Supporting Policy Reform from the Outside: Insights from a Theoretical Framework

Policies are not designed and implemented by a social planner but are determined through a political process, based on the policymakers' preferences, beliefs and the constraints provided by political institutions. The resulting outcome could entail the choice of inefficient policies. This study presents a modified version of Besley and Persson (2011)'s core model which explains policy failure as the result of weak political institutions, negative views vis-a-vis public goods and/or limited technical capacity for identifying and designing high-quality public programs. In light of these theoretical predictions, the limits and opportunities are discussed for external agents to support policy reform processes in recipient countries.