Innovations in Bureaucracy

Last week I was at the “World Innovation Summit for Education” (WISE) in Doha, and I don’t think I heard the word “bureaucrat” once. Clearly the organisers don’t read Blattman or they would know that Bureaucracy is so hot right now.

The World Bank might be a bit more ahead of the curve here, and held a workshop earlier this month on “Innovating Bureaucracy.” I wasn’t able to attend (ahem, wasn’t invited), and so as the king of conference write-upsdoesn’t seem to have gotten around to it yet, I’ve written up my notes from skimming through the slides (you can read the full presentations here).

Tim Besley — state effectiveness now lies at the heart of the study of development. Incentives, selection, and culture are key, and it is essential to study the 3 together not in isolation.

Michael Best — looks at efficiency of procurement across 100,000 government agencies (each with decentralised hiring) in Russia. Wide variation in prices paid by different individuals/agencies, with big potential for improvement.

Zahid Hasnain — presents Worldwide Bureaucracy Indicators (WWBI) for 79 countries. Public sector employment is 60% of formal employment in Africa & South Asia, and is usually better paid than private employment.

Richard Disney — provides a critique of simple public-private pay gap comparisons — need to consider conditions, pensions, and vocation. Lack of well-identified causal studies.

James L. Perry — 5 key lessons on motivating bureaucrats in developing countries.

(1) select for ‘vocation’

(2) work on prosocial culture

(3) leverage employee-service beneficiary ties

(4) teacher newcomers public service values

(5) develop leaders who model public service values. (full paper here)

Erika Deserranno: Summary of experimental lit on financial & non-financial incentives for workers. Both can work when well designed, or backfire when not. 3 conditions for effective performance-based incentives;

(1) Simple to understand

(2) Linked to measurable targets

(3) Workers can realistically affect targets 

Yuen Yuen Ang — How has China done so well in last 40 years without democratic reform? Through bureaucratic reform which has provided accountability, competition, limits on power. 50 million bureaucrats: 20% managers & 80% frontline workers. Managers have performance contracts focused on outcomes, with published league tables. Frontline workers have large performance-based informal compensation. (bonus podcast edition with Alice Evans here)

Stuti Khemani — research & policy rightly moving from short-route accountability to long-route. Need much more evidence on how public sector workers are selected. One example suggests elected Chairpersons have higher cognitive ability, higher risk aversion, lower integrity.

Jane Fountain — government IT projects fail in part because they’re too large — should move to agile development (build small and quick, get feedback, revise)

Arianna Legovini — improved inspections of health facilities in Kenya seem to be improving patient safety.

Daniel Rogger — new empirics of bureaucracy — World Bank bureaucracy lab investing in substantial new descriptive work on bureaucracy and bureaucrats using both surveys & administrative data, as well as RCTs on reforms

Jim Brumby, Raymond Muhula, Gael Rabelland — two helpful 2x2s — need to understand both capacity & incentive for reform, and then match data architecture to difficulty of measuring performance.

South Sudan: Failed or fragile?

This is a guest post by Aggrey Tisa Sabuni, Economic Advisor to the President, Republic of South Sudan. 

Foreign Policy magazine recently ranked South Sudan the fourth most "failed state" in the world in its 2012 Failed States Index, which ranks countries according to a list of 12 "state vulnerability" indicators. There are numerous concerns with this index; however, I would like focus my attention on the term "failed state". To fail implies you cannot learn, improve and eventually succeed. Although I do not dispute that South Sudan is fragile, I take issue with the idea that we will never prosper as a nation. Instead of labelling South Sudan as a lost cause, we should be working to identify the roots of our fragility so that we are able to turn around our fortunes. In this regard, I wonder if the readers of this post and the public at large truly understand what "fragility" actually means?

The term "fragile state" conjures up a number of different images, but ultimately it means a country is susceptible to a crisis, whether it is a natural disaster, an economic catastrophe or a security threat that cannot be easily dealt with. Fragility tends to be caused by the absence of a strong and effective government apparatus capable of dealing with crises as they develop, exacerbated by a lack of relative social harmony across different societal groups. Symptoms of fragility include regular outbreaks of internal insecurity, a weak justice system that fails to resolve disputes as they arise, a shortage of qualified and skilled personnel to staff key government institutions, and a lack of basic services to meet needs of the population.

However, fragility is also an opportunity. It is a chance to start over, to build from the foundation up. What is required, however, is patience. When you are building a house the foundation is the first and most important step. It takes more time to complete than the rest of the house. In South Sudan we are building the foundation.

