Thursday, 26 July 2012

Does it make sense to “build states”?

by Mick Moore

A major debate is brewing on what to do about ‘failed states’, lawlessness and endemic violence. Is the solution to ‘build states’? Or should we be looking at alternatives? New analysts have begun to unsettle the conventional wisdom. But establishment organisations such as the World Bank are failing to take the changing evidence into account.

The establishment view: States should be built

On the one side we have what might be called the establishment position. Most official aid agencies, including DFID (pdf, 1mb), hold this view, as do official international organisations like the OECD (pdf).
These organisations’ view is that states should be built. Where there are problems of lawlessness, ‘ungoverned spaces’, ‘failed states’ or endemic conflict, the solution is to put states back together again. This perspective might suggest, for example:
  • All of Somalia should be governed by a single, national, recognised government based in Mogadishu.
  • Mexico's drug trafficking problems should be solved by the victory of the official armed forces in their conflicts with the ‘narcos’.
  • The state apparatus based in Kathmandu should be strengthened so that it can exercise control over the whole of Nepal.
Thousands of articles and books telling us how to ‘fix fragile states’ have been published in recent years.

An alternative view: Political authority is different in different places, and involves more than just states

On the other side, we have an increasing number of scholars and researchers telling us that, in some cases, building or rebuilding states is more or less impossible, and certainly against the current of history. The era when states were universally viewed as the dominant source of legitimate public authority is coming to an end.

Instead, we are beginning to understand that the patterns of political authority are much more complex and differentiated. We recognise that, in the future, states will share power with a much wider range of actors: large commercial corporations, official international organisations, international civil society organisations, transnational criminal networks, transnational judicial authorities, warlords, drug smugglers, insurgents and many others.

This doesn’t mean that states will disappear from the face of the earth. But, where local conditions have led to the collapse of state authority, we might think twice before we rush off to rebuild the state.

In particular, it may make little sense for the international community to try to reconstruct a state from above. It may be better to allow local people to find their own ways of constructing the collective authority that they need to provide security for themselves and their livelihoods. David Leonard made this case in relation to Somalia in a blog post a few months ago.

To people who want to read the broader argument, I recommend Anne Clunan and Harold Trinkunas’s edited book Ungoverned Spaces: Alternatives to State Authority in an Eraof Softened Sovereignty. Stanford, Stanford Security Studies, 2010. I do not agree with everything in the book, but it is refreshing to find a consistent series of papers that start from a deep scepticism about our capacity to rebuild states wherever we want. The book presents a coherent argument about the historical decline of state power.
It was the experience of reading this book that made me realise the roots of my disappointment with the 2011 World Development Report, Conflict, Security, And Development (and perhaps I am not alone in my disappointment).
Is it time to ask whether strengthening state authority is the most effective solution to some of the worst problems of conflict and insecurity? Unfortunately, like most of the establishment organisations, the World Bank is unable to publicly deal with this possibility.
It is far from clear what the alternatives to ‘building states’ are. Perhaps we should be thinking about ‘coping mechanisms’ rather than ‘solutions’. We need a debate about these alternatives, and I am sure we will have one. Reading Ungoverned Spaces will give you a head start with the arguments.

Tuesday, 17 July 2012

Professional Services, Markets and the Poor 3: Value-based organisations

by David Leonard

Organisations that are managed locally and professionally – particularly value-based ones – do better at providing quality services in market settings.

In my first blog post in this series I established that most of the world’s poorest people live in countries where they have to pay (formally or informally) for professional services. They pay even for services provided by governments. For better or worse, the poor are participating in markets for health, education, veterinary medicine and other services.

In the remaining posts in this series, I will ask: What can be done to make these markets work better for the poor? In post 2 we saw that payments to individual service providers have strong limitations. Except in a limited set of circumstances, they don’t overcome the unequal information problem. As a result, although they may stimulate quantity of effort, they tend not to produce better quality.

In this third and final post in the series, we’ll see that making payments to organisations offers better institutional solutions to the challenges of providing services for the poor.

