Latest Findings on Development Effectiveness: Lessons Learned

1
Latest Findings on Development Effectiveness
Lessons Learned

• Presentation by Ajay Chhibber, Director and
• Patrick G. Grasso, Adviser, Independent
  Evaluation Group, World Bank
• DCF-Vienna High Level Symposium
• April 19-20, 2007
• Vienna, Austria

2
Three Core Questions on Development Effectiveness
and Poverty Reduction

• How effectively has economic growth translated
  into poverty reduction? What factors have
  affected these results?
• What factors have led to high-quality results in
  sectors that deliver services to the poor?
• What measures have helped raise the
  accountability of public institutions responsible
  for delivering and sustaining results?
• What is happening to Aid Flows and Aid
  Coordination?

3
Convergence Narrowing gap between OECD and
developing countries
Average annual per capita income growth
1960s
2001/6
1970s
1990s
1980s
OECD average 1980-2006
Source World Bank
4
But There Is Strong Cross-country Variability In
Growth Performance

• Growth has improved in most Bank borrowing
  countries over the past five years, but achieving
  sustained growth remains a challenge.

5
Growth is a Major Factor in Poverty Reduction
6
There Are Still Over 1 Billion People Living In
Extreme Poverty
7
Poverty Reduction Remains A Significant
Challenge Even In Countries With Positive Growth
Rates
Positive Per Capita Income Growth between the mid-1990s and early-2000s did not always lead to Poverty Reduction in 25 countries reviewed by IEG

Note High growthaverage annual per capita GDP growth rate of gt2.5, moderate growthaverage annual per capita GDP growth of 0-2.5, low growth average annual per capita GDP growth lt0 between household survey years in the mid-1990s and 2001-05. Country group includes all countries for which IEG carried out a CAE or CASCRR in FY03-06 and for which comparable poverty data is available in DECRGs Povcal database for mid-1990s and 2001-05 Source ARDE 2006
8
Income Distribution Has Affected Poverty
Reduction (1)

• Growth was an important driver of poverty
  reduction, but even small changes in income
  distribution either dampened or reinforced
  growths effects on poverty in 25 countries
  reviewed by IEG.

9
Income Distribution Has Affected Poverty
Reduction (2)

10
Poverty reduction requires attention to both
growth and opportunities for the poor

• Growth is necessary but not sufficient for
  poverty reduction. Extent to which the poor
  participate in growth depends upon

• literacy
• health

• infrastructure, environment
• initial income inequality

• job creation
• access to credit

• Burkina Faso Modest annual growth delivered
  impressive poverty reduction based
  mainly on increases in farm production
• Strategies need to take account of
• where the poor live and how they earn their
  income
• what constrains growth in those areas and sectors
  
• constraints to inter-sectoral mobility such as
  low skills or lack of access to capital,
  infrastructure or markets

11
Rural Poverty Reduction Requires More Attention

• Rural poverty remains more pervasive than
  urban poverty in many countries.

12
What factors have led to better service delivery
to the poor

1. Improve the policy environment
2. Integrate complementary actions from different
   sectors
3. Adapt to political and capacity realities
4. Combine short- and long-term objectives

13
Good policies and successful projects go together

• The 18 countries with the best overall policies
  had 82 of projects rated satisfactory
• Sector policies matter, as well as the overall
  policy framework. Individual projects have more
  impact if anchored in an appropriate and
  country-owned sector strategy.

14
2. Integrate complementary actions

• Achieving the MDGs requires multiple actions
  aimed at the targeted outcomes
• Improvements in one sector often require removing
  constraints in another sector
• Bangladesh girls secondary schooling and rural
  electrification contributed to reductions in
  child mortality
• Vietnam trade liberalization and infrastructure
  investments helped fuel agricultural growth that
  reduced rural poverty
• Poverty Reduction Strategies are designed to
  integrate actions for both physical and human
  capital. As implemented they need to put more
  emphasis on infrastructure and rural development.
  

15
3. Adapt to political and capacity realities

• Reforming public sector institutions requires
  broad political support.
• Bolivia and Yemen Technocratic civil service
  reforms couldnt overcome traditions of political
  patronage
• If broad support is lacking, an incremental
  approach can get results.
• Senegal Successful reforms in telecoms and
  water built on politically acceptable
  intermediate solutions. But planned reforms in
  power and urban transport were too
  all-encompassing, and failed
• Modernization and reform efforts must match
  implementation capacity.
• Malawi a health service pilot operation with
  modest objectives has achieved more than an
  ambitious public sector overhaul program
• Some countries health systems have been
  overstretched by the demands of global disease
  control programs.

