Measuring Progress with Governance Indicators: Wizards, Words, or Wisdom?

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Measuring Progress withGovernance Indicators
Wizards, Words, or Wisdom?

• Governance Flagship Course
• Poul Engberg-Pedersen
• PRMPS, April 23rd 2003

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Using Governance Indicators

• The politics and industry of governance
  indicators Different purposes and multiple
  actors The risk of capturing indicators for
  inappropriate purposes
• Public sector governance PEM PAR CAB but a
  moving target with both processes and outcomes
• Strategic choices on how to monitor progress
• Local / national / global level?
• Purpose-specific or general indicators?
• Linking reforms, aid and capacity in country
  monitoring?
• Methodology Assessments / Approximations /
  Perceptions?
• Ownership Client / Bank / Development community?
• Time perspective Basic governance change, or
  right direction?
• PSG monitoring in CAS results framework

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The Politics of Governance Indicators Different
Purposes

• Diagnostics without politics Identifying
  problems in public sector management
• Diagnostics with politics Identifying state
  capture political drivers of corruption
• Decisions on aid allocation and debt relief The
  need vs. performance paradox
• Designing PSG operations and reforms
• Accountability and results management Progress
  monitoring and lessons learned

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The Business of Governance Indicators Multiple
Actors

• MDGs UN and IFIs compete with governance as
  the unknown factor
• Aid, debt, global deals Bilaterals, IFIs, WTO
  with good governance as part of deal
• FDI, loans Private risk assessments, ICRG
• Politics TI, Freedom House, WBI
• Accountability IDA outcome monitoring and
  results management (HIPC tracking)
• Client countries Need for PSG diagnostics

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Governance A moving target
MDGs
National politics
Governance
Results
Governance
Implemen- tation
PRSP
Governance
Governance progress is about process and outcome
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Multiple success levels / types

• Outcomes, e.g. peoples good health and education
• Events, e.g. policies/legislation or
  establishment of institutions
• Processes standards, e.g. budgeting,
  accounting, hearing
• Impact, e.g. empowerment

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The Banks Country Policy and Institutional
Assessment, CPIA

• 20 indicators in four clusters (economic
  management structural policies social
  inclusion/equity public sector management and
  institutions).
• Scored 1-6 (low-gthigh) for each client country,
  annually by Bank staff. So far, not made public
  or shared with clients.
• 16 Property-rights and rule-based governance
• 17 Quality of budgetary and financial
  management
• 18 Efficiency of revenue mobilization
• 19 Quality of public administration
• 20 Transparency, accountability and corruption
  in the public sector

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Three fields of public sector governance

• Public financial management
• Aggregate fiscal discipline
• Allocative efficiency Strategic prioritization
• Operational / technical efficiency

• Public admin. reform
• External accountability to oversight bodies and
  partners
• Internal accountability within the Executive
• Human institutional capacity
• Structural coherence and alignment within
  Executive

• Institutional checks and balances
• Constitutional balance of power
• Oversight by legislature and supreme audit
  institutions
• Rule of law and legal / judicial reform
• Institutionalized stakeholder participation

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PUBLIC FINANCIAL MANAGEMENT
LEGISLATURE
JUDICIARY
DONORS AID
President / Cabinet
Supreme audit inst.
ALLOCATIVE EFFICIENCY PRIORITIZATION
Core ministries
AGGREGATE FISCAL DISCIPLINE
LINE MINISTRIES
SERVICES
Regional administrations
TECHNICAL / OPERATIONAL EFFICIENCY
LOCAL GOVERNMENTS
SOCIETY TAXES FEES
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PUBLIC ADMINISTRATION REFORM
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INSTITUTIONAL CHECKS AND BALANCES
LEGISLATURE OVERSIGHT
JUDICIARY RULE OF LAW
CONSTITUTIONAL BALANCE OF POWER
Supreme audit inst. Oversight
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Strategic questions on progress measuring

• Are universal benchmarks available? Do
  countries have to go through stages of PSG
  reform?
• Shall we look at the reforms or also at the
  reformers? How do we capture political reform
  processes?
• Is there a difference between PEM, PAR, and CAB
  with respect to benchmarks and indicators?
• Can survey- and perception-based indicators be
  used in progress measuring?
• If recurrent assessments are needed to capture
  governance outcome of Bank-supported operations,
  who can and should do them?

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Basic and advanced public administration reforms
PSG reform issues Basic Enhancing discipline Advanced reforms
Aggregate cost reductions Hardening budget constraints Block or frame budgeting
Efficiency improvements Line-item budgeting Inputs Plan-oriented budgets
Accounting reforms Cash accounting Double-entry book-keeping
Auditing reforms Compliance auditing Performance auditing
Career management Enhancing job security Decreasing tenure
Unity of the civil service Cadre with common terms Diversify pay arrangements
Individual incentives Standard promotion / reward Annual performance targets
Openness Closed career development Lateral entry in career system
Public agency size Simplify ministry structures Single-purpose agencies
Contractualization Few performance contracts Extensive use of contracts
Political decentralization Few changes in responsibility Reallocation to sub-national
Service shredding Minor reductions in services Shredding government tasks
Contracting out Easy support tasks only Strategic tasks, too
Is this possible? How does it relate to reform
processes / drivers of reform?
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Contents and drivers of PSG reforms

• CONTENTS OF PSG REFORMS
• Advanced Reforms
• Block / frame budgeting
• Diversify pay and tenure
• Performance targets
• Major decentralization
• Basic Reforms
• Discipline in budgets
• Enhanced job security
• Simplified gov. structure
• Security / Survival
• Effective service delivery

• DRIVERS OF PSG REFORMS
• National Organizations
• Central/local civil service
• Parliament
• Nation-wide political parties
• Interest organizations
• Champions of Reform
• Reform entrepreneurs
• Networks of reformers in and outside bureaucracy
• Doers
• All authorities / CS / private

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Linking PSG reforms, aid and capacity Need for
country-specific progress monitoring
Effective types of aid
Budget support to government
Basket funding, e.g. SWAPs
Programs for social services delivery
Zero-generation reforms
Support through civil society
Humanitarian assistance projects
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PSG monitoring in CAS results framework
                       
 
           
 
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Governance Operations Progress Indicators Three
options or a mixture?
More detailed CPIAs

• Extend PEM benchmarking to more countries
• Establish similar benchmarks for public admin.
  reform, checks balances
• Establish joint assessment system with clients
  Who?

• Regulation of entry
• Budget volatility
• Revenue source volatility
• Trade tax
• Telephone faults
• Telephone waiting
• Contract enforcement

• Add supplementary questions to each of CPIA
  16-20
• Apply 1-6 ratings for each of the more detailed
  questions
• Establish joint assessment with clients and/or
  publicize ratings?