Download this Paper Open PDF in Browser

Fostering Civil Society to Build Institutions: Why and When

56 Pages Posted: 30 Nov 2006 Last revised: 27 Jul 2008

Peter Grajzl

Washington and Lee University - Department of Economics; CESifo

Peter Murrell

University of Maryland - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 23, 2008

Abstract

We revisit the ubiquitous claim that aiding civil society improves institutional outcomes. In our model, a vibrant civil society initiates public debate in a reform process that would otherwise be dominated by partisan interest groups and politicians. By altering the incentives of interest groups submitting institutional reforms, civil society involvement sometimes solves adverse selection problems that arise because interest groups are better informed than politicians. Because aid increases the cost to the politician of excluding civil society, it affects institution-building. We show that the welfare implications of fostering civil society critically depend on the specifics of local politics, thereby casting new light on the experience of civil society aid in post-communist and developing countries. Our analysis uncovers a particularly disturbing instance of the tragedy that aid can be counter-productive where institutions are poor. An empirical application shows how the impact of civil society aid varies with the level of democracy.

Keywords: civil society, institutional reform, civil society aid, interest groups, post-communist countries, developing countries

JEL Classification: D02, D78, F35, O19, P50

Suggested Citation

Grajzl, Peter and Murrell, Peter, Fostering Civil Society to Build Institutions: Why and When (July 23, 2008). Available at SSRN: https://ssrn.com/abstract=948267 or http://dx.doi.org/10.2139/ssrn.948267

Peter Grajzl

Washington and Lee University - Department of Economics ( email )

Lexington, VA 24450
United States

HOME PAGE: http://home.wlu.edu/~grajzlp/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Peter Murrell (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3476 (Phone)
301-405-3542 (Fax)

Paper statistics

Downloads
364
Rank
67,215
Abstract Views
1,558