The Political Economy of Economic Reform

This topic is both timely and useful. Its usefulness stems from the fact that, while a considerable amount of resources are used to promote economic reform, not much attention has been given to the evaluation and rationale for reform. When do reforms work? Why do they fail?

Contrast the many papers asking why the distribution of income in the United States and other advanced countries has widened and the very little consideration given to the much greater change in the wealth of different nations. Why have per capita incomes in several African countries declined at a time when the world has seen greater increases in per capita income for more people than at any time in recorded history.

The subject is too broad to cover in one short session. I will limit my remarks to two topics: reform in the former Soviet Union and the role of development banks and institutions. The two overlap, of course. The principal development institutions ~ the IMF and the World Bank — are very active in the former Soviet Union.