16
Making global programs More Effective

• Most have been donor-driven the voice of
  developing countries in their establishment and
  governance has so far been limited
• Most are advocacy/technical assistance programs
  supporting national public goods although
  global public goods programs still command the
  major share of expenditures
• Global-country linkages have been weak
  incentives to foster such linkages are
  insufficient

17
Donors need to develop a stronger approach to
support of regional programs

• Regional programs are few in numberyet equally
  successful (above 80) in meeting their
  objectives as single-country programs
• A regional hydropower project in the Senegal
  River Basin has succeeded in providing
  efficiently produced electricity for Mali,
  Mauritania, and Senegal
• Donors and countries have overlooked
  opportunities for regional cooperation in country
  development strategies
• They need greater peripheral vision to address
  such issues as water management, power,
  transport, and disease control.
• Successful support of regional programs requires
  attention to three key issues
• The achievement of equitably apportioned costs
  and benefits among all countries
• Reliance for program coordination on broad
  regional institutions vs customized arrangements
  for specific topics
• Accommodation of the need for performance-based
  aid allocations and financial incentives for
  countries to participate

18
4. Combine short- and long-term objectives

• Need long term engagement to get results
• Cambodia IDA projects helped build the Health
  Ministry from weak bystander to effective
  implementer of AIDS control programs.
• Reform requires consensus-building. Combining
  short-term outputs with a long-term reform
  program helps deliver results
• Ghana IDA Support for education combined policy
  reforms with funding for school buildings and
  teaching materials over 15 years. Physical
  improvements helped build support for difficult
  systemic reforms.

19
III. Strengthening Public Sector Accountability

• Efforts to strengthen the accountability of
  public sector institutions have led to better
  government processes in some countries, but they
  have not yet resulted in improvements in the
  perceived quality of governance.
• 35 Countries with Bank Assistance for Public
  Sector Reform
• Government Process Quality Governance
  Perception
• Notes Quality of Government Process Indicators
  CPIA for budget and financial management, and for
  public administration 1999-2005.
• Governance Indicators are Kaufmann, Kraay,
  Mastruzzi Indicators for 1996-2004.
• Sample includes all countries for which IEG
  carried out a CAE or CASCRR in FY03-06, where the
  Bank provided support for public sector and
  governance reforms and for which CPIA and KKM
  indicators were available.
• Source ARDE 2006

20
Governance Reforms Need Political Backing To
Deliver Results

• Three factors attenuated the effectiveness of
  governance reforms through large-scale
  administrative reforms
• 1. Reform initiatives have not always been
  aligned with political realities
• Civil service reform in Bulgaria delivered
  results because it had strong political backing
  (prospects of EU accession), but civil service
  reforms in Yemen and Bolivia achieved limited
  results, because political support to end a
  system of patronage appointments was absent.

21
Three Factors Attenuated Effectiveness Of
Governance Reforms

• The focus has been on adoption of legislation and
  establishment of institutions, but enforcement
  capacity has received insufficient attention.
• Anticorruption agencies, for example, have only
  limited impact when they and their staff are not
  fully independent of those whose behavior they
  monitor.

22
Three Factors Attenuated Effectiveness Of
Governance Reforms

• 3. Governance reforms have tended to
  insufficiently address the intersection between
  the public sector and private sector, even though
  regulatory reforms have often been effective
  against corruption.
• Establishment of an independent regulator for
  electricity in Turkey enabled direct contracting
  between buyers and sellers of electricity and
  sharply limited opportunities for kick-backs to
  officials.

23
There Is Improvement In The Transparency Of
Government Processes

• Budget transparency
• Turkey brought extra-budgetary funds that
  undermined fiscal discipline into the budget,
  subjecting them to budget and parliamentary
  scrutiny.
• Public expenditure tracking surveys in Uganda
  drastically increased the share of spending that
  actually reaches schools.
• Public procurement
• Civil society representatives observe public
  tendering in the Philippines.
• Uganda posts results of procurement audits,
  contract awards etc. on the web.
• Customs administration
• The South East European Trade and Transport
  Facilitation Project introduced standard
  electronic forms showing duties due, thus helping
  to reduced room for corruption.

24
Implications Basing Governance Reforms On A
Realistic Assessment Of The Political Economy

• Reforms to improve the accountability of public
  sector institutions require broad-based political
  support.
• When such support is absent, an incremental
  approach that allows momentum for reforms to
  build can help achieve results.

25
Governance Reforms Need A Realistic Assessment Of
The Political Economy

• Thorough exploitation of sector-specific
  opportunities to improve governance brings
  results, even when anti-corruption is not the
  primary objective.
• Reforms can be enhanced with efforts to foster
  local demand for accountability through increased
  transparency of government processes and resource
  utilization.

26

1. Aid flows are not reaching scaling up commitments

Source OECD/DAC Database on Aid Activities
Note Regional breakdown not yet available for
2006.
27
Aid flows are not reaching scaling up commitments
Source OECD/DAC Database on Aid Activities
Source OECD/DAC Database on Aid Activities
28
Summing up

• Independent Evaluation finds that development
  effectiveness improves when it
• Focuses on the nature of growth
• Integrates activities across sectors and sustains
  them over time
• Supports and fosters a good policy framework in
  each country
• Recognizes each countrys political and capacity
  realities and builds on deep country knowledge
• Aid volumes and fragmentation source of concern

29
ARDE 2006 Website

• http//www.worldbank.org/ieg/arde2006