Managing the Crisis a Comparative Analysis of Economic Governance in 14 Countries Bibliographic Information Published by the Deutsche Nationalbibliothek

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Managing the Crisis a Comparative Analysis of Economic Governance in 14 Countries Bibliographic Information Published by the Deutsche Nationalbibliothek Bertelsmann Stiftung (ed.) Managing the Crisis A Comparative Analysis of Economic Governance in 14 Countries Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available on the Internet at http://dnb.d-nb.de. 2010 Verlag Bertelsmann Stiftung, Gütersloh Managing editor: Dr. Hauke Hartmann Translation and copy editing: Dr. Barbara Serfozo, Berlin Production editor: Christiane Raffel Cover design: Nadine Humann Cover illustration: Kiyoshi Ota/Getty Images Typesetting and printing: Hans Kock Buch- und Offsetdruck GmbH, Bielefeld ISBN 978-3-86793-077-2 www.bertelsmann-stiftung.org/publications Contents Introduction: The Centrality of Governance 6 Sabine Donner, Hauke Hartmann, Andrea Kuhn Managing the Crisis: A Comparative Assessment 9 Rolf J. Langhammer, Sebastian Heilmann Managing the Crisis: A BTI Perspective 31 Sabine Donner, Hauke Hartmann Managing the Crisis: An SGI Perspective 37 Andrea Kuhn Criteria for Country Assessments 40 Authors 42 5 Introduction: The Centrality of Governance Sabine Donner, Hauke Hartmann, Andrea Kuhn Political discourse in recent years has tended to discount nance, we simply need to know more about political man- the role of the state as a major engine in promoting eco- agement on the national level. nomic growth and steering development processes. Main- The Bertelsmann Stiftung has a long tradition of as- stream economic thinking on the politics of reform has sessing the quality of governance and devising evidence- been more concerned with state efficiency, lean govern- based policy strategies for decision-makers. Its Transfor- ment, the prevention of over-regulation and the avoidance mation Index (BTI) monitors political management around of populist interventions. However, the global financial the world, encompassing all 128 developing nations and and economic crisis has triggered a substantial shift in countries in transition that have a population of more than this perspective. Many free-market thinkers, including two million inhabitants and have not yet attained fully con- Deutsche Bank chief executive Josef Ackermann, have solidated democracy and a developed market economy. conceded that deregulation has reached or exceeded its The Stiftung's Sustainable Governance Indicators (SGI) of- practical limits. Ackermann himself has admitted that he fer a complementary focus on the OECD member states. no longer believes in ªthe market's self-healing power.º Our project teams, for whom the quality of governance There is broad acknowledgement that public spending is a key analytical focus, naturally observed various gov- contributed significantly to overcoming the recession, ernments' responses to the financial and economic crisis and the New York Times, reporting from the annual meet- with particular interest. From the outset, it appeared ing of the American Economic Association in January likely that governments' responses would exhibit ele- 2009, even detected a ªnew enthusiasm for fiscal stimu- ments of policy behavior not wholly captured by the BTI lus, and particularly government spending,º among econ- and SGI general assessments of political management ca- omists. At a time when the prospect of global financial pability and performance. The BTI criteria are designed to governance remains no more than wishful thinking, the evaluate whether governments in developing countries renaissance of the nation-state as crisis manager has and nations undergoing transformation are determined in proved indispensableÐand all the more impressive given pursuing their goals (steering capability), are prudent the previous skepticism about its efficacy. and effective (resource efficiency), combine mediation The stimulus packages implemented by the world's and conflict management (consensus-building), and coop- major economic powers have already been ably assessed erate reliably with international organizations and neigh- and compared. As of the time of writing, these measures boring states (international cooperation). The SGI's Man- seem to have averted an enduring recession, though agement Index turns to OECD countries to analyze some were hastily crafted, poorly implemented and even executive capacity, that is a government's ability to plan reinforced structural imbalances. But understanding the and implement strategies in four central categories, as lessons of the turbulent months behind us will require a well as executive accountability, a concept assessing the look beyond the quality and effectiveness of the various degree to which non-executive actors (e.g., the parlia- anti-crisis