Credible commitment and success with public enterprise reform

This paper studies why some efforts at public enterprise reform fail and wh y others succeed. Economic reforms are intended to increase efficiency and, thus, help sustain long-term growth. Yet, many governments have had diffic ulty sustaining the reforms they initiated and have reintroduced rigid cont rols over markets and enterprises. This is because either in the process of implementation, the government discovers that the costs of carrying the re form further are greater than the expected efficiency gains, or the public is skeptical that the new policies can be sustained and does not take the a ctions necessary for the gains to be realized. This paper develops a new-in stitutionalist framework and employs various measures of policy commitment and net gain from continued reform to analyze these issues. The paper sugge sts ways in which the potential success or failure of a reform can be asses sed, with implications for the steps that reformers might take to increase the chances of success. (C) 2000 Elsevier Science Ltd. All rights reserved.