Catalysts for change

Institutional reform happens when the actors take advantage of opportunities for change, and use instruments of change at their disposal. The institutions that mediate social interaction must foster both stability and change. A measure of stability and predictability in the rules governing society is necessary for the people to have confidence to work together, to challenge each other to improve their communities, and to invest in their future. A vibrant civil society and such institutions as a democratic legislature can provide for dynamism-including that in rulemaking. In a society founded on broader consensus and certain ethical principles, these institutions are simultaneously given force and anchored to give predictability and confidence.

A seeming paradox is that democracies-despite their frequent leadership changes-can better commit to the longer run, and do the right things. When characterized as a stable democracy, countries benefit from predictable successions, as if the democratic institutions themselves have taken on the role of an owner with a long-range perspective.⁴⁶ However, studies show that young democratic states have problems similar to those in autocratic states, in terms of protecting property rights to allow assets to thrive, at least until democratic institutions have taken root. This is a challenge for fledgling democracies.

Many East Asian countries have done well in the last 30 years in stability and asset creation, but not necessarily through democratic institutions. What these countries had in common, however, was broad access to land (some had experienced historical shocks that gave them land reform) or other characteristics that made them emphasize shared growth, such as through broad-based rural development and broad provision of health and education.

Some institutions-such as constitutions-are designed to make change exceptionally difficult.⁴⁷ Constitutional changes typically require a much higher degree of voter consensus than do lesser legislative reforms. And a two-chamber legislature requires that coalitions be built in alternative ways for changes to pass. Other institutional means of providing stability and commitment are so-called checks and balances, that is, independent veto players. High court justices appointed for life, and systems with separation of power among branches of government can ensure that radical departures from the norm are not made in haste. Institutions may also be designed to facilitate change in one direction and not in another. In many Latin American countries a national park may be created with a simple presidential decree, but dismantling a park requires the approval of both the president and the legislature. Some countries have anchored their commitment to the environment in the constitution by linking the environment to the rights of their citizens. Others, such as India and Pakistan, have supreme court decisions serving the same purpose.⁴⁸ The stability provided by all these institutional mechanisms depends on whether they rest in shared values, so that relevant actors abide by them. In general, multiple review procedures and systems of checks and balances work only when political and economic power are not too concentrated.