| plain institutional change institutions need to be | | | | outcomes need not automatically be more |
| conceptualized as a dependent rather than an | | | | efficient, at least not for everybody or not |
| independent variable. The social science literature | | | | immediately. Although an exogenous shock |
| on institutional change is too large to be dealt with | | | | triggers change, the actual outcome of |
| comprehensively. The discussion is restricted to | | | | transformed institutions is conditioned by the |
| three perspectives that are relevant to the | | | | existing distribution of power and transaction |
| question under what conditions institutions can | | | | costs and how they affect collective action. This |
| change for the better in mineral-rich countries. | | | | view allows for the possibility that similar |
| The technocratic perspective | | | | institutional reforms may to varying degrees be |
| Policy advisors have been inclined to suggest that | | | | captured by particular interests which may or |
| institutions can be re-designed once a government | | | | may not serve the broader development |
| has decided that this is what it wants to | | | | objectives. Variance in outcomes across countries |
| do.Unfortunately this view leaves unclear whether | | | | that have pursued similar types of reforms is at |
| and under what conditions particular domestic | | | | least possible. As pointed out in section 2, this |
| conditions enable governments to be more or less | | | | would appear to be the case for mineral-rich |
| 'willing'. From the agency-focused perspective it is | | | | countries were similar types of reforms have led |
| to be asked why policy-makers, who have been | | | | to different outcomes. |
| identified as causing the problems in the first | | | | Historic analysis of the development of mineral |
| place, would suddenly agree to accept institutions | | | | rights in the American Midwest referred to earlier, |
| that are likely to cause them material or political | | | | made the case that the prospects for institutional |
| disadvantages. For the case of Norway, there are | | | | change following an exogenous shock is |
| governments who have accepted for themselves | | | | conditioned upon the distribution of benefits and |
| special fiscal institutions that constrain their choices | | | | power under the old and the new property rights |
| in the future. This is not to say that reform | | | | system. In addition, the ability to compensate |
| proposals to introduce such institutions are flawed | | | | losers and as well as to correctly foresee the |
| in principle, but to point out that their | | | | likely effects of a proposed institutional change in |
| effectiveness is conditioned by additional factors. | | | | light of bounded rational and information |
| Rather than assigning them to a black box labeled | | | | asymmetries also matters to whether positive |
| 'political will', these factors should be made the | | | | institutional change will actually take place. |
| subject of investigation. | | | | Institutional change as an evolutionary process |
| Institutional reforms targeting the privatisation of | | | | also suggests that 'time' is an important factor. |
| previously state managed enterprises have in | | | | Pooling annual data on institutional indicators as if |
| some cases led to efficiency gains and better | | | | each year observation for the same country |
| service delivery. But in others they have provided | | | | could be treated as a separate case misses this |
| political elites with opportunities to engage in | | | | point. Similar exogenous shocks can trigger either |
| self-enrichment without delivering on the | | | | positive or negative institutional change, depending |
| objectives that reforms have set out to achieve. | | | | on how the initial configuration of variables |
| Targeted sector reforms can also run the risk of | | | | conditions the direction of change. If explanatory |
| undermining institutional changes in other sectors. | | | | variables are seen to affect outcomes |
| For example, pressing needs to quick-fix | | | | independent of the values of other variables, |
| macroeconomic and fiscal problems in the short | | | | configurations of variables cannot be analysed. |
| run can undermine the development of political | | | | This suggests that for clues as to how institutional |
| institutions if they increase and leave | | | | change was brought about a comparative analysis |
| unconstrained the power of the executive the | | | | of mineral-rich countries should try and compare |
| legislature. The same may apply to the mineral | | | | case configurations in relation to time. Moreover, in |
| sector if foreign investment remains one of few | | | | order to specify causal linkages an explicit |
| or the only immediate prospect for generating | | | | theoretical explanation is also required. |
| much needed foreign exchange and government | | | | The distributional conflict perspective |
| revenue. | | | | A third perspective suggests more strongly that |
| Case studies conducted by the ICMM, the World | | | | distributional conflicts drive institutional change. |
| Bank and UNCTAD have shown that impressive | | | | Irrespective of whether change is put in motion |
| improvements in macroeconomic and fiscal | | | | because of a strong exogenous shock, this view |
| management at the national level have not in all | | | | suggests that the initial set of institutions supplied |
| instances been matched by equal improvements | | | | by a public authority provides the arena within |
| at the sub-national level and with respect to other | | | | which private agents engage with each others in |
| sectors' outcomes. In Peru for example | | | | bargaining processes and conflicts to change |
| fundamental legislative and regulatory changes to | | | | institutions to their advantage. The outcome of |
| the mineral sector were undertaken by executive | | | | the battle is conditioned by the relative power of |
| decree by a government which was later ousted | | | | the parties involved in the confrontation. |
| for corruption and authoritarianism. These | | | | This view is similar to that of the less optimistic |
| circumstances have led to a political settlement | | | | view of evolutionary institutional change. But it |
| involving a decentralisation process which not least | | | | focuses more on what happens to the policy |
| has contributed to politicising the fiscal institutions | | | | preferences of previously opponent economic, |
| governing resource revenue management. | | | | social or political groups in the context of a |
| Indonesia also provides an example of a | | | | distributive struggle. If policy preferences change it |
| mineral-rich country with rather good | | | | is possible that this results in greater convergence. |
| macro-economic and efficient resource rent | | | | This at least allows for an opportunity that |
| management but a poor record on corruption. In | | | | institutional change leads to broad-based rather |
| Indonesia decentralisation has also formed part of | | | | then interest-group specific improvements in living |
| a political settlement which has not made it easier | | | | conditions. This view on institutional change leaves |
| to achieve efficient resource revenue | | | | open when and how convergence of policy |
| management. | | | | preferences could evolve and who would be the |
| The evolutionary perspective | | | | winners and the losers. Individual actors could play |
| A second perspective suggests that institutional | | | | an important role in the process, as for example |
| change resembles an evolutionary process. | | | | in the case of Botswana first post-independence |
| Exogenous shocks may render existing institutions | | | | president. |
| inefficient and entice individuals to collaborate to | | | | Institutional change as the outcome of |
| replace them with more efficient ones. A positive | | | | distributional conflicts poses no expectation that |
| suggestion is that those benefiting from more | | | | institutional change will necessarily be efficient. |
| efficient institutions will replace institutions that | | | | Inefficient outcomes could arise because potential |
| have become inefficient and that this will benefit | | | | losers can block change half-way, or potential |
| everyone. The reform literature of the 1980s and | | | | winners cannot credibly commit to compensating |
| 1990s proposed that economic crises provide a | | | | powerful losers. What matters according to this |
| unique opportunity for executive policy makers | | | | view is whether (re-) alignments between elites |
| and their supporters to garner political support for | | | | and/or between groups of elites and no elites lead |
| the introduction of fundamental changes to | | | | to institutional changes that support broad-based |
| property rights and other institutions. | | | | economic activity and greater social and political |
| Others have suggested that in the wake of | | | | inclusion. |
| exogenous shocks some actors may be better | | | | Viewing institutional change as the outcome of |
| placed to capture the opportunity for challenging a | | | | distributional conflicts requires propositions that |
| status and will be inclined to re-designing | | | | allow for changes in policy preferences over time |
| institutions to serve their particular rather than | | | | and theories that can explain such changes. |
| wider public interests. This view cautions that new | | | | |