Wednesday, July 02, 2008

New paper

Heterodox Reform Symbioses

Christian von Luebke
Neil McCulloch
Arianto A. Patunru
Siti B. Wardhani



Many countries are embracing investment climate reforms in order to facilitate higher investment and economic growth. Interestingly, these policy efforts – although based on similar institutional recommendations – give rise to distinctly different results across and within countries. Much of the existing investment climate literature favors a rule-based 'good governance' approach, in which less advanced economies are advised to boost investment and growth by adopting well-established OECD-type institutions and practices. While there is little doubt that the protection of property rights, low corruption, and effective public services are desirable long-term objectives, it remains questionable whether orthodox institutional prescriptions are the most promising pathway to get there. By taking a deeper look into the political economy of the city of Solo, we argue that relationship-based (rather than rule-based) cooperation can be a key factor for policy reform. In this paper we demonstrate that informal deliberations between government leaders and local firms can provide an effective mechanism to improve local investment climates. In the case of Solo, a 'heterodox' public-private symbiosis – between the mayor and a broad spectrum of multi-sectoral/scale/ethnic firms – has stimulated important regulatory and administrative reforms and contributed to a rise in private investment. ***

The paper was presented last week at IDS, Univ. of Sussex, UK. The revised version will be posted here.


Ratna said...

How u determine or desribe out a rule-based itself? Does the rule generate such a relationship or vice versa? Just don't want to put a greater emphasis on "relationship"...

Aco said...

Ratna, I share your concern of not putting too much on relationship. Yes, basing public policy solely on (informal) relationship all the way to the long run might be a bad idea. As for which comes first: rule or relationship, the answer is complicated. It can go both ways. Please be patient, they will post the paper on the website. Thanks!