In 2003, Georgia launched one of the most celebrated anti-corruption reforms in the post-Soviet world. The country overhauled its traffic police overnight, firing the entire force and hiring new officers at higher salaries. Petty bribery on the roads plummeted. Yet corruption didn't vanish—it migrated upward, concentrating among political elites who now operated with even less institutional friction. The reform changed one piece. The system adapted around it.

This pattern repeats across democracies and developing states alike. A government reforms its procurement rules but leaves enforcement agencies unchanged. A country decentralizes authority but keeps the old fiscal system intact. Each reform makes sense on paper. Each disappoints in practice.

The reason lies in a concept political economists call institutional complementarity—the idea that institutions don't operate as standalone machines but as interlocking components of a larger system. Change one without adjusting its neighbors, and you often get dysfunction rather than improvement. Understanding this dynamic is essential for anyone trying to grasp why well-designed policies so frequently fail to deliver.

Every institution exists within an ecology of other institutions. A court system depends on police forces to bring cases, on legislatures to define laws clearly, and on professional norms among lawyers and judges to function predictably. Change any one element—say, introduce an ambitious new judicial code—and its effectiveness hinges entirely on whether those surrounding institutions can support it.

Political economist Peter Hall documented this dynamic in his comparative studies of European economies. He showed that Germany's system of coordinated wage bargaining worked not because the bargaining institutions were inherently superior, but because they were complemented by patient capital from banks, robust vocational training systems, and works councils inside firms. Each element reinforced the others. Remove one, and the logic of the entire arrangement starts to fray.

This is why transplanting institutions across contexts so often disappoints. When international development agencies export regulatory frameworks from high-income countries to low-income ones, they're extracting a component from one system and inserting it into another. The formal rules arrive, but the informal norms, enforcement capacity, and political incentive structures that made those rules work stay behind. The result is what scholars call institutional monocropping—a superficially modern framework layered over a completely different operational reality.

The practical implication is counterintuitive. The effectiveness of any single institution tells you less about its design quality than about its fit within the broader institutional landscape. A mediocre institution embedded in a coherent system will often outperform a well-designed one surrounded by mismatched counterparts. Power analysis starts here: not with individual rules, but with the relationships between them.

Takeaway

An institution's performance is less about its own design than about its fit with surrounding institutions. Before evaluating any reform, map its dependencies—what other institutions must function correctly for this one to work as intended.

When reformers change one institutional element while leaving complementary structures untouched, they don't just fail to improve the system—they often make it worse. Political scientists call these partial reform pathologies, and they explain some of the most puzzling governance failures of the past few decades.

Consider Russia's economic liberalization in the 1990s. Markets were opened and prices freed, but the legal infrastructure for property rights, contract enforcement, and corporate governance remained weak or absent. The result wasn't a functioning market economy. It was an environment where those with political connections could acquire vast assets without the institutional constraints that make market competition productive. Partial reform didn't produce a hybrid of plan and market—it produced something worse than either.

The mechanism works through what Charles Lindblom would recognize as a disruption of mutual adjustment. In any functioning institutional system, actors have adapted their behavior to the existing set of rules and norms. They know what to expect from courts, regulators, and counterparts. When reform changes one set of expectations while leaving others intact, it creates a zone of uncertainty that sophisticated actors exploit. Those with resources and connections navigate the ambiguity. Those without get caught in the gaps.

This is why partial reforms often benefit insiders disproportionately. The old system's informal networks remain intact even as formal rules shift. Players who understand both the old logic and the new rules can arbitrage the difference. Reformers see this and often blame corruption or political will. But the deeper problem is structural: they've created an incoherent institutional environment where gaming the system is the rational response.

Takeaway

Partial reform doesn't produce partial improvement—it often produces novel dysfunction. When you change formal rules without changing the informal systems that actors actually rely on, you create exploitable gaps that tend to benefit the already powerful.

If institutions are interdependent and partial reform is dangerous, does that mean everything must change at once? Not quite. The practical answer lies in sequencing—identifying which institutional changes must come first to create the conditions for subsequent reforms to succeed.

The key insight from comparative political economy is that some institutions are enabling while others are dependent. Enabling institutions create the preconditions for other institutions to function. Rule-of-law infrastructure, basic state capacity, and credible commitment mechanisms tend to fall in this category. Dependent institutions—specialized regulatory bodies, complex market mechanisms, participatory governance structures—require those foundations to operate effectively. Reformers who sequence dependent reforms before enabling ones reliably get disappointing results.

This framework explains why many governance reform programs in developing countries have followed a predictable arc of enthusiasm and disillusionment. Electoral reforms are introduced before civil service professionalization. Decentralization proceeds before local fiscal capacity exists. Independent regulatory agencies are created before the judiciary can enforce their decisions. Each reform is defensible in isolation. The sequence undermines them collectively.

Effective reform strategists—and they do exist—work backward from desired outcomes to identify the minimum enabling conditions. They ask not what is the ideal institution? but what must already be in place for this institution to function? This shifts the reform conversation from blueprints to pathways. It's less glamorous than announcing sweeping changes, but it's far more likely to produce durable results. The best reformers, in other words, are those who understand that the order of operations matters as much as the operations themselves.

Takeaway

Not all institutional reforms are equal in sequence. Enabling institutions—those that create the conditions for others to work—must generally be built or strengthened before dependent institutions can function. Ask what must already be true for a proposed reform to succeed, and you've identified what needs to change first.

The persistence of reform failure isn't primarily about bad ideas or insufficient political will. It's about a structural reality: institutions are systems, and systems resist piecemeal intervention. Changing one component without adjusting its complements is like replacing a single instrument in an orchestra and expecting the music to improve.

This doesn't counsel paralysis. It counsels strategic patience and sequencing discipline. The most effective governance reforms in modern history—from postwar European reconstruction to successful East Asian development strategies—worked because reformers understood institutional interdependence and planned accordingly.

For anyone analyzing or participating in political systems, the lesson is to look beyond individual institutions to the relationships between them. That's where reform succeeds or fails. That's where power actually operates.