The political economy of social sector reform

Eduardo Lora

My approach

• Key questions suggested by Phil:– Reform triggers: why this reform?

why now?– Incentives of key players to support

or oppose reform– Compensation methods used to

secure reform

My approach

• Draw from a previous Network Project on similar issues:– Improving the Odds: Political Strategies for

Institutional Reform in Latin America (RES, 1999), by Carol Graham, Marilee Grindle, Eduardo Lora and Jessica Seddon

– 12 case studies from Argentina, Bolivia, Peru and Uruguay: four cases of social security reform, two of health reform, one instance of labor reform, one privatization, and one decentralization of social services.

Tentative conclusions

1. Circumstances matter:• Political timing: beginning of administration;

strength of government’s coalition• Opportunity windows: health reforms Gua and Col

2. Importance of leadership: • The executive leader’s understanding of the PMP,

ability to involve new/potential beneficiaries and knowledge of sector’s institutionsChile: education; Gua: health; Bogota.

Tentative conclusions

3. Working within institutions:– While creating parallel organizations is easier than reforming

the existing ones, new institutions must be embedded in or complement (rather than compete with) existing onesGua: health; Col: failed vouchers

– Aligning informal and formal institutions creates momentum and improves sustainability: Bogota

– But institutionalized politics (parties, etc) absent!

4. Bundling: a two-edged sword: – Bundling works as a way of mobilizing public opinion support

and changing the arena of discussionChile: multi-level education reform; Col: health-pension; Bogota (“torear varios toros al tiempo”)

– Bundling may backfired if reforms are perceived to be linked to unpopular programs or to a damaged brand (“privatization”)

Tentative conclusions5. From compensation to cooperation:

– Offering direct compensation to losers is not key to the fate of most reforms (difficult to identify winners and losers; hard to negotiate in a credible way)

– Arena of negotiation (smoked-filled room)– Cooperation more important: build trust and involve beneficiaries:

Col: Water; Bogotá.

6. Stakeholders are key: – The political balance between losers and new stakeholders created

by reform is keyGua: health; Col: water

– The long-term sustainability of reforms depends heavily on the capacity of new stakeholders to organize and express their interestsChile v Mexico: education

Tentative conclusions

7. Avoiding old battle lines: – The positive political momentum of reforms helps

redress conflicts and expand the space for win-win interactions

– New narratives to prevent tit-for-tat politics

8. Communication strategies matter: – How effective the government is in presenting its side of

the debate is crucial, and may help change the arena of negotiation-discussion

– Develop new vision, “narrative”– Leadership, media quality: Bogota