Value Chain Glossary: Reform
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Reform
Reform is a political process that encompasses much more than a series of inputs leading to discrete legal outputs. Successful reform incorporates relationships and shapes incentives that drive both business and government behavior. To succeed, reform must also build trust, promote transparency and ensure that benefits accrue to those taking risk. The most significant policy reform may not be the creation of a new law or policy, but rather changing or improving the implementation of an existing law or policy. Successful policy reform requires changing three things:
- how laws are implemented
- the burdens that are placed on businesses and the relationships in which businesses can engage
- the incentives that drive business decisions
If a reform cannot be expected to change how businesses make decisions, it may be preferable to focus resources elsewhere. Private sector entities within a value chain can inform the process; they know whether a law is important and whether reform is likely to change how they behave.
Lessons Learned from Business Enabling Environment Reform: There is no standard process for reform, and there can be no “how to” manual. Different reforms involve different stakeholders and varying combinations of technical, political and institutional issues. Reform is also shaped by a country’s politics and capacity. Nevertheless there are common insights and lessons that emerge, and these lessons provide something of a checklist for reformers:
- Use the wide and growing array of new tools to benchmark and diagnose constraints and identify reform priorities.
- Foster competition through trade and product market reforms to create pressure for other investment climate reforms.
- Generate and leverage new information on specific policy reforms and proven good practices to expose the costs of the status quo, build support and overcome opposition.
- Seize crisis or political change to push through bold reforms.
- Use pilots and sector-specific interventions as learning and demonstration tools when reforms face great uncertainty or strong opposition.
- Leverage and empower supporters to help mitigate opposition using a mix of strategies and techniques, while maintaining dialogue with the private sector and other key stakeholder groups.
- Do not wait for long-term public sector reform to create the right incentives and capacity for implementation. Bring in new leadership and skills from the outside, set performance targets and incentives, leverage new information technology solutions, and outsource implementation to the private sector.
- Build on dedicated, empowered and competent teams to lead and sustain the reform process while ensuring transparency and accountability.
- Monitor progress closely against realistic and agreed upon targets and set up systems early in the process to measure results on the ground.
- Pay as much attention to getting the reform process right as to the technical content of reform to achieve desirable and sustainable policies and outcomes.
