Economic, political and institutional determinants of structural reforms: Empirical evidence for OECD countries

Structural reform policies aiming at economic growth and productivity have found application in many countries, with the liberal economic order paradigm gaining popularity in the early 1980s. There has not been any theory or empirical finding that is agreed upon in the economics literature regarding the situations in which pro-market reform policies emerge. In this study, in order to contribute to the solution of this problem, which is encountered in theory and practice, the reasons for reform policies are explained with the help of two different methods, qualitative and quantitative. In this direction, it is aimed to fully reveal the reasons behind the structural reform experiences of OECD countries in the 1996-2017 period throughout the study. In line with this purpose, the reasons for structural reform policies in OECD countries have been clarified with panel data models including fixed effects and a process tracing approach, which is a type of case study. According to the results of the analysis, increases in unemployment rates are the main triggers of reforms in general. At the same time, as market controls increase, more reforms are seen over time. However, the stagnation in economic activity and the need for reform are not sufficient for pro-reform legislative changes on their own. This fact is clarified by the anti-reform practices of populist governments in the case study, while econometric analysis provides evidence to falsify the opportunistic model of political business cycles and confirm the partisan model. The effects of the demands of the people and the attitudes of the parties forming the government towards the reforms on the reform process come to light in the different econometric model definitions and the evidence presented by the process tracing approach. Strong governments increase the likelihood of reform policies. Keywords: Pro-market reforms, Economic crises, Process tracing approach, Political business cycles.