In other words, not only are the policies themselves valuable, they also unlock the potential benefits from aid inflows. Every government makes mistakes, and proposes policies that cannot be implemented in practice. However, policy unreliability arises when the broad policy commitments made by government are infrequently implemented, or implemented only partially, within a reasonable time period. This policy unreliability cannot be measured in absolute or objective terms, but there are some symptoms to look out for. When businesses consider government rules and policies to be unpredictable, investment and growth are weak.
Surveys can reveal business perceptions of government predictability.
See details of various business surveys by clicking here . A budget that varies tremendously from year to year in its inter-sectoral allocations is signaling to the business community that government has no coherent policy stance. Businesses that perceive this are less likely to heed the rules and regulations that governments issue on the basis that all are unstable and unlikely to be enforced. Budgetary volatility is a useful measure as it is correlated with business perceptions of unpredictable policy. These show the degree to which officials believe it is worth attempting to implement policy or to follow basic procedures.