Socio-economic developments in the enlargement countries and the need for evidence based policy making

The global economic crisis has had a significant impact on the Enlargement region by reducing inflows of external finance. Unemployment has increased in a context of already high long-term and youth unemployment. As governments seek to restrict their budget deficits there will be little scope for much increase in government expenditure in the near future. These effects of the crisis highlight the need for better policy making in the region, drawing on better understanding of the causes of economic and social problems and better appreciation of the range of policy options and their relative chances of success or failure. However, there is a substantial knowledge gap which can only be filled by well-designed research studies based on research questions that are relevant to the needs of policy makers. In this context evidence-based policy making (EBPM) techniques have a valuable role to play in improving the policy process. This paper outlines both ex-ante and ex-post techniques of EBPM. It points out the specific nature of the policy process in transition countries and the difficulties of formulating rational policy during periods of rapid structural change in which the administrations have become politicised and state capture by big business interests is common. Furthermore, pervasive policy transfer, often of a coercive nature, is an additional constraint on rational policy making. The conflicting advice received from multiple donors and external advisers provides an incentive for playing the system and producing inconsistence policy formulas. The paper concludes that there is significant scope for improvement in policy making through the use of EBPM techniques. Governments should therefore encourage the use of systematic review and ex-post evaluation of policy programmes and analysis of natural experiments where possible, while at the same time maintaining a realistic awareness of the dangers and distorting effects of the influence of advocacy coalitions, state capture and partyisation of economies.