What Next Ruminations of an aid grunt

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What Next? Ruminations of an aid grunt

• Lant Pritchett
• July 16, 2009

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Overview

• Development as accelerated four-fold
  modernization
• The primacy of implementation (policy as a
  mapping) administrative modernization
• What is organizational capability?
• How to build it?
• How to destroy it?
• Link with policy reform
• Innovation versus isomorphic mimicry Agents,
  organizations, and systems
• Can external assistance be part of solutions?

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Evolution in administration in various sectors
(USA)
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Characteristic evolution of administrative
structures
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Four-fold transformation Theories of
development are about components and their
inter-relationships (e.g. one waywhat causes
what--or two way causationvirtuous/vicious
circles)

• Developed
• Prosperous (and
• High Human Capital)
• State responsive to citizens
• State high capability
• Fair and Tolerant Society

Better
Or Governed justly and democratically Economic
Growth Investing in People
Bad Old Days
Time
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Divergence, Big Time in current levels of output,
mapped into history China is in the 19th
century, India pre-USA Civil War, and Ethiopia in
the middle ages.
Current Cross Section
Economic Trajectory of Leading Country
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Getting to Denmark What do governance
trajectories look like?
When was Denmark at Pakistans current
level? 1900? 1800? 1700?
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Governance trajectories When Can Afghanistan be
Egypt? India? (the median failed state country)
Denmark?
What is a maximal feasible improvement in
governance?
?
?
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The primacy of policy implementation

• Public policies are mappings from factual
  conditions about the world to actions by agents
  of the state (e.g. economic, taxation, education,
  policing)
• De jure or notional policies can be chosen
• Realized policy is the endogenous result of the
  choices by agents of the state

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Notional Policy is Designed, Realized Policy is
an outcome
Notional policy (de jure)
Realized States of the World
Actions by agents of the state
Direct organizations of implementation (e.g.
agencies, Ministries)
Front-line Providers (e.g. policemen, Teachers)
Realized policy (de facto)
Background institutions (e.g. judiciary,
legislative oversight, professional
associations, civil society
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Study of Drivers Licenses in Delhi

• Notional Policy Mapping from Relevant States of
  the World (Is the person of age? Proof of
  residence? Capable of Driving?) to Actions by
  agent of the state (Issue individual a drivers
  license).
• Recent study (published Nov 2007) of the
  question Does implemented policy resemble
  notional policy, in particular how does
  corruption affect an apparently simple and
  routine process of policy implementation?
• Randomized experiment with control group, bonus
  group (paid money by experiment if they got a
  license within 32 days), and learning group
  (given driving lessons) in Delhi.

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Key Finding Notional (de jure) Policy and
Implemented Policy had almost no relationship to
each other

• In the control group (to which the study did
  nothing) of those who hired an agent only 12
  percent took the driving exam that was an
  essential element of the notional policy to
  assess the relevant state of the worldcan the
  person operate a motor vehicle? relevant to
  taking the notional policy action issuing a
  legally valid drivers license
• Of those that did not hire an agent, that is,
  attempted to follow the de jure policy, 94
  percent did take the drivers license exam.
• Does it matter? The study undertook an
  independent evaluation of the driving competence
  of the people who acquired license by a driving
  schoolin Delhi.
• 69 percent of those in comparison group who hired
  an agent were automatic failures in the
  independent test (meaning the driving school in
  Delhi would not get in the car with them as they
  could not demonstrate sufficient knowledge for
  them to believe it was safe).

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Additional elements of the study

• One treatment group was given a bonus if they
  acquired their license faster. This group
• more likely to hire an agent,
• Were 18 percentage points more likely to both
  obtain a license and fail an independent driving
  test
• Another treatment group was given free drivers
  training to increase their chances of passing the
  driving examno effect at all.

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Difference between notional policy (de jure
specification) and implemented policy (reality)
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A perfect storm
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Primacy of Policy Implementation Water in the
Regulations
A 45 degree line in this Graphperfect and
uniform compliance
The worst reported actual delays are ¼ the
official reported minimum
Realized policy as told by firms
De jure policy from official regulations
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What is organizational capability?

• Policies are mappings from factual conditions of
  the world to actions by agents of the state
• Organizational capability is the extent to which
  realized policyactions actually taken by the
  agents--achieves the organizations goals
• Individual capacitythe ability to recognize
  the state of the world and the optimal action
  w.r.t. to that state is just one element of
  organizational capability

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The effort deficit of doctors in Delhi
Doctors in public facilities (PHC) do not do what
they know to do
Effort deficit, poor neighborhood PHCs
What doctors in public sector knowindividual
capacity
What they do In practice
Source Das and Hammer, Strained Mercy
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What does training as the augmentation of
individual capacities do to realized policy
when organizational capability is weak?
The private sector outperforms in red triangles
with much lower blue dots already
Training can (possibly) Slide the blue dots,
when.
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But remember the old development adage

• If you give a man to fish you feed him for one
  day
• If you teach a man to fish, you can give your
  friend the contract for training.

