443.qxd 7/15/2006 11:46 AM Page 1 Batch number: 1 CHECKLIST (must be completed before press) (Please cross through any items that are not applicable) Front board: Spine: Back board: ❑ Title ❑ Title ❑ ISBN ❑ Subtitle ❑ Subtitle ❑ Barcode ❑ Author/edited by ❑ Author/edited by Edited by THE POLITICAL ECONOMY OF REFORM FAILURE ❑ Series title ❑ Extra logo if required ❑ Extra logo if required The Political Economy General: ❑ Book size of Reform Failure ❑ Type fit on spine Mats Lundahl and Michael L.Mats Lundahl and Michael Wyzan CIRCULATED Date: SEEN BY DESK EDITOR: REVISE NEEDED Initial: Date: APPROVED FOR PRESS BY DESK EDITOR Initial: Date: Edited by Mats Lundahl and Michael L. Wyzan ,!7IA4BISBN 978-0-415-36244-3 Routledge studies in development economics www.routledge.com ï an informa business PC4 Royal Demy B-format Spine back edge The Political Economy of Reform Failure Economists have moved in recent years beyond analysing the manner in which the macroeconomies of different countries function and prescrib- ing appropriate policies for dealing with domestic and external imbal- ances. Increasingly, they have sought to understand the complex interaction between political and economic phenomena. The Political Economy of Reform Failure considers issues of economic reform in a broad range of settings: developed, transition and developing countries. Using country-specific cases this book focuses on those territo- ries which have encountered problems reforming, allowing the reader to gain an accurate understanding of the factors that inhibit the success of economic reform, the different context in which economic reform is attempted and the different challenges that individual countries face. The Political Economy of Reform Failure uses case studies which are often difficult to find such as Uzbekistan, Burma or Haiti. An international team of contributors including Bo Södersten, Deepak Lal and Ronald Findlay have been brought together to analyse these issues. Mats Lundahl is Professor of Development Economics at the Stockholm School of Economics. He has published widely on issues of development in Latin America, Africa and Asia. His most recent publications with Rout- ledge are Knut Wicksell on Poverty (2005), Peasants and Religion (2000) and New Directions in Development Economics (1996). Michael L. Wyzan, currently based in Lusaka, Zambia, is a senior consultant with BearingPoint, Inc. His 26-year career in comparative and development economics has included stints in academia, with amongst others, Illinois State University, the International Institute for Applied Systems Analysis and Stockholm School of Economics. He also worked for the US Treasury Department in Bulgaria and the US Agency for International Development in Armenia and Eritrea. He received a Ph.D. degree in economics from the University of North Carolina, Chapel Hill in 1979. Routledge studies in development economics 1 Economic Development in the 6 Financial Development and Middle East Economic Growth Rodney Wilson Theory and experiences from developing countries 2 Monetary and Financial Edited by Niels Hermes and Policies in Developing Robert Lensink Countries Growth and stabilization 7 The South African Economy Akhtar Hossain and Macroeconomic prospects for Anis Chowdhury the medium term Finn Tarp and Peter Brixen 3 New Directions in Development Economics 8 Public Sector Pay and Growth, environmental Adjustment concerns and government in Lessons from five countries the 1990s Edited by Christopher Colclough Edited by Mats Lundahl and 9 Europe and Economic Reform Benno J. Ndulu in Africa Structural adjustment and 4 Financial Liberalization and economic diplomacy Investment Obed O. Mailafia Kanhaya L. Gupta and Robert Lensink 10 Post-apartheid Southern Africa Economic challenges and 5 Liberalization in the policies for the future Developing World Edited by Lennart Petersson Institutional and economic changes in Latin America, 11 Financial Integration and Africa and Asia Development Edited by Alex E. Fernández Jilberto Liberalization and reform in and André Mommen Sub-Saharan Africa Ernest Aryeetey and Machiko Nissanke 12 Regionalization and 19 Finance and Competitiveness Globalization in the Modern in Developing Countries World Economy Edited by José María Fanelli and Perspectives on the Third Rohinton Medhora World and transitional economies 20 Contemporary Issues in Edited by Alex F. Fernández Jilberto Development Economics and André Mommen