measures. We also need to know how govern- ment, political parties, associations and other civil society ments' reactions were conceptualized, whether interna- actors) inform, communicate with and monitor the gov- tional experts and local stakeholders were consulted, how ernment, thereby deepening its knowledge base and en- swiftly and transparently implementation took place, hancing its level of normative reflection. The BTI and SGI whether structural imbalances were addressed or influen- do capture important aspects of crisis management with tial lobbies had a disproportionate say, and whether pol- their criteria, but they do not cover the totality of a policy icy learning took place. For all their pain, these months of response thatÐif well conductedÐrapidly and convinc- economic turmoil constitute an opportunity to broaden ingly formulates effective concepts and measures, flexibly our understanding of the successes and shortcomings of grasps the opportunity to tackle structural imbalances political steering processes in crisis situations, which will and invest in social and sustainable development, suc- in turn provide us with valuable lessons for the next in- cessfully resists the temptations of protectionism and ternational crisis. The frequency of global shocks and im- understands the value of political communication as a balances appears to be on the rise, and in the absence of psychological stabilization factor. With these dynamic any resilient and convincing architecture for global gover- measures in mind, the Stiftung's project teams have sought 6 SWEDEN RUSSIA GREAT BRITAIN USA GERMANY HUNGARY CHINA TURKEY SOUTH KOREA INDIA BRAZIL INDONESIA CHILE SOUTH AFRICA Advanced Economies Emerging Economies to expand their understanding of political management · Implementation, assessing governments' public com- through a detailed study of various governments' modes munication, swiftness in execution and engagement of operation during the crisis. in regional or international cooperation. We are highly grateful for the conceptual groundwork · Funding, tax and monetary policies, analyzing the fi- laid by Prof. Rolf J. Langhammer (Kiel Institute for the nancial character of stabilization and stimulus poli- World Economy) and Prof. Sebastian Heilmann (Univer- cies and the credibility of funding mechanisms. sity of Trier), both of whom advised and accompanied this · Feedback and lesson-drawing, analyzing public com- study from its inception to its publication, and who sum- ments or criticism associated with anti-crisis meas- marize the results of our comparative assessment in the ures, policymakers' subsequent responses and any in- perceptive analysis that follows this introduction. In coop- stitutional restructuring that took place in reaction to eration with these scholars, the Bertelsmann Stiftung de- the crisis. veloped a comprehensive set of criteria to assess the qual- ity of crisis management in selected countries. Its 63 In devising a standardized questionnaire for country ex- questions were focused on capturing the essence of gov- perts, the Stiftung's project team also included a set of in- ernance as policymakers devised and implemented meas- troductory questions designed to assess risk exposure ures to cushion the blow of economic shocks. The follow- and initial crisis impact as well as concluding questions ing criteria were included: analyzing anti-crisis measures' tentative impact on the · Agenda-setting and policy formulation, assessing the economy, with a particular focus on stimulus policies' po- agility and credibility of policy responses and the ex- tential to create structural distortions. In this way, the full tent to which external policy expertise and interna- cycle of policies aimed at coping with the recession was tional cooperation were sought. addressed, covering the time span between September · Policy contents, referring not only to the time frame 2008 and September 2009. The analytical criteria and as- and size of stabilization and stimulus measures, but sociated questionnaire are documented in greater detail in also to whether elements of social protection and stra- the appendix of this book and on the attached CD-ROM. tegic investment for developmental purposes were in- Given the restraints of time and the associated impos- cluded and to whether protectionism played any role. sibility of including in this project all 151 countries regu- 7 larly assessed by the BTI and SGI, the Stiftung teams de- ports rather than devising a numerical comparison in the cided to focus their attention on countries of special inter- form of a ranking. The standardized set of 63 questions est. Among these are eight developing countries and was deemed sufficient to elicit evaluations of governance emerging markets whose considerable size makes them that would be comparable by chapter,
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