Public Opinion and the Dynamics of Reform

Abstract

Why do economic reforms that are proceeding successfully often run aground? A number of observers have expressed surprise that public opinion regarding the continuation of a reform process often runs directly counter to the performance of the reform itself. This is especially surprising if one thinks of voters as forward-looking. If anything, a reform that is proceeding successfully might be expected to see burgeoning political support, as voters learn something about the underlying reform, or about the incumbent government's ability to implement it smoothly. In this paper we show that there might arise circumstances where the initial success of reform might result in it running into a political impasse. We suggest that the key might lie in the effect that the reform process has on the balance of political power. In particular, if initially successful reforms change the balance of political power in such a way as to make future redistribution less likely, then public opinion may turn against reform. Thus, in some sense, an initially successful reform may well end up sowing the seeds of its own destruction.political economy, economic reform, public opinion, redistribution, compensation