Political Constraints and Public Support for Market Reform

Georgetown University, Edmund A. Walsh School of Foreign Service Working Paper

32 Pages Posted: 7 Aug 2006  

Raj M. Desai

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS); The Brookings Institution

Anders Olofsgård

SITE-SSE; Georgetown University - Edmund A. Walsh School of Foreign Service (SFS)

Date Written: January 2006

Abstract

As concerns about reform fatigue in lower- and middle-income countries have become more widespread, so has the search for ways of boosting support for market-oriented reforms. While the effects of political institutions on reform results have been extensively analyzed, there has been relatively little investigation of their effects on public opinion. We argue that constitutional and extra-constitutional reforms that place limits on the discretionary authority of public officials, and that enable voters to monitor, reward, and sanction politicians can enhance the legitimacy of market reforms. We present a voting model with asymmetric information to illustrate that these formal-legal reforms provide a credible signal of reformers' commitments to ensure that the benefits from reforms are widely shared. Using panel data based on public-opinion barometers from Eastern Europe and Latin America we examine the effects of changes in political accountability on public support for markets. We find that political accountability boosts support for markets, but that this effect declines as the reform process matures.

Keywords: Political Economy, Reform, Institutions, Signaling

JEL Classification: D72, P16, P26

Suggested Citation

Desai, Raj M. and Olofsgard, Anders, Political Constraints and Public Support for Market Reform (January 2006). Georgetown University, Edmund A. Walsh School of Foreign Service Working Paper. Available at SSRN: https://ssrn.com/abstract=880763 or http://dx.doi.org/10.2139/ssrn.880763

Raj M. Desai (Contact Author)

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS) ( email )

Washington, DC 20057
United States

The Brookings Institution ( email )

1775 Massachusetts Ave., NW
Washington, DC 20036
United States

Anders Olofsgard

SITE-SSE ( email )

Stockholm
Sweden

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS) ( email )

Washington, DC 20057
United States

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