To be sure, a free press, a vigorous civil society, an adequate infrastructure of public policy analysis and evaluation can help in disentangling the effects of policies and institutions on outcomes. But the effectiveness of feedback mechanisms also hinges on governance factors where path dependence is very real. It is very hard to change institutions rapidly and what we have heard today about Poland and the other transitional economies demonstrates the tremendous cost of economic reform policies which do not respect the fact that there is path dependence, that beliefs change slowly and that vested interests can capture the reform process. For example, a big bang approach to reform where market institutions do not exist can end up being detrimental to society. In truth, economic performance depends on effective social learning which is in fact very rare because the virtuous cycle of development is not inevitable.
Luck is involved and there can be disconnects at many stages of the transformation process.
One can create the wrong institution or the wrong organization. Hence, they may adopt the wrong norms and their beliefs and values may not evolve in the proper direction as we have witnessed in countries suffering from ethnic conflict. This explains why we have observed such tremendous variations in development performance. Societies can learn from experience but sometimes past is not prologue and the generals of the development crusade often fight the last war. This is to a certain extent what happened in the East Asia crisis, that there was a certain amount of misplaced learning using the lessons of Mexico to deal with Indonesia, for example.