Are complementary reforms a “luxury” for developing countries?

Reform complementarities and growth: Evidence and mechanisms

“…The idea that reform of one policy area bolsters the effectiveness of other areas is not new. The use of interaction terms in econometric models is a common method for capturing such synergistic effects (Chang et al., 2009; Coricelli & Maurel, 2011; see Braga de Macedo et al., 2014 for further review). Consider the equation $$Y=\alpha +\beta X+\gamma Z+\delta XZ$$.…”

The spatial dimension of productivity

“…The detailed overview of the productivity drivers and of their interdependencies suggests that increases in productivity can result from a range of policies (many of them already in place) targeted at these determinants. It is well-established in the literature (mostly in the context of nations) that policy complementarities must be taken into account in order for policies to be efficient in achieving desired outcomes (Braga De Macedo and Oliveira Martins, 2008 [280]; Braga de Macedo, Oliveira Martins and Rocha, 2014 [281]; Combes et al, 2014[282]).…”

“…It has also been shown that if the reforms (the removal of distortions) are pair-wise complementary, the returns on doing one policy is always greater when another policy is already in place and the system becomes supermodular 1 . With certain (general) assumptions, this case generalises to any number of policy pairs (Braga de Macedo and Oliveira Martins (2008 [280]) offer a more detailed overview and discussion).…”

Beyond global hubs: Broadening the application of systems approaches

“…Here, it is important to combine both the existing evidence from more or less similar contexts with the expert knowledge of the local conditions. Another important consideration is the audit of the programmes already in place and investing resources in a careful development of complementary policies that would benefit from the synergies across the policy field (De Macedo and Martins, 2008; De Macedo et al., 2014).…”