Reforms : Love Them for the Long Term

While there is a large literature on the political economy of reforms, surprisingly little is known about reform reversal. Based on an investigation of reform reversals in former transition countries, this column argues that once reforms are introduced, self-enforcing social norms and social learning should catch up with the new reality to create domestic anchors. Social norms have not always been strong enough to outweigh the opportunistic behavior of politicians seeking short-term windfall gains. External anchors, while helping to protect reforms, cannot replace domestic ones