ECONOMY

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management. On the other hand we still see significant evidence of state influence in
the development of supply-side strategies. On both the supply and the demand side,
however, we find a range of new arguments which emphasize how governments are
constrained in their selection of policies by the existing socioeconomic institutional
configuration of the state. These arguments are coupled with empirical evidence identifying
significant long-term effects of states’ socioeconomic institutional structures
on patterns of economic development and performance. By emphasizing the impact
of state structures on patterns of economic activity, these arguments tend to downplay
the significance of the economic role played by elected governments.
Ultimately the question of the significance of government influence on economic
policy-making in the face of inherited institutional constraints is an empirical one,
which can only be resolved through methodological innovation. However, as we have
described, it has important normative and positive implications. Stated in the most
general terms, the important question which we need to address is whether we should
see “states” as sets of equilibrium socioeconomic institutions, relatively immune to
the actions of governments (aside from their historical role in the selection of institutions
at the point of creation), or whether governing political parties should also be
considered important state actors—retaining the capacity significantly to influence
economic outcomes, and the welfare of citizens.
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