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Guriev: The changing political economy of reforms

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Guriev: The changing political economy of reforms

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Guriev: The changing political economy of reforms

  1. 1. The changing political economy of reforms Sergei Guriev Sciences Po, Paris
  2. 2. The traditional narrative Distributional impact: reforms generate winners and losers • Must be able to compensate the losers • Need state capacity to redistribute Time dimension: short-term pain, long-term pain • Need patient voters and their confidence in the elites • Need long-term oriented elites • E.g. established political parties Communication strategy: good reforms sell themselves • Need public trust in experts 29/11/19 Sergei Guriev 2
  3. 3. Challenges already before the global crisis: Lessons from the post-communist transition Major backlash after the first round of reforms • Reforms delivered on average • But not for the median voter: only for the top 44% transition reduced the income gap vs. the West • Not just rise in inequality but rise in unfair inequality • Emergence of oligarchs with political influence and media ownership The backlash brings anti-reform populists to power • Build crony capitalism • Subvert (relatively weak) democratic checks and balances • Pro-reform politicians cannot come back to office 29/11/19 Sergei Guriev 3
  4. 4. Share of respondents supporting market economy 29/11/19 Sergei Guriev 4 Source: EBRD (2016)
  5. 5. Evolution of income distribution in post- communist countries 29/11/19 Sergei Guriev 5 Source: EBRD (2016)
  6. 6. A typical country-level “elephant curve”: Russia 29/11/19 Sergei Guriev 6 Source: EBRD (2016)
  7. 7. Political economy of reforms after the crisis European (and American) trust crisis • Rise in unemployment -> rise of populist vote • And decline in trust in national and European elites • No impact on interpersonal trust • Disintegration of traditional parties Internet and the populist narrative • expansion of mobile internet reduces confidence in government … benefitting populist opposition (but not the green opposition) • “this time is different”: social media have low barriers to entry + user-generated content 29/11/19 Sergei Guriev 7
  8. 8. 29/11/19 Sergei Guriev 8 Source: Algan et al (2017)
  9. 9. 29/11/19 Sergei Guriev 9 Source: Guriev et al (2019)
  10. 10. 29/11/19 Sergei Guriev 10 Source: Guriev et al (2019)
  11. 11. Way forward Fair competition and anti-oligarch agenda • Anti-trust policies • Political and media anti-trust Fair redistribution • Fighting global tax evasion • Increase labor’s bargaining power: UBI vs. unions/min.wages? • Equal access to public goods Rebuilding trust • Deliberative/participative democracy (citizens’ assembly, participative budgets etc.) • Opening up elite selection Communication strategy • Time to stand up to populists online 29/11/19 Sergei Guriev 11

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