WWS 572a                                        Prof. Joan Nelson

Spring l994                                     Monday 1:00-4:10

 

 

                      Course Requirements

           Market Reforms and Democratic Transitions

 

 

     Since l980, two trends have emerged in Latin America, much of Africa, most of the post-Communist world, and parts of South and Southeast Asia: a re-orientation toward more open, market-driven eocnomic strategies, and the replacement of discredited authoritarian systems by more open political systems. This course focusses on the ways in which each trend has affected the other.

 

     The course begins by considering the several components of economic reform and their track record in different regions. It then examines the politics of economic reform, in any kind of political system. The next two sessions focus on democratic openings and an overview of their interactions with economic reform. The remaining sessions examine more specialized topics: special issues of post-communist transformation, external factors affecting both trends, rebuilding markets, rebuilding states, opening trade and labor markets, and poverty and equity issues.

 

     Students will write a paper (15-20 pages, due the last class meeting) examining aspects of the interactions between economic reforms and political opening in one country. These papers will provide the basis for a series of team reports on the links -- reinforcing and conflicting -- between economic and political reforms in countries where the sequencing of reforms is similar. The next page of this syllabus lists the categories of countries and specific cases in each category. The syllabus gives tentative dates for team reports; the dates will be revised after students have selected cases and teams are designated. There will also be a final examination, including both short-answer and essay questions: some or all of the essay questions will be selected from a "study list" of questions provided before the exam.

 

     The course grade will be calculated roughly as follows:

i. Class participation and evidence of keeping up with and absorbing the readings: 24%

ii. Role in team report: 10%

iii. Individual papers: 33%

iv. Final examination: 33%

 

 

 

     Team Reports for Market Reforms and Democratic Transitions

 

     The purpose of the team reports is to provide an opportunity not only to share information about specific cases, but also to inform your analysis of a specific case with broader perspectives about the special issues likely to affect countries which have similar sequences of economic and political reforms. There will be one team report in each of the last several class meetings. Each report will last an hour,  including 20 to 30 minutes' presentation (depending partly on how many students are on the team), followed by questions and discussion.

 

     The country categories are as follows:

 

GROUP I: ECONOMIC REFORMS FOLLOWED BY POLITICAL OPENING

     Clear-cut cases: Chile, Korea, Taiwan. Turkey is a more complicated story, but probably fits this category.  More doubtful (but interesting) cases: Thailand, Ghana, Mexico.  Key issue: how do economic reforms and their outcomes generate pressures for -- and against -- political liberalization?

 

GROUP II: ATTEMPTED ECONOMIC REFORMS IN ESTABLISHED DEMOCRACIES

     Costa Rica, Jamaica, Venezuela (economic reforms mainly failed), India     (economic reforms still in early stages), Sri   Lanka (late l970s -early l980s, and again in recent years).

Key issue: what factors seem to be essential for established democracies to undertake and sustain serious market-oriented reforms?

 

GROUP III: SEMI-SIMULTANEOUS TRANSITIONS FROM NON-COMMUNIST PASTS

     Argentina, Bolivia, Nicaragua (which never had central planning, despite strong Communist ideological influence), Spain (though note serious economic reform was delayed several years after Franco's death). Key issue: how do the simultaneous reform processes affect each other?

 

GROUP IV: SIMULTANEOUS POST-COMMUNIST TRANSITIONS

     Poland, Hungary, Czech Republic, Bulgaria, Mongolia, Latvia, Estonia. Many post-Communist countries, including almost all of the former Soviet Union, have not undertaken enough economic reform to fit this category. Key issue: how do the simultaneous reform processes affect each other?

 

GROUP V: POLITICAL OPENINGS, NOT MUCH ECONOMIC REFORM

     Clear-cut cases: Brazil, Ecuador, Peru, Philippines, Zambia, Romania, Albania, Russia, Ukraine, much of the remainder of the former USSR.  Less clear (or I'm less sure of the facts): Uruguay, Gambia, Benin. Key issue: is political opening the main obstacle to economic reform? and how is the absence of significant economic reform feeding affecting democratic consolidation. Note: I view this category as less interesting than the first four, because I think the obstacles to serious economic reform are fairly well understood.

    

 

Cases not relevant to this course:

     For various reasons, a number of countries are less desirable or inappropriate cases for the topics of this course. Colombia and Botswana are established democracies which (for different reasons) have not required major market-oriented economic reforms since l980. In China, Vietnam, and perhaps also Indonesia, major economic reforms may eventually contribute to political openings, but so far there's not much of the latter. In Myanmar, Haiti, much of the Middle East, Zaire, Malawi, Togo, Kenya, and many other sub-Saharan African countries: non-democratic governments persist (despite pressures and some steps toward political opening); and there has been little or no economic reform, despite sporadic stabilization and/or reform packages.  Also not appropriate for this course are

countries torn by or emerging from civil war, including Afghanistan, Angola, Mozambique, Somalia, Sudan, Liberia, Cambodia, Lebanon, El Salvador.

