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much more than just cuts in tariffs and a balancing of the budget. If you want to achieve lasting change and have a real impact on the behavior of those agents that determine the success of reform, you must change the “rules of the game”—the manner in which trade policy is made or fiscal policy is conducted. This insight, assisted and reinforced by the academic literature on

Much of this is for the good. In particular, the tilt towards governance has the virtue that it helps shift the focus of reforms towards objectives that are desirable end-goals in and of themselves. The items on the original Washington Consensus agenda were all of instrumental value at best. Playing around with tariff and tax schedules and with the composition of public expendi

We know that a large part (half or more) of the difference in incomes per head between rich and poor countries is due to differences in total factor productivity (TFP)--i.e., the efficiency with which capital, skills, labor, and other inputs are transformed into final output--with the rest being due to differences in physical or human capital levels.