European and North American Policy Change: Drivers and Dynamics by Giliberto Capano & Michael Howlett

Author:Giliberto Capano & Michael Howlett [Capano, Giliberto & Howlett, Michael]
Language: eng
Format: epub
Tags: Political Science, International Relations, General
ISBN: 9780415849968
Google: L4VxlQEACAAJ
Goodreads: 17269917
Publisher: Routledge
Published: 2009-01-01T00:00:00+00:00

Conclusion

The World Bank’s three-pillar pension reform strategy set out in the 1994 Report Averting the Old Age Crisis was a turning point in the global debate on pension reforms. Notwithstanding the widespread reservations against its recommendations, the report set the parameters for efforts to reform pension system around the world. All significant discussions on pension reform in the subsequent years directly or indirectly referred to, albeit not necessarily in agreement, the key points raised in the Report.

Within a few years of the Report’s publication, there was a growing unease about the proposed reforms, both within and outside the Bank. While the Bank formally continued to adhere to the principles enunciated in its 1994 Report, many researchers and officials associated with the Bank published a clarifying note in 2005 which indicated a significant departure from the official position. The new document emphatically recognized that social protection and not economic development should be a pension plans’ key objective, and acknowledged the importance of local social and political conditions in determining the actual content of reforms. Although the shift appears minor, it has serious policy implications for both the content and focus of pension policy: it suggests that the objective of pension should be primarily to provide income maintenance to the aged and not promote economic development and that markets are of limited use in meeting the needs of the weakest sections of the society.

The reforms proposed by the two documents were shaped not by any single factor but a range of factors rooted in society and cognitive learning on the part of analysts and makers of pension policy. They were the products of the social, economic and political conditions existing at the time and the lessons that the Bank drew from the way in which they were being addressed. The 1994 Report was the product of the conditions in the late 1980s and early 1990s when the Bank was deeply involved in economic restructuring first in Eastern Europe and subsequently Latin America from which it drew universal conclusions about pensions. The financial unsustainability of the pension programs in the face of rapid ageing combined with deep economic problems faced by the two regions at the time colored the Bank’s perception and led to an overemphasis on economic concerns at the expense of social objectives. Similarly, its sanguine assessment of the desirability of privately managed savings based scheme was significantly influenced by buoyant stock markets during the 1990s. The collapse of the stock market and outbreak of economic crises in Asia and Latin America in the late 1990s, and adverse findings on the actual performance of the implemented reforms made the Bank more circumspect about relying heavily on private savings and private management of pension funds.

The shift in the Bank’s position was not a response to changes in structural conditions because there was no structural shift in the global economy or polity in the late 1990s that might have led the Bank to change its position. The forces for change instead lay specific social and economic developments and the lessons the Bank drew from them.

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