Reform Redux: Measurement, Determinants and Reversals

What do we know about the effects of structural reforms? One main reason the answer may be “little†is inadequate measurement. In this paper we put forward improved measures of economic liberalization across countries over time. We show that structural reforms, carefully measured, follow richer dynamics (than those from existing indexes) which are very closely linked to the theoretical work. For example, we find FDI inflows reduce the likelihood of privatization reversals and labour strikes increase that of price liberalization reversals. We also find that our new measures, in standard specifications, have larger and more precisely estimated impacts on growth.