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Microeconomic reform (or often just economic reform) comprises policies directed to achieve improvements in
economic efficiency In microeconomics, economic efficiency, depending on the context, is usually one of the following two related concepts: * Allocative or Pareto efficiency: any changes made to assist one person would harm another. * Productive efficiency: no ad ...
, either by eliminating or reducing distortions in individual sectors of the economy or by reforming economy-wide policies such as tax policy and competition policy with an emphasis on economic efficiency, rather than other goals such as equity or employment growth. "Economic reform" usually refers to
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a r ...
, or at times to reduction in the size of government, to remove distortions caused by regulations or the presence of government, rather than new or increased regulations or government programs to reduce distortions caused by
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where ...
. As such, these reform policies are in the tradition of laissez faire, emphasizing the distortions caused by government, rather than in
ordoliberalism Ordoliberalism is the German variant of economic liberalism that emphasizes the need for government to ensure that the free market produces results close to its theoretical potential but does not advocate for a welfare state. Ordoliberal ide ...
, which emphasizes the need for state regulation to maximize efficiency.


Microeconomic reform in Australia

Microeconomic reform dominated Australian economic policy from the early 1980s until the end of the 20th century. The beginning of microeconomic reform is commonly dated to the floating of the Australian dollar in 1983. The last major policy initiatives associated with the microeconomic reform agenda was the package of tax reforms centered on the Goods and Services Tax (GST) which came into force in July 2000, and the
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of
Telstra Telstra Group Limited is an Australian telecommunications company that builds and operates telecommunications networks and markets voice, mobile, internet access, pay television and other products and services. It is a member of the S&P/ASX ...
which began in 1998 and was completed in 2006. There were, however, some instances of microeconomic reform before the 1980s, notably including the Whitlam government’s 25 percent
tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and p ...
cut. Similarly, the consequences of some microeconomic reforms initiated in the 1990s, such as National Competition Policy are still being worked through. The policy agenda associated with microeconomic reform included: * reductions in and eventual removal of
tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and p ...
protection * corporatisation and privatisation of
government business enterprises A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the government ...
*
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a r ...
of industries including airlines * new forms of
regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology Biology is the scientific study of life. It is a natural science with a ...
in industries subject to privatisation and corporatisation *
tax reform Tax reform is the process of changing the way taxes are collected or managed by the government and is usually undertaken to improve tax administration or to provide economic or social benefits. Tax reform can include reducing the level of taxatio ...


Microeconomic reform in the People's Republic of China

The Chinese economic reform () refers to the program of
economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with t ...
changes called "
Socialism with Chinese characteristics Socialism with Chinese characteristics ( zh, s=中国特色社会主义, hp=Zhōngguó tèsè shèhuìzhǔyì) is a set of political theories and policies of the Chinese Communist Party (CCP) that are seen by their proponents as representing M ...
" in the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, sli ...
(PRC) that were started in 1978 by
pragmatists Pragmatism is a philosophical tradition that considers words and thought as tools and instruments for prediction, problem solving, and action (philosophy), action, and rejects the idea that the function of thought is to describe, represent, ...
within the
Communist Party of China The Chinese Communist Party (CCP), officially the Communist Party of China (CPC), is the founding and sole ruling party of the People's Republic of China (PRC). Under the leadership of Mao Zedong, the CCP emerged victorious in the Chinese Civil ...
(CPC) led by
Deng Xiaoping Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the China, People's Republic of China (PRC) from December 1978 to November 1989. Aft ...
and are ongoing as of the early 21st century. The goal of Chinese economic reform was to generate sufficient
surplus value In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cos ...
to finance the
modernization Modernization theory is used to explain the process of modernization within societies. The "classical" theories of modernization of the 1950s and 1960s drew on sociological analyses of Karl Marx, Emile Durkheim and a partial reading of Max Weber, ...
of the mainland Chinese economy. Neither the
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the ...
command economy, favored by CPC conservatives, nor the
Maoist Maoism, officially called Mao Zedong Thought by the Chinese Communist Party, is a variety of Marxism–Leninism that Mao Zedong developed to realise a socialist revolution in the agricultural, pre-industrial society of the Republic of Ch ...
attempt at a Great Leap Forward from
socialism Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the ...
to
communism Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society ...
in China's agriculture (with the commune system) had generated sufficient surplus value for these purposes. The initial challenge of economic reform was to solve the problems of motivating workers and farmers to produce a larger surplus and to eliminate economic imbalances that were common in command economies. Economic reforms started since 1978 have helped lift millions of people out of poverty, bringing the poverty rate down from 53% of the population in 1981 to 8% by 2001.....


Microeconomic reform in India

The
economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...
of 1991, initiated by then Indian prime minister
P. V. Narasimha Rao Pamulaparthi Venkata Narasimha Rao (28 June 1921 – 23 December 2004) was an Indian lawyer, statesman and politician who served as the 9th prime minister of India from 1991 to 1996. He is known for introducing various liberal reforms to Indi ...
and his finance minister
Manmohan Singh Manmohan Singh (; born 26 September 1932) is an Indian politician, economist and statesman who served as the 13th prime minister of India from 2004 to 2014. He is also the third longest-serving prime minister after Jawaharlal Nehru and Indi ...
, did away with investment, industrial and import licensing and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors. Since then, the overall direction of liberalization has remained the same, irrespective of the ruling party, although no party has yet tried to take on powerful lobbies such as the
trade unions A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits (s ...
and farmers, or contentious issues such as reforming labor laws and reducing agricultural subsidies. The effect of these reforms has been positive, and since 1990, India has had high growth rates and has emerged as one of the wealthiest economies in the developing world. During this period, the economy has grown constantly with only a few major setbacks. This has been accompanied by increases in life expectancy, literacy rates, and food security since then.


