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The Limits of Institutional Design

This research paper explores the various aspects of institutional design, focusing on electoral systems and governance structures. It examines the impact of different electoral systems on participation, decision-making speed, and expected decision costs. The paper also discusses the relevance of factors such as party discipline, campaign finance, federalism, and independent judiciaries. Additionally, it analyzes case studies of successful institutional reform, highlighting examples from Chile, Japan, Italy, New Zealand, and Thailand. Overall, the paper emphasizes the complexity and interdependence of institutional design, suggesting that good institutions are heavily influenced by local context, traditions, and leadership.

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The Limits of Institutional Design

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  1. The Limits of Institutional Design Francis Fukuyama Johns Hopkins School of Advanced International Studies

  2. Presidential/PM v. Electoral Systems Plurality PR US, Philippines Presidential Latin America Continental Europe Parliamentary Westminster

  3. Participation v. speed of decision-making (Buchanan and Tullock) Expected Decision Costs Percentage of population required to make decision

  4. Types of veto gates • Electoral system • PR/plurality, district size, thresholds, timing • Party discipline • Open v. closed list PR, campaign finance • Bicameralism • Federalism and decentralization • Independent Judiciaries

  5. System Rankings • Classic Westminster • Parliamentary/PR with strong parties • Premier-presidential • Presidential with plurality voting • Parliamentary with fragmented parties • Presidential with fragmented parties

  6. British Election Results, 2001

  7. Successful Institutional Reform • Electoral systems • Chile 1988, Japan 1994, Italy 1994, New Zealand 1996, Thailand 1997 • Federalism • Brazil, Fiscal Responsibility Law (2000)

  8. Conclusions • No such thing as an optimal political system • Institutions come in complex, interdependent packages • Good institutions heavily dependent on local context and traditions • Need to invest in local knowledge of institutions • Leadership matters • Formal institutions matter less than many think

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