The year since our independence on the 9th July 2011 has been a turbulent one. The Government and our population have been operating under very challenging circumstances and we are learning how to address these challenges. On January 20th the Government made the decision to shutdown of oil production, in response to repeated provocation from the Government of Sudan and the theft of South Sudan’s oil. As a result, we are facing the prospect of losing 98 per cent of our revenue. We have also seen a resurgence of open hostilities in the border regions, rising domestic prices for basic commodities, insecurity from cattle raiding and limited provision of services.

We did not expect it to be an easy year.

Despite these challenges, we have begun to see the fruits of our labour in other important activities. National and State governments have adopted constitutions and are abiding by them. In Jonglei State, we have witnessed a peace accord that has stabilised relationships between the various groups in that State. These actions have undoubtedly helped improve the level of internal security and has promoted an increasingly strong sense of nationhood amongst the population.

In the area of economic policy, we have implemented significant public financial management reforms, which have led to an increase in non-oil revenue collections of over 250 per cent since July 2011. A new currency was successfully introduced under extremely challenging circumstances, but with minimal disruption to the South Sudanese. All of these successes have been achieved under the framework of the South Sudan Development Plan, our first ever national plan, which outlines how best to use Government and donor funds for the development of the country.

These are not insubstantial achievements. They are a direct reflection of a country determined to ensure that its people benefit from improved security and economic prospects.

Despite these successes, we have continued to receive a significant amount of negative press over our actions, particularly the decision to halt oil production. While there is no doubt that circumstances have slowed down our progress, the fact remains that the complex nature of our negotiations with the Government of Sudan disguises their unwillingness to negotiate and compromise a settlement. Until the political challenges with Sudan are resolved, we will continue to be hampered in our efforts to build a solid foundation for South Sudan. As such, this is the precise moment where we need our friends in the international community to stand up, to acknowledge our successes and failures, and to actively support the efforts of the government in dealing with its challenges.

South Sudan is not a failed state. We are a country rich in potential but hampered by short term fragility. Managing the challenges we face is not a simple task. I strongly believe that South Sudan can utilise its abundant resources for the benefit of the population and the region if an adequate foundation is built. However, this processes requires the patience and sustained support of the international community. We will undoubtedly make mistakes along the way, but with the support of our friends, we will be able build a strong and prosperous nation.

The Political Economy of Privatisation

Adam Smith or Machiavelli? Political incentives for contracting out local public services 

Why do some local governments deliver public services directly while others rely on providers from the private sector? Previous literature on local contracting out and on the privatization of state-owned enterprises have offered two competing interpretations on why center-right governments rely more on private providers. Some maintain that center-right politicians contract out more because, like Adam Smith, they believe in market competition. Others claim that center-right politicians use privatization in a Machiavellian fashion; it is used as a strategy to retain power, by ‘purchasing’ the electoral support of certain constituencies. Using a unique dataset, which includes the political attitudes of over 8,000 Swedish local politicians from 290 municipalities for a period of 10 years, this paper tests these ideological predictions together with additional political economy factors which have been overlooked in previous studies, such as the number of veto players. Results first indicate support for the Machiavellian interpretation, as contracting out increases with electoral competition. Second, irrespective of ideological concerns, municipalities with more veto players in the coalition government contract out fewer services. 

Yikes!

War! Huh (What is it good for) (Apparently PFM reform)

Or that was one of the more colourful* claims made by Stephen Peterson in a seminar a couple of weeks ago on his work over 12 years with the Ministry of Finance in Ethiopia. Apparently the war with Eritrea meant all the other international advisers left, leaving him alone to work with the government without the distraction of competing missions from different donors.** He was the only expat in the Ministry of Finance, compared to something like 282 at one point in Kenya.

Ethiopia now has the third best PFM system in Africa, after South Africa and Mauritius.

*Damn you America, for making me have to pause and think about the correct spelling of common words like this
**Just to be clear, I'm really not trying to imply that war is in any way a good thing. War is still bad yeah?

Election Day in Liberia

Wow, Rob Blair is even more cynical than me.

Seen in this light, the “massive turnout” that the newspapers are reporting this morning starts to seem disenchanting. To the extent that turnout is driven by campaign promises, more voters may mean more disillusionment and less communal collective action down the line.

Definitely worth reading the rest of his report from Election Day in Liberia on Chris Blattman's Blog. 

We need to talk about capacity-building

My new employers Oxford Policy Management have just published an interesting new opinion piece by Alex Matheson looking at the failure of capacity-building.

A 2006 Australian report ‘Capacity Building Evaluation’ states that the development community spends $15 billion annually on capacity development but is “unsure” of the return on its investment. In 2008, the World Bank concluded that no more than half of the $720m it spends on training each year actually resulted in enhanced capacity.

