A great hope characterizes much social science research today. An entire generation of scholars has pinned its professional prestige on the notion that by implementing changes in the configuration of formal institutions, policy makers can make real and lasting improvements in human welfare. Perhaps nowhere have such arguments had more impact than among students of politics in newly democratizing republics, where the eclipse of military government has given way to vigorous debates about the appropriate design of the economy and polity.
For many years, debates about the appropriate design of the economy dominated this discussion. As many of the world's new democracies made the transition to competitive politics in a context of severe economic crisis, it was only natural that questions about the design of market institutions would initially take precedence. In this vein, the combined intellectual efforts of academics, bureaucrats, and economic experts in the employ of international lending institutions converged to produce a blueprint for economic reform. The blueprint, often referred to as the Washington consensus, was embraced with greater or lesser enthusiasm by developing-country governments around the world. However, its central components – among them the privatization of state-owned enterprises, trade and financial liberalization, and measures to encourage fiscal discipline – were pretty much implemented everywhere.