Political Economy of Structural Adjustment: A General Equilibirum- Interest Group Perspective

Economic policy, policy reform and sustainability are viewed as a political- collective action process. The challenge is to provide incentives for collective action that yield an efficient allocation of a country's resources and to prevent the reemergence of the old policy regime once a crises is resolved. A modified Ricardo-Viner model with rent seeking households is used to provide insights into the factors that cause action to be misdirected, and into how policy reform might be induced and sustained. The analysis suggests the use of instruments that decrease the scope for rent seeking, provide resources - in the form of public goods - to the less influential, and compensatory payments to those disadvantaged by reform. Several recent IBRD and IMF country programs include these types of payments.


Issue Date:
1992
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7467
Total Pages:
45
Series Statement:
Bulletin 92-3




 Record created 2017-04-01, last modified 2017-08-23

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