Edited by B.N. Ghosh 13 The African Economy 21 Mexico Beyond NAFTA Policy, institutions and the Edited by Martín Puchet Anyul future and Lionello F. Punzo Steve Kayizzi-Mugerwa 22 Economies in Transition 14 Recovery from Armed Conflict A guide to China, Cuba, in Developing Countries Mongolia, North Korea and Edited by Geoff Harris Vietnam at the turn of the twenty-first century 15 Small Enterprises and Ian Jeffries Economic Development The dynamics of micro and 23 Population, Economic Growth small enterprises and Agriculture in Less Carl Liedholm and Developed Countries Donald C. Mead Nadia Cuffaro 16 The World Bank 24 From Crisis to Growth in New agendas in a changing Africa? world Edited by Mats Lundal Michelle Miller-Adams 25 The Macroeconomics of 17 Development Policy in the Monetary Union Twenty-First Century An analysis of the CFA Franc Beyond the post-Washington Zone consensus David Fielding Edited by Ben Fine, Costas Lapavitsas and 26 Endogenous Development Jonathan Pincus Networking, innovation, institutions and cities 18 State-Owned Enterprises in Antonio Vasquez-Barquero the Middle East and North Africa 27 Labour Relations in Privatization, performance and Development reform Edited by Alex E. Fernández Jilberto Edited by Merih Celasun and Marieke Riethof 28 Globalization, Marginalization 36 Targeting Development and Development Critical perspectives on the Edited by S. Mansoob Murshed millennium development goals 29 Programme Aid and Edited by Richard Black and Development Howard White Beyond conditionality Howard White and Geske Dijkstra 37 Essays on Balance of Payments Constrained 30 Competitiveness Strategy in Growth Developing Countries Theory and evidence A manual for policy analysis Edited by J.S.L. McCombie and Edited by Ganeshan Wignaraja A.P. Thirlwall 31 The African Manufacturing 38 The Private Sector After Firm Communism An analysis based on firm New entrepreneurial firms in surveys in Sub-Saharan Africa transition economies Dipak Mazumdar and Jan Winiecki, Vladimir Benacek Ata Mazaheri and Mihaly Laki 32 Trade Policy, Growth and 39 Information Technology and Poverty in Asian Developing Development Countries A new paradigm for delivering Edited by Kishor Sharma the internet to rural areas in developing countries 33 International Competitiveness, Jeffrey James Investment and Finance A case study of India 40 The Economics of Palestine Edited by A. Ganesh Kumar, Economic policy and Kunal Sen and institutional reform for a viable Rajendra R. Vaidya Palestine State Edited by David Cobham and 34 The Pattern of Aid Giving Nu’man Kanafani The impact of good governance on development 41 Development Dilemmas assistance The methods and political Eric Neumayer ethics of growth policy Melvin Ayogu and Don Ross 35 New International Poverty Reduction Strategies 42 Rural Livelihoods and Poverty Edited by Jean-Pierre Cling, Reduction Policies Mireille Razafindrakoto and Edited by Frank Ellis and François Roubaud H. Ade Freeman 43 Beyond Market-Driven 44 The Political Economy of Development Reform Failure Drawing on the experience of Edited by Mats Lundahl and Asia and Latin America Michael L. Wyzan Edited by Makoto Noguchi and Costas Lapavitsas The Political Economy of Reform Failure Edited by Mats Lundahl and Michael L. Wyzan First published 2005 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group © 2005 editorial matter and selection, Mats Lundahl and Michael L. Wyzan; individual chapters, their contributors Typeset in Baskerville by Wearset Ltd, Boldon, Tyne and Wear Printed and bound in Great Britain by MPG Books Ltd, Bodmin All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-415-36244-X Contents Notes on contributors xii Acknowledgements xv 1 Introduction 1 MATS LUNDAHL AND MICHAEL L. WYZAN PART I Developed countries 23 2 Stable growth with slow and expensive adjustments: an essay on the old OECD countries using Denmark as an example 25 MARTIN PALDAM 3 Reform failure and poor economic performance: the case of Sweden 49 BO SÖDERSTEN 4 The role of European integration in the reform process: the Greek experience 70 SARANTIS E.G. LOLOS 5 The political economy of reform failure and macroeconomic mis-management: Turkey, 1980–2002 89 A. ERINÇ YELDAN AND SABIT KHAKIMZHANOV x Contents PART II Transition countries 115 6 On the political economy of transformation: reasons for success, causes of failure 117 JOZEF M. VAN BRABANT 7 A chequered history: political culture and conflict in Albanian