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CDS Seminar Series: Prof. Jean-Paul Faguet/ LSE The Incoherence of Institutional Reform: Decentralisation as a Structural Solution to Immediate Political Needs

When Feb 06, 2020
from 03:30 PM to 05:00 PM
Where SG1, ARB
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THE INCOHERENCE OF INSTITUTIONAL REFORM: Decentralization as a
Structural Solution to Immediate Political Needs
Jean-Paul Faguet

Institutional reforms are structural changes in the rules and norms of
authority, with long-term, unpredictable effects on government, politics and society. But leaders undertake them to solve unrelated, discrete, short-term political problems. Understanding the latter is key to understanding the characteristics of real reforms, and hence their fate. We construct a theory of instrumental incoherence, and test it with detailed, original evidence from decentralizations in Bolivia and Pakistan. Decentralization is a powerful measure that alters politicians’ incentives, parties’ structures, public expenditures, and macroeconomic and fiscal balances, among others. Different outcomes flow from different reform designs, which respond to the different political problems that motivated politicians. We characterize sincere reforms, which are long-lasting, vs. insincere reforms, which are short-lived. Our analysis likely extends to a broader class of reforms where the incentives of agents pursuing a change, and the effects of that change, are highly asymmetric in time and dimension.