Lessons from investment climate reform

Presentations and background papers are now available online for the recent World Bank seminar on Reforming the Investment Climate: What are we Learning?

This half day seminar…focused on the political and institutional aspects of reform, including triggers for reform, packaging and sequencing issues, building public support, creation of institutional arrangements to implement and sustain reform, and monitoring and evaluation.

My favorite presentation was from Yasheng Huang, an always fascinating Chinese scholar whose upcoming book addresses the question “How capitalist is China?”

Hint: Huang’s research indicates that in the 1990s credit constraints on the private sector increased dramatically. On investment climate reforms, Huang calls the World Bank-supported fiscal recentralization in 1994 a mistake. He says the Chinese central government already had incredible political power, thus adding in additional economic power was counterproductive.

Roberto Zagha’s presentation on “Policy Reform: Lessons from the 1990s” also had a few interesting nuggets that challenge conventional wisdom. Namely, growth is systematically overprojected in countries in political transition. The 1990s witnessed an incredible number of positive political reforms, yet economies responded very unevenly. Latin America's experience after the military dictatorships is a good case in point.

Also see the working paper on managing investment climate reforms, background to our recent online discussion on the topic.