affect pension reform in three post-communist countries

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  • Orenstein, Mitchell A.

Abstract

The author examines the political and institutional processes that produced fundamental pension reform in three post-communist countries: Hungary, Kazakhstan, and Poland. He tests various hypothesis about the relationship between deliberative process and outcomes through detailed case studies of pension reform. The outcomes of reform were similar: each country implemented a mandatory funded pension system as part of reform, but the extent, and configuration of changes, greatly differed. Countries with more"veto actors"- social and institutional actors with an effective veto over reform - engaged in less radical reform, astheory predicted. Poland and Hungary generated less radical change than Kazakhstan, partly because they have more representative political systems, to which more associations, interest groups, and"proposal actors"have access. Proposal actors shape the reform agenda and influence the positions of key veto actors. Pension reform takes longer in countries with more veto and proposal actors, such as Poland and Hungary. Legacies of policy, the development of civil society, and international organizations, also profoundly affect the shape and progress of reform. The author sees pension reform as happening in three phases: commitment-building, coalition-building, and implementation. He presents hypothesis about tradeoffs among inclusiveness (of process), radicalism (of reform), and participation in, and compliance with, the new system. The hypothesis: including more, and more various, veto and proposal actors early in the deliberative process, increases buy-in and compliance when reform is implemented, but at the expense of faster and greater change. Early challenges in implementation in all three countries, nut especially in Kazakhstan, suggest the importance of improving buy-in through inclusive deliberative processes, where possible.

Suggested Citation

  • Orenstein, Mitchell A., 2000. "How politics and institutions affect pension reform in three post-communist countries," Policy Research Working Paper Series 2310, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2310
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    Cited by:

    1. World Bank, 2003. "Case Study 4 - Poland : Participation in Macroeconomic Policy Making and Reform," World Bank Other Operational Studies 11317, The World Bank.
    2. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications, The World Bank, number 7336.
    3. Jiří Večerník, 2004. "Social Policies and Structures Under Transition: Cohesion and Tensions," Prague Economic Papers, University of Economics, Prague, vol. 2004(4), pages 310-322.
    4. repec:dau:papers:123456789/6253 is not listed on IDEAS
    5. Sunita Kikeri & Thomas Kenyon & Vincent Palmade, 2006. "Reforming the Investment Climate : Lessons for Practitioners," World Bank Publications, The World Bank, number 7096.
    6. Robert Holzmann & Mitchell Orenstein & Michal Rutkowski, 2003. "Pension Reform in Europe : Process and Progress," World Bank Publications, The World Bank, number 15132.

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