That bears repeating - less than half of World Bank spending on training actually does anything.

So why does this continue? Matheson explains how both donors and recipient governments have every incentive to carry on with the status quo and not rock the boat. For the recipients, well who doesn’t like an excuse to get out of the office for a few days of training? And for donors, it’s a nice clean easy way to spend some money, which may well have at least some short-term superficial outputs.

What is typically though needed in dysfunctional organizations is not more inputs into a bad organizational system, but the much more challenging job of managerial and organizational reform.

The first quick win is to be clear on terminology.

Training ≠ capacity development. 

The two are not synonymous (technical training for individuals can of course be very useful, we should just be clear that it is not going to create effective organizations, meaning the working relationships between individuals).

Finally Matheson offers up some more substantive solutions;

• Making a prior political economy assessment of the barriers to capacity development and the prospects for building conditions for successful partnership. 

• Not engaging unless the leadership group in the organisation is committed to the goals and is willing to allow space for change. 

• Designing interventions that take account of the political and economic environment. For instance, organisational change strategies in civil services in South Asia must take into account the power and influence of cross-departmental cadres, and the strong bonds between batch-mates. 

• Designing support programmes that allow enough time for new capacities to be institutionalised and are sufficiently flexible to survive political inattention, senior staff turnover, and periodic distractions. Important elements of this are establishing inclusive networks and engaging on a wide front to allow for changing partners and temporary reversals. 

• Promoting a process of change that allows time and opportunity for confidence building through small successes amongst the leadership team, before addressing major challenges. 

• Adopting a patient but persistent approach that keeps long-term behavioural goals in mind, exploits windows of opportunity, avoids unnecessary confrontations and focuses on results rather than publicising a badged reform.

Does it Matter if Budget Support Goes Extinct?

Simon Maxwell is worried about budget support going extinct.

Budget support should not be allowed to fall off the agenda. Developing country finance ministers would miss it ... So would development practitioners ... Budget support ... delivers at scale, empowers developing country Governments, reduces transactions costs, and increases accountability.

All of which is true. But also makes the most sense when you are comparing it with "old" aid. Aid projects designed to replace government functions. Budget support is an improvement on these parallel systems, and a better form of government-to-government aid, in large part because it is built on respect for the recipients.

But is the best possible form of aid? I think that two new forms of aid can do better.

Cash-on-delivery is a close relative of budget support, but it does even more for empowerment and respect, as it manages to do away with all the process conditionality required for budget support, by paying only for results. No need to worry about PFM systems. Either the government delivers for its people, or it doesn't, no need for us tell them how to do it.

Cash transfers to individuals goes one step further from respect and empowerment for developing country governments, to respect and empowerment for poor individuals. It seem so obvious, when our goal is to make poor people less poor, to just give them the cash, especially when it is feasible at low overheads (see GiveDirectly) and globally affordable (see Charles Kenny).

Kenny estimates that $100 billion a year in cash transfers to individuals could eradicate extreme poverty.

There are about 1 billion people living in the rich world. So for just one hundred dollars a year each we could eradicate extreme poverty.

Cash-on-delivery and cash transfers also counter the #1 complaint from taxpayers about aid - that it is wasted.

The only trouble with cash-on-delivery and cash transfers? They get rid of the need for development experts.....

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Update: Response from Ranil at Aidthoughts here

Ranil reflects on six years working in Africa

"it’s incredibly humbling when you’re still in the office at two am, trying to get a document printed before its deadline, and it suddenly strikes you that the person standing next to you is doing this for less than $150 a month." [AidThoughts]

How Sierra Leone provided Free Health Care

On April 27, 2010, Sierra Leone started free health care for pregnant women, new mothers, and young children. John Donnelly takes an in-depth look at how the war-torn nation managed it.

There is even a brief cameo by Juba's finest payroll consultants;

A consultant from Booz & Company did an extensive analysis of the ministry's payroll of more than 7000 workers, which included all employees, even those who worked in remote health posts throughout the country. The analysis found more than 850 phantom workers, who were mostly retirees still receiving their salaries, however paltry. Those people were removed from the payroll, allowing the ministry to add 1000 new workers.

Stirring stuff - well worth reading the rest in full at the Lancet (although that Booz consultant does describe this as the "Hollyoaks version" of the story).

Capacity Building and Soccer

via Alan Hudson - Matt Andrews has a new blog.