 

 

Please consider in advance which case or cases interest you. I will ask for a tentative choice the first day of class, and a definite choice the second class meeting, so that we can organize the teams as soon as possible. Teams should have no fewer than 3 and no more than 6 members.  There can be more than one team per category. However, it would be most intereesting for the class if we had at least one team for each of categories I through IV.

 

 

 

 

 

 

 

WWS 572a                                        Prof. Joan Nelson

Spring l994                                     Monday 1:00-4:10

 

 

                        Course Syllabus

           Market Reforms and Democratic Transitions

 

January 31

Introduction and historical background

 

 

February 7

The Content and Outcomes of Economic Reforms

     Stabilization; liberalization; institutional reforms

     Economic outcomes

     Recent changes in prescriptions

    

Readings:

 

John Williamson, "What Washington Means by Policy Reform," in Williamson, ed., Latin American Adjustment: How Much Has Happened?, Institute of International Economics, Washington D.C. 1990.

 

World Bank, Latin America and Caribbean Region, Latin America and the Caribbean: A Decade After the Debt Crisis, Chapters 1-3 (pp. 6-34).

 

Alan Gelb, "Socialist Transformations: Some Lessons and Implications for Assistance," in SIDA (Swedish International Development Authority), Redefining the Role of the State and the Market in the Development Process (Stockholm, Sweden: SIDA, 1993).

 

 

February 14

The Politics of Economic Reform

     Theoretical perspectives

     Phases of reform and changing political challenges

     Dropouts and repeaters

 

Readings:

 

Merilee Grindle, "The New Political Economy: Positive Economis and Negative Politics, in Gerald M. Meier, ed., Politics and Policy Making in Developing Countries: Perspectives in the New Political Economy (San Francosco: International Center for Economic Growth, l991), pp. 41-67.

 

Stephan Haggard and Steven Webb, "What do we know about the Political Economy of Policy Reform?", World Bank Research Observer, Vol. 8, No. 2, July 1993, pp. 143-168.

 

Joan M. Nelson, "Consolidating Economic Adjustment: Aspects of the Political Economy of sustained Reform," in Paul Mosley, ed., Development Finance and Policy Reform, (St. Martin's Press, 1992), pp. 105-128

 

 

February 21

Democratic Transitions and Their Aftermaths

     Paths to and varieties of democratoc transitions

     Legacies of authoritarian rule

     Post-transition patterns

     Consolidation and alternative scenarios

 

Readings:

Samuel P. Huntington, "Will More Countries Become Democratic?", Political Science Quarterly , 99:2 (summer l984), pp. 193-218. 

 

Michael Bratton, "Political Liberalization in Africa in the 1990s: Advances and Setbacks," April '93.

 

Karen Remmer, "Democratization in Latin America," in Robert O. Slater, Barry M. Schultz, and Steven R. Dorr, Global Transformation and the Third World (Lynne Reinner Publishers, l993), pp. 91-111  

Russell Bova, "Political Dynamics of the Post-Communist Transition: A Comparative Perspective," World Politics 44:1 (October 1991), 113-138.

 

 

February 28

Interactions: Democratic Transitions and Economic Reforms

     Democracy, economic growth, and market economies

     Technocrats vs. democtratic access

     Vicious or virtuous circles: economic performance and public      opinion

     Interest groups, parties, and economic reform

     Longer-run distributive impact and prospects for democracy

         

Reeadings:   

Adam Przeworski and Fernando Limongi, "Political Regimes and Economic Growth," Journal of Economic Perspectives 7:3 (Summer l993), 51-69.

 

Stephan Haggard and Robert Kaufman, "Economic Adjustment and the Prospects for Democracy," in Haggard and Kaufman, eds., The Politics of Economic Adjustment (Princeton U. Press, l992), pp. 319-350.

 

Adam Przeworski, "The Political Dynamics of Economic Reform," Chapter 4 in Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America, (Cambridge U. Press, 1991), pp. 136-192.

 

[Joan M. Nelson with Marcelo Cavarozzi, Jacek Kochanowicz, Kalman Mizsei, and Oscar Muñoz, "Overview: How Market Reforms and Democratic Consolidation Affect Each Other," (draft, January l994).]

 

 

March 7

Post-communist Transformation (Lecture by Jacek Kochanowicz)

     Special features of post-communist transformation

 

Readings:

Note: Professor Kochanowicz may assign additional readings to be announced.

 

Laszlo Bruszt, "Transformative Politics: Social Costs and Social Peace in East central Europe," in East European Politics and Societies, 6:1, Winter 1992, 55-72.

 

Susan Woodward, "The Tyranny of Time," The Brookings Review, Winter 1992, pp. 6-13.

 

Leszek Balcerowicz, "Economic Transition in Central and Eastern Europe: Comparisons and Lessons," Lecture for the International Finance Corporation, Washington D.C., December 1, 1993. 

 

SPRING RECESS

 

March 21

External Factors affecting economic and political reforms  

     International economic trends

     International intellectual and ideological trends

     Aid donors and conditionality

     Debt, trade, and magnets

 

Readings:

Miles Kahler, "External Influence, Conditionality, and the Politics of Adjustment, " in Stephan Haggard and Robert Kaufman, eds., The Politics of Economic Adjustment, pp. 89-136.

