Reconstruction involves military occupation with the aim of rebuilding and reforming both formal and informal institutions along liberal democratic lines. This essay contends that successful reconstructions require mechanisms that make reforms credible over the long run. In the absence of a signal of sustained credible commitment, institutional reforms will not be trusted by the populace resulting in the failure of the broader reconstruction. The incentive and epistemic aspects of the credible commitment problem are analyzed. Also considered are potential solutions to the problem of credible commitment. Absent such solutions, attempts to "export" institutions via military occupation will fail or produce dysfunctional outcomes. An analysis of the numerous aspects of the credibility problem in the current reconstruction of Iraq is provided to illuminate the central arguments.

Read the article at Christopher Coyne's website.

Citation:

Boettke, Peter and Christopher J. Coyne. The Problem of Credible Commitment in Reconstruction. Journal of Institutional Economics 5, no. 1 (2009): 1-23.