Matt is the author of my favorite capacity-building as soccer metaphor, which crudely paraphrased goes something like this:

Much development capacity-building is a bit like sending Arsene Wenger to work with Accrington Stanley. A bottom league team with part-time players needs help with the basics - like making sure the players get to the game on time and maintain a basic level of fitness and organization. Bringing in the nutritionist, sports psychologist, and sophisticated data analysis used by the likes of Arsenal is kind of not really always appropriate.

How to make a government planning process from scratch

The Southern Sudan experience provides useful insight into appropriate approaches to developing planning and budgeting systems in other post-con¬flict settings. Above all, it injects a note of realism about what can be achieved. The key policy lessons are as follows: 

1. A strong technical lead by an integrated Ministry of Finance is essential. Although international technical assistance can provide support to system design and management, it is not a replacement for the leadership role and decision-making capacity of Government. 

2. When designing post-conflict support programmes, efforts are needed to fully understand the levels of local capacity, and the systems used prior to and during the conflict, so that starting points are realistic. 

3. For system development to be fully grounded, it needs to be aligned with the rate of improvement of local capacity. This means accepting that process development can take years, and that best practice, however desirable, cannot always be achieved overnight. 

The Ministry of Finance received continuous technical assistance throughout the development process, including long-term TA based in the Ministry, short-term consultants for training and quality assurance, and logistical and financial support for workshops. Although this support played a key role in the design and development of the systems, decision-making and strategic direction always belonged to the Ministry of Finance. In addition, the gradual recruitment of technical staff meant that the Ministry was increasingly able to manage systems itself, although with back-up support. Key providers of support included the UNDP’s ‘Support to Economic Planning’ project, Overseas Development Institute (ODI) fellows, USAID and more recently the ODI’s Budget Strengthening Initiative.

From a new ODI briefing paper by Fiona Davies and Gregory Smith.

The Wrong Expert

A concerned friend just sent me the link to “An Ethnographic Study of the Use of Evidence in Policy-making in the UK”

Based on participant observation in a team of British policy-making civil servants carried out in 2009, this article examines the use that is made of evidence in making policy. It shows that these civil servants displayed a high level of commitment to the use of evidence. However, their use of evidence was hampered by the huge volume of various kinds of evidence and by the unsuitability of much academic research in answering policy questions. Faced with this deluge of inconclusive information, they used evidence to create persuasive policy stories. These stories were useful both in making acceptable policies and in advancing careers. They often involved the excision of methodological uncertainty and the use of ‘killer charts’ to boost the persuasiveness of the narrative. In telling these stories, social inequality was ‘silently silenced’ in favour of promoting policies which were ‘totemically’ tough. The article concludes that this selective, narrative use of evidence is ideological in that it supports systematically asymmetrical relations of power.

Well here’s another ethnographic study, from “The Thick of It” (a fantastic show, buy the DVD here) (NSFW).

"45 qualified civil servants due in South Sudan in June"

Only in Juba can this be a news headline.

The Role of Economists in Government

I don't recall who said it, but it has been said that the role of economists in government is to stop bad ideas, and then to stop them again when they come back again. Evidently some local authorities in Southern Sudan need an economist, or at least someone minimally literate in markets.

From the Tribune; 

Johnson Sebit Aki, a staff officer at the traffic police in Wau, said the illegal commuter transport business in the town is well known to the traffic police but the major obstacle has been lack of support from the members of public in curbing the menace. 

Aki cited an incident which recently occurred in Wau town, where traffic police were alerted the passenger of a commuter bus where passengers were charged twice the acceptable fare. However, on arrival the passengers insulted the police officer.

"They asked our officers to stay away as the payment was a consensus reached between them and the conductor. From such reactions we also lose appetite to continue dealing with them," he said.

 and Gurtong;

RUMBEK, 28th April, 2011 [Gurtong] - Butchers operating in Rumbek township have been apprehended by security officers following their decision to increase the price of meat without due consultation with relevant authorities in Lakes State.

Also to be filed under "Reasons to be doubtful of the effectiveness of decentralised systems of government." 

New Draft Constitution

The Republic of Southern Sudan has a new interim constitution for the period following independence.

John Ashworth compiles reactions here. The most worrying thing for me is the removal of Presidential term limits, which means that the current Vice-President Riek Machar has been completely ignored after publicly declaring a preference for term limits a few months ago. 

“Our Friends at the Bank”

A visit to a friend at the World Bank a couple of months ago reminded me of this fantastic film I saw as an undergraduate at SOAS.

Remember how evil World Bank conditionality used to force poor countries to cut their social spending on health and education? This documentary shows World Bank officials trying to convince Ugandan officials that they need to spend more on education instead of physical infrastructure.

