According to economist Thorstein Veblen (1857-1929), systems are general, popular ways of looking at things that determine the ways in which people interact with each other in an economy.
This includes decision-making methods, transaction cost, and even the idea of a creative environment that is much in vogue these days. These factors also determine the speed and the nature of the groundwork for a country's economic development.
For this reason, we often say that systems are the basis of a country's economy.
Although systems are so important, it is not easy to change them.
Many institutional reforms die for no particular reason other than that they are not widely accepted.
Institutional reforms are meant to elevate the quality of institutions. But what exactly is institutional quality?
Certain international risk assessments, such as the International Country Risk Guide and the Business Environmental Risk Index list five indicators of risk: the risk of a sudden change in the rules of the game, the risk of the government breaking agreements, the degree to which citizens respect the law, corruption and the quality of civil servants.
Some of these indicators have literal meanings, but others need interpretation. Cases of governments breaking agreements include postponements of signed agreements, size reductions, changes in orders of priority and failure of implementation.
Respect for the law refers to the degree to which citizens accept or abide by established regulations or judicial decisions.
The quality of bureaucrats includes their professionalism and their ability to resist pressure, as well as sensible mechanisms for personnel appointment and training.
Professionalism also concerns the question of whether government officials can utilize their expertise to resist unexpected policy changes and prevent breakdowns in government services.
Recently, Chou Po-lun (周伯倫), a former legislator behaved negatively toward a court verdict. Although Chou enjoys freedom of expression, the incident obviously set a bad example for other public figures.
I cannot help associating the incident with our people's attitude toward law and order. Luckily, the people seem to have accepted the court decision.
This being so, Chou should engage in some self-scrutiny.
Next, although the controversy over whether Chen Shui-bian's (
These problems concern the government's ability to deliver on its promises and the quality of government officials.
But, at the same time, it has been pleasing to see the persistence of some officials and their positive influence on public opinion.
From this episode we can see that, to some extent, the quality of our national institutions can be ensured but they can also be damaged all too easily.
Institutional quality is the cornerstone of social and economic development.
The people have the right to expect officials to guarantee that quality.
Officials have a duty to maintain and promote institutional quality. This is what gives our nation hope and happiness.
Schive Chi is the president of the Taiwan Academy of Banking and Finance.
Translated by Grace Shaw
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