Payments to organisations 

Incentives (in the form of jobs, salaries, bonuses and spoken appreciation) that are mediated through organisations are more likely than payments to individuals to have a positive effect on quality but only if the values of quality and service are institutionalised in the organisation. There are several components to this proposition:

Organisations have a greater ability to signal a commitment to quality than practitioners do as individuals. Because facilities have a physical and continuous presence they are much more visible to the public and more subject to public discussion than individual practitioners within them.

Organisations have a greater ability to observe and reward the performance of their staff than individual users of the service do. Because of information asymmetry individual users do not always know when they are being badly served. This is particularly the case in human and animal health because of the variable effectiveness of treatment, where bad care might nonetheless result in recovery and a ‘state-of-the-art’ intervention could still end in death.

A similar, even if somewhat smaller, imprecision in user judgments about quality of service is also evident in education. Students and parents often do not know the real value of the teaching they have received until they see their national school-leaving exam results. And even then they cannot be certain which teachers were responsible.

Particularly if the organisation decentralises personnel management to the facility level, it is possible for local professional supervisors to make formal or informal observations there of the quality of the processes in which employees are engaged and to apply a wide array of rewards and punishments relatively quickly.

Organisations that directly manage individual practitioners are more likely (but still are not assured) to be motivated to provide effective oversight and associated incentives, for they are more likely than individuals to be able to signal their character and thus to benefit from extra custom and increased income through the provision of quality.

Explicit incentive payments may be paid to individual practitioners but it is important that they be mediated by the group or organisation in its collective interest, not made directly by the client. These organisations also are likely to perform best if their local professional staff have decentralised control of their personnel and financial management (deconcentration), under the eye of client participation.

Nonetheless, the costs to an organisation of establishing a reputation for institutional quality are significant. From the empirical evidence it appears that the returns to a reputation in additional or higher paying custom are sufficient to maintain quality effort but in themselves are not enough to induce most organisations to create it. Thus the organisations that have invested in the creation and maintenance of quality are more likely to have had pre-existing ‘other-regarding’or altruistic values.

Finding or creating appropriate organisations

In otherwise difficult environments value-led organisations are exemplified by the services of many Christian missions in parts of Africa and the Bangladesh Rehabilitation Assistance Committee (BRAC) in South Asia. The presence or absence of such value-driven organisations is a part of a country’s deep institutional context, which is an aspect of path dependence.

Countries have different institutional repertories and thus will have different tools available with which to overcome their problems with information asymmetry. But that inventory also might be changed by donors or political initiatives that subsidise the long-term, initially-costly investments in new needed institutions.

This blog post draws on a paper currently under consideration with World Development: 'Institutional Solutions to the Asymmetric Information Problem in Services for the Poor', by David Leonard, Gerald Bloom, Kara Hanson, Juan O’Farrell, and Neil Spicer.

Friday, 13 July 2012

Greece’s Law 4014/2011: Lessons for Students of Development Studies

By Diana Conyers

Law 4014 of 2011 is one of a number of recent laws introduced by the Greek Government in response to the country’s financial crisis. It is intended to raise money for the cash-strapped government while at the same time addressing a longstanding problem of violations in planning and building regulations. I argue here that this case study provides some useful lessons for students of governance and development.

Governance challenges in the Greek planning system

It is estimated that 25% of properties in Greece violate some aspect of the planning and building regulations. The violations range from minor infringements, such as the construction of extensions without planning permission, to the construction of entire developments without the necessary building permits.

These irregularities (or ‘informalities’, as they are sometimes euphemistically called) are attributed to inefficiencies in the regulation systems, including the lack of land use plans in many areas, the high cost of building permits, and the excessive amount of time and ‘bureaucracy’ involved in acquiring them. It is an example of a common Greek phenomenon: bureaucratic inefficiency exacerbates an already existing culture of disregard for the rule of law.

Law 4014/2011 attempts to address this problem by requiring property owners to obtain a ‘certificate of regularisation’ before selling or transferring their properties. To get this certificate, a registered professional (an architect or civil engineer) must inspect the property and, if any ‘irregularities’ are found, a fine is payable. Properties are ‘regularised’ for a 30-year period.

