Episode 38: Will Elites Permit Reform?

Episode #038
(20:32 min 18.8MB)

Professor John Nye of George Mason University discusses the importance of New Institutional Economics for developing countries. He talks about how reforms are best understood from the default position of poverty. In fact it is the prosperity of some nations that is a rare and recent event. The real issue is how countries can rise out of destitution, and why it is particularly difficult to do so.

Nye explains that elites distrust reform because they are not sure they will remain unscathed. The key then, is to broker a compromise between the leading factions that will open up the economy in the long run, but will preserve the existing order in the short term. Real world compromise requires not only getting the elites to agree to transformation, but also to create vested interest in further reforms.

John Nye's paper on "Why Do Elites Permit Reform?" is included in the The Annual Proceedings of the Wealth and Well-Being of Nations, 2008-2009 Vol. 1, edited by Emily Chamlee-Wright.

The music is provided by Dieter Bachmann.

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