Wish They All Could Be Like Estonia

Wish They All Could Be Like Estonia is a Wall Street Journal editorial about economic development comparing the case of Estonia to Chile. Mary Anastasia O'Grady makes the case that rapid radical reforms are more effective than gradualism. An article I posted a while back about El Salvador also seems to support this idea.

Here are a few excerpts:

With the 1989 fall of the Berlin Wall the world witnessed a backlash against the overintrusive state. A rallying cry in favor of economic liberalization went up around much of the globe. Some governments–notably in Eastern Europe–used the momentum to push deep, structural reform. Others–notably in Latin America–bungled the opportunity.

Is there any way to explain why it is that some countries have been able to restructure their economies so radically while others have been left in the clutches of special interests?

….

This matters the most in democracies, where leadership needs to produce results if liberalization is to stick. Clearly, it's not the absolute income level that generates support for reforms but the growth in living standards that seems to hold the key. Halfhearted measures generate immense resentment from the "losers" of the old system but often don't yield large enough gains to create a constituency to support the changes.

….

The tale of two small nations [Estonia and Chile] tells a wider global story. Is it any wonder for example that Brazilians, who after almost two decades of being told they are converting to a market economy, widely reject the notion? Improvements have occurred, for instance in monetary stability, but the country is still ranked "mostly unfree," with a per capita GDP of $3,500. Maybe Mr. Laar could pay them a visit.