The Capacity to Reform: Germany and Slovakia

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The Capacity to ReformGermany and Slovakia

• Wolfgang Merkel Science Center Berlin/ Humboldt
  University
• Bratislava
• 5/3/2008

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Comparing Germany and Slovakia?

• Commonalities
• Consolidated democracies
• EU-member states
• Coalition governments
• Differences
• Econ. Development
• Euro Zone
• Size?
• Entrenched/new welfare state

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Reforms Structure and Action

• Structure
• Constraints and Opportunities
• Corridor for Action
• Legacies and Institutions
• Action
• Reform will of the actor
• Cohesiveness of the actor/ government
• Vetoplayers

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Political framework of governmental action
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Vetoplayers Definition

• individual or collective actors whose agreement
  is required for a change in the status quo
  (Tsebelis).
• Two categories of veto players
• institutions (institutional veto players)
• and parties (partisan veto players).

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3 Rules for VP

• The higher the number of veto player, the lower
  the probability that the status quo will change.
• The greater the ideological and programmatic
  distance between the veto players the more
  improbable a change in the status quo.
• The higher the internal cohesion of the
  collective veto players, the better they are able
  to use their veto power against a change in the
  status quo

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Degree of Changes

• 1rst Order Change New Adjustment of Existing
  Instruments
• 2nd Order Change New Instruments, New Programs
• 3rd Order Change Partial Change of Goals
• Peter Hall

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Vetoplayers Germany

• 2nd Chamber Bundesrat
• Länder
• Coaliton partner
• Constitutional court
• Strong interest groups
• Consensual democracy

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Schröder I

• Unemployment problem/ social welfare ref.
• Strong inst. Vetoplayers
• Cohesive Coalition
• Intraparty concflicts
• Hope for business cycle
• Weak Leadership
• Minor reforms
• Problem not solved

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Schröder II

• Strong instit. VPs
• Strong leadership
• Convincing the opposition (BR)
• Major reforms labour market/ social welfare
• Dynamic growth of jobs
• Increasing problem with the own parties
• Price new elections 2005

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Merkel I

• Less instit. VPs (BR)
• Grand Coalition
• Incohesive coalition
• Strong intra coalition competition
• Partner rational vote seekers
• Minor reforms
• Risk reform stalemate and loss of renewed
  economic dynamism

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VPs in Slovakia

• No powerful institutional VPs
• Cenralist state
• Favourable instit. Framework for reforms
• Problem Party System gtgt het. Coalitions
• Potentially powerful partisan VPs

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Dzurinda I

• No second chamber
• No CC intervening in policy making
• Weak interest groups
• Strong partisan VPs
• Heterogenous coalition
• Despite strong reform will
• Only first grade changes

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Dzurinda II

• Strong reform will
• Little institutional VPs
• More cohesive coalition
• Strong leadership
• Major Reforms
• Tax Reform
• Social Insurance Reforms (Pensions)
• Health Reforms
• Cuts in social welfare

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Fico 2006 ....

• Little inst. VPS
• Non cohesive coalition
• Moderate reform willl
• Some social corrections (2nd Pension Pillar
  Health fees)
• Challenge to keep econ.dynamic create more
  social cohesion

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Renewed priorities of Lisbon Strategy

• Investing in people and modernizing labor
  markets,
• Improving business environment
• growth of small and medium enterprises (SMEs) to
  create nine out of ten new jobs.
• 3. Investing in education,
• 4. RD and innovation,
• foster free movement of knowledge, the creation
  of a European Research Area and an integrated
  patent jurisdiction.
• 5. Social Cohesion
• Problem of hard and soft Europ. law
• 6. On energy and climate change MSs to complete
  the internal market for energy

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Lisbon Goals Performance
Source OECD.Stat, average values 1998 till 2007
respectively till most recent year available
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BRI-Scores Management Index 2005-2007
  Slovakia (21) Czech Republic (26) Germany (17)
Strategic Capacity 7.6 3.2 5.3
Inter-ministerial Coordination 5.4 4.0 5.5
Regulatory Impact Assessment 3.0 2.0 4.7
Societal Consultation 4.9 4.9 6.1
Policy Communication 3.3 3.3 3.3
Legislative Efficiency 7.5 8.0 6.9
Anticipation of Veto Players 6.9 7.6 8.8
Effective Implementation 7.9 5.1 7.5
Domestic Adaptability 8.2 2.8 6.4
External Adaptability 6.6 2.7 5.8
Organizational Reform Capacity 4.8 3.3 3.8
Knowledge of Government Policy 3.0 3.0 4.5
Parl. Structures and Resources 6.8 7.3 7.3
Media, Parties and Interest Groups 5.2 5.9 6.4
TOTAL MANAGEMENT INDEX 5.56 4.72 5.98
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Challenges ahead Slovakia

• Sustainable growth
• Investing into people (econ. and social
  dividends lifechances)
• More employment
• Diversifying a strong industr. Sector
  (automobile)
• Complementing it with an advanced service sector
  (IT)
• Fighting corruption
• Joining the Euro - Zone

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Challenges aheadGermany

• Stimulation growth/ domestic demand
• Reforming the labour market
• Reforming the social insurance system
• Investing in education
• More women into the labour market
• Boosting qualified employment
• Integration of migrants
• Grand Coalition doubts on the reform capacity