Governments in the developing world are under a lot of international and national pressure to review and update their processes. Internationally, donors and governments in the developed world are urging governments of developing nations to increase transparency, support decentralization, decrease corruption and participate in global digital information sharing. Nationally, the private sector de...

This paper o ers an explanation why governments have limited commitment and are susceptible to the ratchet e ect. It analyzes a two period model in which a government with full commitment regulates a rm. Each period is predated by an election. If contracts of previous governments tie newly elected governments, governments end up being unable to resist renegotiation. If previous contracts do not...