Voting for reform: democracy, political liberalization, and economic adjustment

Abstract

The widespread movement toward political liberalization and democratization is one of the most dramatic historical changes of the past two decades. But can a developing country balance a stable democracy with a well-functioning market economy? This book addresses this question by showing how political reforms influence the efforts of government to initiate and sustain economic reform. It illustrates the crucial link between political and economic reforms with case studies of eight countires at varying stages of political liberalization: Chile, Mexico, Nigeria, Poland, Senegal, Spain, Thailand, and Turkey. The studies focus on two clusters of policies: monetary and fiscal controls, and trade and exchange rate mechanisms. In contrast to many analyses, the studies consider these policies not only as functions of their intended economic effects but also as outcomes of interactions among politicians, bureaucrats, and interest groups. The studies also examine the evolving institutional context in each country. The authors discuss the effects of various political arrangements on economic adjustment efforts, although they recognized the intrinsic value of stable democratic government. The book explains how conflicts between pluralist politics and growth promoting economic policies can be resolved, and it shows why adjustment is not complete until the public has voted for reform. It will be of great use to both policymakers and students.