The Law was introduced in September 2011 with the requirement that properties must be regularised by 31 December 2011. However the implementation of the law has been fraught with problems. The process of regularisation is almost as bureaucratic as the system that caused the initial problems, and the costs to property owners are high. The deadline for submission of applications has had to be postponed three times already.

Meanwhile, the process has increased the burden on the Greek population, particularly small, relatively poor property owners, and exacerbated the existing problems of a collapsed property market and lack of investment. Moreover, the law is being challenged in the courts, so could have to be withdrawn. 

In other words, the law is doing very little to address either of the original problems (‘informal’ development and lack of government revenue) and its implementation is creating or exacerbating others. The only winners are the architects and civil engineers employed to implement the process, and I suspect that some of them are beginning to regret ever getting involved!

Implications for students of governance and development

 This example from Greece shows that one cannot draw clear distinctions between ‘north’ and ‘south’, or ‘developed’ and ‘less developed’ countries. Although Greece is part of the European Union in many respects (including the quality of its ‘governance’) it has more in common with ‘less developed’ nations of Africa, Asia and Latin America. In fact, this is one of the reasons for its current problems: it’s difficult for a country like Greece to compete in an economic and monetary union dominated by countries like Germany.

Another implication is that the ‘international community’ seems to have learned little from experience with structural adjustment programmes (SAPs) in sub-Saharan Africa and Latin America in the 1980s and early 1990s. This experience showed that economic reform cannot happen without political and institutional reform. And the latter is a long, slow process that entails changes in ‘political culture’ and has to be internally driven; external actors can facilitate but not impose such reforms. 

The same mistakes are being made now in Greece. The economic and financial policies being forced upon the Greek government are unlikely to achieve the intended objectives unless accompanied by political and institutional reforms. Law 4014/2011 illustrates this point well.

The primacy of politics

And that leads me to a third implication of Law 4014/2011: the ‘primacy of politics’. Greece’s current problems are in large part due to a complex combination of national and international political factors.

At the national level, governance is hampered not only by bureaucratic inefficiency but also by a deeply embedded system of patronage and rent-seeking. The recently elected coalition government has vowed to confront this problem, but it will not be easy, especially since the two main parties involved (New Democracy and PASOK) are those who have governed the country for many years.  The opposition Syriza Party claimed to offer a real alternative, but did not get enough support to be able to put this claim to the test.

However, like most ‘less developed’ countries, Greece’s political problems are not merely internal. Why are the lessons learned from the earlier SAPs being ignored in Greece today? The main reason is not lack of knowledge, either of the experience with SAPs or of Greece’s governance problems. The main reason is that it is not in the political interests of those making the decisions (particularly the IMF, the European Central Bank and the German government), to remember these lessons - any more than it was in the interests of the IMF and World Bank to change its policies regarding SAPs when the failures became evident. In this respect, the recent change of government in France and the similar problems in other south European countries offer a glimmer of hope, but at present it is only a glimmer.      
More information on Law 4014/2011
Information on Greece’s general governance problems

Wednesday, 11 July 2012

Powerful executives, loyal ministers and policy coordination

Presidents and prime ministers are without doubt, the most powerful, influential and visible policymakers in an elected democracy. Depending on different political traditions and institutional configurations, the executive branch has strong prerogatives to set the country’s policy agenda, appoint technical and political staff to implement policy decisions and secure funding allocations to finance their agenda. Strong executive influence can be decisive to ensure fiscal discipline, push for legislative reforms or adopt new policy priorities.

The recent political economy analysis work of nutrition policies underlines the central role of the executive office to ensure that nutrition strategies are part of national development plans, to coordinate different sectors and ministries to implement the nutrition strategy, to secure nutrition funding and to maintain an electoral commitment to reducing children and maternal chronic malnutrition over time.