 

Joan M. Nelson with Stephanie Eglinton, Encouraging Democracy: What Role for Conditioned Aid? (Washington D.C.: Overseas Development Council Policy Essay No. 4, l992).

 

[Tony Killick, "Does the IMF really help developing countries?", Overseas Development Institute Briefing Paper, (London: ODI, April l993).]

 

 

March 28

Privatization and Energizing the Private Sector

     What markets do well and poorly

     Privatizing state enterprises and functions

     Creating a dynamic private sector

    

Readings:

Samuel Bowles, "What Markets Can -- and Cannot -- Do," Challenge, July-August l991, pp. 11-16.

 

John Waterbury, "The Heart of the Matter? Public Enterprise and the Adjustment Process," in Stephan Haggard and Robert Kaufman, eds., The Politics of Economic Adjustment (Princeton U. Press, 1992), pp. 182-217.

 

Robert Klitgaard, Adjusting to Reality (San Francisco: ICS Press for the International Center for Economic Growth, 1991), Chapters 3-5, pp 29-84.

 

Sunita Kikeri, John Nellis, and Mary Shirley, Privatization: The Lessons of Experience (Washington, D.C., The World Bank, 1992).

 

Ben Slay, ed., "Roundtable: Privatization in Eastern Europe," in Radio Free Europe/Radio Liberty Research Report, 2:32, August 13, l993, pp. 47-57. (A succinct country-by-country survey of measures to date.)

 

GROUP REPORT: COUNTRIES WHERE POLITICAL OPENING FOLLOWED ECONOMIC REFORMS

 

 

April 4

Reviving and Redefining the State

     Transitional and enduring functions of the state

     The crucial issue: fiscal reforms

     Reforming the bureaucracy

     Potential and limits of decentralization

 

Readings:

Peter Evans, "The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change," in Stephan Haggard and Robert Kaufman, eds., The Politics of Economic Adjustment, (Princeton U. Press, 1992), pp. 139-181.

 

Albert Fishlow, "The Latin American State," Journal of Economic Perspectives, 4:3 (Summer l990), 61-74.

 

Robert Klitgaard, Adjusting to Reality, Chapters 1, 5-8 1-16, 85-168.

 

[Tony Killick, "A Reaction Too Far," ]

 

GROUP REPORT: ATTEMPTED ECONOMIC REFORMS IN ESTABLISHED DEMOCRACIES

 

April 11

Trade Liberalization, Labor Market Liberalization, and Industrial Policy

     The roles of trade liberalization

     Winners and losers

     Timing and sequencing: are East Asian comparisons relevant?

     Unions, labor market liberalization, and democracy

 

Readings:

Jeffrey D. Sachs, "Trade and Exchange Rate Policies in Growth-Oriented Adjustment Programs," in Vittorio Corbo, Morris Goldstein, and Mohsin Khan, Growth-Oriented Adjustment Programs, (Washington, D.C., IMF and World Bank, l987), pp. 291-325 and the comments by Charles Dallara and C. David Finch, pp. 326-333. (The remainder of the "comments" are also interesting.)

 

World Bank, Latin America and the Caribbean: A Decade After the Debt Crisis, (l993), Ch. 5, "The Opening of Latin America," pp. 54-66 (skip the section on regional trading blocs), and section on "Labor Market Regulations in Latin America" in Chapter 6, pp. 92-96.

 

Dani Rodrick, "The Rush to Free Trade in the Developing World: Why so late? Why now? Will it last?", in Stephan Haggard and Steven Webb, Voting for Reform: Political Liberalization, Democracy, and Economic Adjustment forthcoming, Oxford University Press for the World Bank, 1994.

 

Joan Nelson, "Building Blocks or Stumbling Blocks? The changing role of labor unions in dual transformation societies," (draft, February 1994).

 

GROUP REPORT: SIMULTANEOUS TRANSFORMATION FROM NON-COMMUNIST PASTS

 

April 19

Adjustment, Equity, Poverty, and Democracy

     How does adjustment affect poverty? equity?

     Democratic politics and pro-poor policies

    

Readings:

Stephan Haggard, "Markets, Poverty Alleviation, and Income Distribution: An Assessment of Neoliberal Claims," Ethics and International Affairs, Vol. 5, 1991, pp.175-196.

 

Joan Nelson, "Poverty, Equity, and the Politics of Adjustment," in Haggard and Kaufman, eds., The Politics of Economic Adjustment (Princeton Press, 1992), 221-269.

 

Carol Graham, "Comparing Experiences with Safety Nets During Market Transitions: New Coalitions for Reform?" in Safety Nets, Politics, and the Poor: Transitions to Market Economies (forthcoming: Washington, D.C.: The Brookings Institution, 1994).

 

GROUP REPORT: POST-COMMUNIST SIMULTANEOUS TRANSFORMATIONS

 

 

April 25

GROUP REPORT: POLITICAL OPENING WITHOUT SERIOUS ECONOMIC REFORM

 

Course review and conclusions.