BIG BANG

- THE debate on the relative merits of “big bang” economic reforms vis-à-vis “gradual” reforms has preoccupied policymakers in many emerging nations since the collapse of the Soviet Union in the early 1990s. The proponents of “big bang” reforms argue that the latter will bring about a fundamental shift in people’s expectations about the future by altering the existing structure of the economy. Detractors say that the resulting dislocation to the economy and uncertainty will do more harm than good. The capacity of the state to implement so many sectoral and micro-economic reforms simultaneously is limited and therefore the risks of failure are high. They point to the sale of state-owned assets at rock-bottom prices to a group of Russian oligarchs — a direct result of hasty, ill-prepared and opaque privatization. Faced with violence, Mexico, like Pakistan, is underperforming. The recent elections brought to power a reformer, President Enrique Pena Nieto, who is committed to unlocking Mexico’s suppressed economic potential. He has decided to follow a “big bang” approach and is bringing about landmark reforms in sectors such as energy, tax, labour and education.