Building political commitment: Coordinating ministers and managing coalitions

The existing research, however, has not explained why different cabinet members would be willing and able to implement the presidents’ agenda? Why would ministers agree to coordinate around a common policy agenda instead of looking after their own goals, especially if they come from different parties, regions or technical backgrounds? And how can the ministers’ incentives be compatible with the president’s?

There is a remarkable research gap to explore on cabinet management. Work in the European context and more recently in Latin America has begun to paint a picture (see references below). We know for example that presidents (as opposed to prime ministers) usually have greater powers to appoint and dismiss cabinet ministers from a broad range of collaborators selected from inside and outside the party in government.

In most Latin American countries, presidential appointments do not even need validation from congress, which makes cabinet members directly responsible and responsive to the head of the government. This is a mixed blessing. In Peru, presidents relied on the support of loyal ministers to execute and implement his nutrition agenda. On the other hand, this makes ministers less responsive to demands or issues that are not on the president’s radar.

In coalitional settings, cabinet ministers help ensure that different political allies are included in the government to influence decision making. In this context, minority presidents or prime ministers can still remove and replace “rebel” cabinet ministers to protect their policy agenda. But in doing so, they affect the balance and stability of their governing coalition. The implication is that cabinet ministers are more likely to represent the different demands of the coalition and are less responsive to the priorities of the executive.

In Brazil, President Lula worked with ministers from different political parties around his nutrition agenda, while allowing them to take credit for the success of visible outcomes.

Vertical and horizontal relationships: What’s missing in our understanding of inter-sectoral cooperation?

More systematic research is needed to tell us what produces policy coordination across different ministries, especially outside a European context. A useful point of departure is to think whether the relationship between executives and cabinet ministers is vertical (hierarchical) or horizontal (collegial) (Hallerberg 2009). At the same time, we still need to know where ministers are recruited from, how long they remain in office, why they leave office and where do they go to afterwards.

From a policy perspective, these questions are critical to understanding why inter-sectoral cooperation takes place.

Altman, David.  2000.  "Politics of Coalition Formation and Survival in Multiparty Presidential Democracies: The Case of Uruguay (1989-1997)."  Party Politics  6: 259-83.
Amorim Neto, Octâvio, and Kaare Strøm.  2006.  "Breaking the Parliamentary Chain of Delegation: Presidents and Non-Partisan Cabinet Members in European Democracies."  British Journal of Political Science  36: 619.
Hallerberg, M., Rainer Strauch, R. and von. Hagen, J. 2009. Fiscal Governance in Europe, New York: Cambridge University Press.
Laver, Michael, and Kenneth A. Shepsle.  1990.  "Coalitions and Cabinet Government."  American Political Science Review  84: 873-90.
Martínez-Gallardo, Cecilia.  2010.  "Inside the Cabinet: The Influence of Ministers in the Policymaking Process." In How Democracy Works. Political Institutions, Actors, and Arenas in Latin American Policymaking, edited by Carlos Scartascini, Ernesto Stein and Mariano Tommasi, 119-45. Washington, D.C.: Inter-American Development Bank.119-45
Schleiter, Petra, and Edward Morgan-Jones.  2009.  "Party Control over European Cabinets?"  European Journal of Political Research  48: 665-93.

Tuesday, 3 July 2012

Development in Africa—finding an alternative to the ‘good governance’ paradigm?

By Richard Crook

A remarkable event in development policy research took place in Copenhagen on 30 March 2012. The Africa Power and Politics research consortium (APPP) which I have been working with for the past five years, joined with four other major research programmes, funded by a range of donors, to give a joint presentation to an audience of donors, practitioners and other researchers.

Rethinking ‘good governance’ development policies

The purpose of the event was to urge a fundamental rethink in the way development policy is conceived and aid disbursed by the main bilateral and multilateral donors.

The basic message was twofold:

  • Donors and development researchers should stop pretending that ‘good governance’, based on the kinds of states which emerged in rich countries after industrialisation, is a prerequisite for economic development.
  • Economic development in Africa requires economic transformation (fundamental changes in the productivity of agriculture and the emergence of modern industries), not just economic growth based on another commodities boom. Such transformation is unlikely to come from massive budget transfers for social provisioning and capacity support, based on good governance conditionalities including competitive electoral democracy. It is mainly the product of the particular configuration of incentives which drives political elites to use their economic ‘rents’ to support long term investment in nationally-based capital accumulation, agricultural transformation and productive industry (see the Elites Production and Poverty programme). 