I think my favourite part is Ugandan President Yoweri Museveni explaining the concept of prioritisation to World Bank President James Wolfensohn, and Wolfensohn eventually caving in with “My guess is you’ll get your way, which I think you are used to doing.”

You can buy the video here. (It’s a little pricey as I guess there was a limited market. It also comes with English commentary instead of the French version I managed to put up here).

The Revolution WILL be Televised

I was just thinking the last few days about how I should write something about Acemoglu & Robinson’s theory of revolution and how it applies to the Middle East.

Well Tim Harford got there first, and probably does a much better job than I would have:

What kind of concessions should protesters look for? According to the economists Daron Acemoglu and James A. Robinson, who have built a detailed series of game-theoretic models of political transition, the answer is: ones that cannot be easily undone. Tunisia’s Ben Ali will surely not return, but already activists are concerned that democratic reforms may not be entrenched, and have returned to the streets to protest. Mubarak may be Egypt’s past, but Egypt’s future is unclear.

A fresh constitution, civil rights, and credible elections are all ways of safeguarding the gains so far. The revolutionary protesters are right to insist on them; it would hardly be a surprise to see feet being dragged by those who profited from the status quo.

It is intriguing to view events in the Middle East through this game-theoretic lens. For example, Saudi Arabia’s “royal gift” of $35bn does not seem to have satisfied activists in the kingdom. That makes sense: gifts can be withdrawn. If a dictatorial government can vent the revolutionary head of steam for a while, then the momentum for reform may be dissipated for many years - especially if the ringleaders are rounded up while all is quiet.

The one thing he touches on but does not quite make explicit is the importance of television. The trouble with revolution is that you have to solve a massive coordination problem in order to get everyone out onto the streets at the same time. Nobody wants to be the first one to the party and have to make awkward small-talk with the hosts. Better to arrive when things are in full-swing.

Much has been hyped about the role of Twitter and Facebook, but it seems to me that the real driving force has been the ready news of martyrs, accompanied by moving images, live evidence of the mass crowds out there, and the proven impact shown by the departure of Ben Ali and Mobarak. It was television, not Facebook, that did this.

In the words of the rather prescient-looking Charles Kenny:

Forget Twitter and Facebook, Google and the Kindle. Forget the latest sleek iGadget. Television is still the most influential medium around…

TV is having a positive impact on the lives of billions worldwide, and as the spread of mobile TV, video cameras and YouTube democratize both access and content, it will become an even greater force for humbling tyrannical governments

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Addendum:

In the course of finding that Charles Kenny quote, I came across this marvellous paper on the economics of Baywatch.

"aid and Baywatch may have about same value [to people in dev countries]"

Revolution and the Resource Curse in the Middle East

Chris Blattman quotes Arvind Subramanian (writing in the FT)

Even if the people of Libya and Bahrain join those of Egypt and Tunisia in overcoming their cursed political systems, the economic manifestations of their rent curses will remain.

The case for the resource curse certainly sounds persuasive, but I just don’t think the evidence is really there any more, with more and more recent studies debunking it. As Charles Kenny writes in Foreign Policy,

The curse is the type of counterintuitive idea that makes for a great newspaper op-ed. Nonetheless, the curse is also the kind of counterintuitive idea where intuition may have been right to begin with.

To the extent that it does exist, the curse is not destiny, and movement towards more open societies is the best way of fighting it.

Hold tight Bahrain, hold tight Libya.

UPDATE: I found the link to some of the main research disputing the claims

One Rule to Rule Them All

Ranil makes the important point that whilst we may be good at describing good institutions ex post, we ain’t so good ex ante.

the reality of how rules emerge and are enforced is far more complex than Romer and many advocates of good governance and institutional approaches to economics recognise. I’ve seen a lot of people write some variation of ‘we know what good rules are’ or ‘we have a good understanding of what institutions stimulate development’. Despite this, I’ve never seen anyone actually set down on paper exactly what the correct legal framework and institutional makeup for development is. If we really did know what worked, surly someone would have written a fairly uncontroversial but best-selling book about this, right?

Here’s the thing - we don’t need to set out the exact legal framework because as Rodrik has said, we have the “meta-institution” of democracy. I’m going to go out on a wild limb and make a universal prescription: constraints on the executive, an electorally accountable legislative, and rights and protections for individuals and minorities are always and everywhere good things.
Trouble is, as the Egyptians are ably demonstrating, and in the words of Claude Ake (via Cblatts),
“Democracy is never given, it is always taken.”

Institutions and Development

Oh how I would love to sit in on this class.

Political Economy of Institutions and Development

Daron Acemoglu and Abhijit Banerjee