Economic Reform in Iran


Economic reform in New Zealand

After the snap election of 1984 in
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
, the new
Finance Minister A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
,
Roger Douglas Sir Roger Owen Douglas (born 5 December 1937) is a retired New Zealand politician who served as a minister in two Labour governments. He became arguably best known for his prominent role in New Zealand's radical economic restructuring in the 198 ...
, began a speedy reform of the New Zealand economy. The speed of the reforms can be partially attributed to the
currency crisis A currency crisis is a type of financial crisis, and is often associated with a real economic crisis. A currency crisis raises the probability of a banking crisis or a default crisis. During a currency crisis the value of foreign denominated debt ...
that resulted from the former government's refusal to devalue the New Zealand dollar. The policies included cutting
subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
and trade barriers, privatising public assets and the control of
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
through measures rooted in monetarism. These policies were regarded in some quarters of Douglas's
New Zealand Labour Party The New Zealand Labour Party ( mi, Rōpū Reipa o Aotearoa), or simply Labour (), is a centre-left political party in New Zealand. The party's platform programme describes its founding principle as democratic socialism, while observers desc ...
as a betrayal of traditional Labour ideals. The Labour Party subsequently retreated from these policies, but it became the core doctrine of the New Zealand ACT party. The reforms created a very business-friendly regulatory framework. A 2008 study ranked
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
99.9% in "Business freedom", and 80% overall in "Economic freedom", noting amongst other things that it only takes 12 days to establish a business in New Zealand on average, compared with a worldwide average of 43 days. Other indicators measured were property rights, labor market conditions, government controls and corruption, the last being considered "next to non-existent" in the
Heritage Foundation The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the pre ...
and ''
Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' study.


Economic reform in the USSR and Russia

Economic reforms began in the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, ...
when Perestroika was introduced in June 1985 by the then
Soviet The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen national ...
leader Mikhail Gorbachev. Its literal meaning is "restructuring", referring to the restructuring of the Soviet economy. During the initial period (1985–1987) of Mikhail Gorbachev's time in power, he talked about modifying central planning, but did not make any truly fundamental changes ('' uskoreniye'', acceleration). Gorbachev and his team of economic advisers then introduced more fundamental reforms, which became known as ''perestroika'' (economic restructuring).


Economic reform in Africa

Economic reform began in Africa throughout Africa in the mid-1990s. Before that, the two decades of donor-sponsored reform efforts to Africa failed to help most sub-Saharan economies to overcome the fiscal and balance of payments deficits. During the mid-1990s, several civil wars ended and a wave of democratization started. The growth rate reached 1.2 percent a year between 1994 and 1997 which is the highest rate during that generation. However, the growth is a result of a donor-led process of structural adjustment as compatible with the survival of the status quo. The growth rate started to decline after 1998 and civil wars reactivated again by then. The two-decade failure reform leaves many African countries incapable of leading another economic reform.


Economic reform in North Korea

North Korea North Korea, officially the Democratic People's Republic of Korea (DPRK), is a country in East Asia. It constitutes the northern half of the Korean Peninsula and shares borders with China and Russia to the north, at the Yalu (Amnok) and ...
is a communist country with the central economic planning system. With the ongoing nuclear issue, North Korea is politically and economically isolated from other countries. Therefore, several tries for economic reforms did not appear to be successful. Its economy relied heavily on the defense industry and the consumer goods industry had been overlooked according to the ''
juche ''Juche'' ( ; ), officially the ''Juche'' idea (), is the state ideology of North Korea and the official ideology of the Workers' Party of Korea. North Korean sources attribute its conceptualization to Kim Il-sung, the country's founder an ...
'' policy. Under the Third Seven-Year Economic Plan (1987–93), DPRK aimed to focus on technology-based industry and to solve their scarcity of electricity. Nevertheless, it did not give a satisfiable result. One of the causes was its relationship with trading partners and losing supportive allies. In response, North Korea tried to attract foreign investors by endorsing joint venture and opening some free-trade zones. Unluckily, with other factors, this policy was not practical. In addition, it also had to encounter a massive military expenditure to secure its leader with both internal and external threat. Later in 2002, there was another attempt to make a market liberalization reform, which the government tries to let the demand and supply determine the price level, which used to be controlled by the central government. It also gave some authority to local producers to make some economic decisions by themselves. Other than the decentralization policy, North Korea also kept trying to induce foreign investors in several ways, including depreciation of its currency and the initiation of Sinuiju Special Administrative District. Still, its solution to successfully reform its economy appears to be contradicting with its leader security regimes. Kim Jong-il's goal, “kangsong taeguk” or “rich nation/strong army,” appears to be unachievable. It caused him facing a reform dilemma. Opening up the country likely to facilitate the reform to be successful, while it would also make its dictatorship insecure. {{Original research inline, date=September 2019


See also

*
Monetary reform Monetary reform is any movement or theory that proposes a system of supplying money and financing the economy that is different from the current system. Monetary reformers may advocate any of the following, among other proposals: * A return ...
*
New public management New Public Management (NPM) is an approach to running public service organizations that is used in government and public service institutions and agencies, at both sub-national and national levels. The term was first introduced by academics in th ...
*
Tax choice In public choice theory, tax choice (sometimes called taxpayer sovereignty, earmarking, or fiscal subsidiarity) is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of c ...


Notes

Microeconomics Economic reforms