The Contribution of Veto Players to Economic Reform

Abstract

Contrary to the conventional understanding that reform is more difficult when veto players are numerous, we show formally that veto players may encourage policy change by weakening the power of special interests that prefer inefficient reform outcomes. Using the same model, we demonstrate that reform reversals are less likely in the presence of multiple veto players, implying that a constitutional framework conducive to initial reforms may also lock in those achievements over time. We find support for our theoretical perspective in a study of the relationship between veto players and reform in Eastern Europe and the former Soviet Union.

Keywords: Veto players, economic reform, special-interest politics

JEL Classification: D72, D78, P20