© 1993 International Bank for Reconstruction and Development / The World Bank
research-article |
An Institutional Analysis of the Design and Sequence of Trade and Investment Policy Reform
Brian Levy is with the Country Economics Department at the World Bank.
Countries vary in their political commitment to change and in the capability of their bureaucracies. Policies vary in their organizational and political demands. These institutional variations can be incorporated into the design of trade and investment policy reform. In virtually all countries the presumption should be for reforms to dismantle—not reconfigure—restrictive entry rules and dysfunctional discretionary investment incentives. But there is no single approach, common across countries, through which trade policy reform should proceed. Countries with weak administrative capabilities should push import liberalization to the limits. But politically constrained countries with a stronger administrative capability might consider roundabout reforms that secure outward orientation without full-scale, prior import liberalization.