A number of industrial and newly industrialized countries have already gone a long way in reducing the role of the state. Dramatic reforms in the way government is organized and in the scope of government involvement in producing goods and services and providing social security have in some cases resulted in reductions of public spending of 10 or even 20 percent of GDP. Two examples, in particular, show that a change in the policy regime is most important to reinvigorate the economy and raise economic growth while maintaining adequate standards of social welfare. In New Zealand and Chile, but to a lesser extent also in some other countries, governments have changed from using economic policies largely to redistribute rents to providing needed services and a regulatory framework appropriate to allow market forces to raise growth rates and social welfare. In this process, some of the reforms outlined in earlier chapters have in fact been successfully implemented. Thus, they do not represent pipedreams of armchair economists.

In the following pages we report on some of the reform experiences in OECD and newly industrialized countries. In the choice of case studies we had to be selective, and only a limited sample of countries and reform experiences are represented. As time goes by, new countries are likely to engage in significant reforms while a few others may experience policy standstill or even reversal. The implementation of concrete reforms has been conducted in often differing circumstances, and reforms that succeeded in one country may not always work in exactly the same way elsewhere.