Why a political economy of ‘best fit’ should guide development assistance 

The policy implications of the Copenhagen statement are difficult, at least for Western donors who have to convince a domestic public of the value of aid. The researchers argue that policy has to be realistic about the nature of politics in poor, developing countries; developmental successes in Africa and even more so in South East Asia have not been associated with regimes that are more ‘democratic’ or well-governed than the less successful. (See the comparative work done by APPP and the Tracking Development project at Leiden University). It’s simply that some patrimonial regimes are more effective than others, if the ruling elite are sufficiently united and the local conditions have incentivised them to develop and implement productive policies.

Policy, therefore, should focus on facilitating the resolution of collective action problems in the provision of infrastructure or investment in private industry, based on a careful analysis of the interests at stake. In other words, a political economy of ‘best fit’ should guide development assistance, based on an understanding of how things really work in a particular country. This may mean less money spent or even withdrawal of aid.

This does not mean that donors should ‘support dictatorships’ or ignore human rights abuses. But it does mean that where there is dysfunctional competitive clientelism, policy might focus on facilitating political settlement or consensual coalition politics around particular economic goals. Or it should focus on particular sectors and local systems which are developing effective forms of action.

The contribution of the Africa Power and Politics programme to this manifesto comes from its focus on how some institutions have overcome the chronic problems of collective action which exist throughout Africa (lack of authority and trust, incentives to free ride and choose individual or private solutions) to produce the ‘public goods’ which are needed for effective development.

‘Working with the grain’ – practical hybrids for local problem-solving instead of ‘good governance' orthodoxy 

We started with a hunch that the institutions which work in Africa are those rooted in local ways of doing things, using cultural repertoires or institutions which have the authority to sustain collective action, drawing on accepted forms of social obligation — 'working with the grain’ as we initially called it. This does not automatically imply a resort to what is misleadingly called ‘tradition’ in Africa; the values which we found in action were contemporary and varied, and established through empirical investigation.

The most important discovery, however, was that whilst ‘working with the grain’ was necessary, it was not sufficient to fully explain the cases we found of effective action.

  • For instance, maternal health services in Rwanda work because the state and ruling party provide a coherent policy framework and authoritative coordination, together with forms of legitimation using neo-traditional political practices.
  • In Ghana, accessible local justice is provided by state institutions which combine the provision of professionally committed personnel and authoritative enforcement with use of popular codes of fairness and morality.
  • In Senegal and the Democratic Republic of Congo, a massive increase in basic educational provision has resulted from the state working with the Islamic community to provide ‘Franco-Islamic’ schools which combine the religious standards demanded by parents with access to modern education regulated according to national standards.
  • Traders associations, transport unions, youth associations and local chiefs have all worked with the state to provide clean markets, effective bus stations, emergency maternity ambulances, security and burials in Sierra Leone, Niger and Malawi.
  • At the national level, workable reforms to the cotton marketing system in Mali which challenge the donor drive for liberalisation are the result of the political regime working with deeply entrenched cotton producer institutions- accepting the national ‘cotton cultural capital’.
  • In African states which have had, or currently enjoy, periods of developmental success (Cote d’Ivoire,  Banda’s Malawi, Kenya, Rwanda, Ethiopia, Botswana), presidential regimes use neo-patrimonial forms of authority to implement and sustain long-term investment in economically productive enterprises and capital accumulation—a kind of ‘developmental patrimonialism’ similar to that of South East Asia.
We term these examples of effective developmental institutions ‘practical hybrids’. None, it should be noted, resemble the kinds of institutions advocated in ‘good governance’ capacity-building reforms, or the formally participatory associations and elite-led advocacy NGOs popular with donors anxious to promote ‘social accountability’. They work because they are embedded in locally understood and constructed solutions to particular collective action problems.