ABSTRACT
A theory of institutional reforms must recognize what policy instruments are available, how politics restrains the choice sets of reformers, and whether spontaneous counter-policy by ordinary actors is likely to undermine reforms. A discussion of the so-called Determinacy Paradox concludes that it is not a practical issue. Insights suggested by the new institutionalism include measures to reduce political risks, increase the durability of reforms, and reduce transaction. The main weakness of NIE as a guide to policy is its limited understanding of the role of norms in undermining reforms and of long-term internal dynamics of social systems.
KEYWORDS:
New institutional economics; determinacy paradox; public policies; political economy