BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 8/2000:
Sequential reform strategy: The case of Azerbaijan
Juhani Laurila ()
and Rupinder Singh ()
Abstract: The aim is to review transition literature for evidence
that supports sequential reform strategy, as presented in this report. The
second part discusses the findings in the context of Azerbaijan, a formerly
socialist transition economy with interesting initial conditions. Evidence
of the country's current need to focus on improving public services fits
well with the sequential reform view. The authors argue that constraints
captured by initial conditions (human resources, administrative capacities,
traditions, etc.) necessitate sequencing of reforms and outline general
aspects of a sequential reform strategy designed to expedite the transition
process. The literature survey supports the Washington Consensus
recommendations for starting transition with macroeconomic reforms, but
over time initial conditions inevitably constrain and necessitate
sequencing. In other words, reform efforts initially need to be directed
across the widest possible front, but later in transition the emphasis of
reform efforts needs to shift from one area to another. In the later
stages, emphasis needs to be laid on improvement of public sector
governance to support and promote macroeconomic reforms and formation of a
healthy corporate sector. Democratic institutions arise with economic
growth generated by the corporate sector.
Keywords: transition economics; sequencing; governance; macroeconomic reforms; structural reforms; private sector; democracy; Azerbaijan; (follow links to similar papers)
JEL-Codes: F35; K40; N00; P20; P30; (follow links to similar papers)
79 pages, August 23, 2000
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