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How do you destroy organizational capability?
Ability to inflict damage on the enemy
Sharply non-linear dynamic of army capability
under engagement stress
Army
Disorganized Mob
Battlefield stress (e.g. fog of war, casualties)
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How do you destroy organizational capability?
Compliance with tax collectors (lack of bribery)
Build organizational Capability
Current tax code
Build organizational Capability
Build organizational Capability
Incentives for agents from tax (rate, complexity)
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Various types of reform

• Getting rid of regulations that both destroyed
  organizational capability and were
  counter-productive if implemented (e.g. foreign
  exchange rationingcorrupting and economically
  damaging)
• first generation versus second generation
  reforms
• Getting the government to do well what only the
  government can do

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The Overall Accountability Triangle Four
Relationships of Accountability
The state
Politicians
Policymakers
Compact
Politics
Long route of accountability
Flow of Services (in transaction intensive
service provision)
Short route
Providers
Citizens/Clients
Client Power
Frontline
organizations
Non poor
Poor
Management
Coalition/Inclusion
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What is Accountability? Demystifying the
Elements of the Accountability Relations
There are Five Features to Any Accountability
Relationship
Feature
What
Example 1 Buying a Sandwich
Example 2 Going to a Doctor
Delegation
You give a task to the accountable agent

• You ask for a sandwich

• You go to the doctor to be treated

Financing
You give the agent the money to do the task

• You pay for the sandwich

• You pay the doctor for the treatment

Performing
The agent does the assigned task

• The sandwich is made for you

• The doctor treats you to try cure your ailment

Informing
You find out how well the agent has done the
work

• You eat the sandwich which informs you of its
  quality

• You see if you are feeling better you assess
  the performance of the doctor

Enforcing
You reward good performance and punish bad
performance

• You choose whether to buy a sandwich from the
  seller the next time, affecting his profits

• You go to him next time (if he was good) or
  choose to go somewhere else if not

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Three useful aphorisms
It aint what you dont know that gets you, its
what you do know that just aint so
The state
Crazy is doing the same thing and expecting
different results
Politicians
Policymakers
Compact
Politics
Long route of accountability
Flow of Services (in transaction intensive
service provision)
Short route
Providers
Citizens/Clients
Client Power
Frontline
organizations
Non poor
Poor
Management
Coalition/Inclusion
Just because the tire is flat doesnt mean the
hole is on the bottom
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What is the response to demonstrable weak policy
implementation (e.g. poor services, corruption)

• More of the same (more funding into existing
  organizations)
• Capacity building (training, more technical
  assistance)
• Organizational Reform (org chart changes,
  process re-engineering)
• Cocooning (channeling aid efforts through
  project specific parallel mechanisms (e.g.
  community driven development))

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How sure are we that democracy and functioning
civil services arethe right path to
development? Is India a (billon person)
counter-example
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When is Isomorphic mimicry as optimal
organizational strategy?
Closed
Space for novelty
Open
System Characteristics
(E)Valuation of novelty
Functionality
Agenda promotion
Demonstrated Success
Organizations (firms, ministries, NGOs)
Legitimation
Isomorphic mimicry
Leadership
Rent Seeking/ Distribution
Wealth Creation
Agents (leaders, managers, Front-line workers
Concerned Flexibility
Compliance
Front-line worker use of capacity
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Danger of BAU External Assistance

• Evaluation of project impact requires an
  articulated theory of development as fundamental
  transformation
• Short-circuiting that with specific output
  targets confuses means and endsthe MDGs will be
  met when development happens, not vice versa
• The political need for demonstrated success can
  reduce the likelihood of providing a sufficiently
  open environment for generation and evaluation of
  innovation
• Fiduciary accountability
• Immediate outcome targets
• Safest thing to do is fund isomorphic mimicry and
  pretend that modern (external assistance
  agency) is engaging with modern (governmental
  counter-part) (or cocoon through projectized/NGO
  contracted provision) and ignore the
  fundamentally diverging political,
  administrative, and social realities

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Where are governance reforms (e.g. civil
service reform, procurement)?
Closed
Space for novelty
Open
System Characteristics
(E)Valuation of novelty
Functionality
Agenda promotion
Replicating existing forms and processes or
actual Functionality?
Demonstrated Success
Organizations (firms, ministries, NGOs)
Legitimation
Isomorphic mimicry
Leadership
Rent Seeking/ Budget maximizing
Wealth Creation
Agents (leaders, managers, Front-line workers
Concerned Flexibility
Compliance
Front-line worker use of capacity
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For instance, Afghanistan

• What part of governed justly is and
  democratically?
• How is investing in people going to be
  implemented?
• Are the efforts at civil service and public
  financial management and governance capable to
  truly home-grown innovations or is the vision of
  development isomorphic mimicry?
• Can the social transformation be de-linked from
  the political and administrative?

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Readings

• Pritchett and Woolcock (2004), Solutions when the
  solution is the problem
• World Development Report 2004, Chapter 3
• Is India A Flailing State? Detours on the Four
  Lane Highway to Modernization
• Deals versus Rules