MattAndrews

Good or Good-looking governance? That is the Question

I am in London and Manchester today, presenting on my new book. Tonight I'm at ODI in London and tomorrow I'm at the University of Manchester. Details here. (http://www.odi.org.uk/events/3162-matt-andrews-pfm-governance ; http://www.policy.manchester.ac.uk/events/2013/professor-matt-andrews-esid-seminar-and-book-launch.htm)

We all like to look good, especially in the eyes of others. This is why so much was made earlier this year when Afghanistan scored 59% on the Open Budget Index (OBI) measure of budget transparency. Its score made it look about as good as the more developed Italy, which registered 60%. This performance generated applause from a variety of observers, who reflected on the reforms that made such score possible. These included producing a new pre-budget report, including output information in budget documents, and creating a citizens budget that explains funding commitments in layman’s terms.  The Ministry of Finance, a variety of donors, and some contractors got major pats on the back for these endeavors.

And they are all good things, and constitute a good achievement.  And the OBI statistics are important for all of us thinking about transparency and accountability and governance. But when one looks at the OBI assessment in full (and not just the average score) there are some significant caveats to note (that are not picked up in reports of the average scores). In particular, while Afghanistan was transparent in telling citizens what it intended to do with money, it did really poorly when asked about transparency in its budget execution process. It did not do well in bringing out mid-year reviews, or producing year-end reports or audits showing what money was actually spent on, when, how and with what effect. When I calculate the scores it received for transparency in this area of the budget process—where money is actually spent—Afghanistan only registers 39% compliance. This contrasts with 67% when looking at transparency in budget preparation.  The result is a gap of 28 points between transparency in budget formulation and execution.

This gap is evident in the OBI data and discussion documents. It means that while Afghanistan produces great looking budgets, we have very little idea about what it actually does with its money after these budgets are published. Incidentally, the gap is only 1.8 for Italy according to the OBI data. While Italy may not look as good as one might expect for an OECD country, it is just about as good as it looks. Afghanistan, on the other hand looks as good as Italy but what you see is not what you get (wysinwyg).   It has good looking governance but I’m not sure if you can say that this kind of governance is also ‘good’. And this is after a decade of concentrated and expensive reform.

 

The above table shows the OBI data and the calculation of gaps between transparency in formulation and execution for Afghanistan, Italy and a few other countries.  All of the countries have similar OBI scores but very different gaps, such that Italy, Bulgaria and Chile look about as good as they are but Uganda and Afghanistan look much better than they are.

When looking at various governance indicators I find that a large proportion of developing countries seem to be producing ‘good looking governance’ like this. I see this with Global Integrity’s measures of processes and systems to combat corruption, for instance. Uganda surprises everyone on this index to yield a 72% score, similar to that of Italy, Chile and Bulgaria—and higher than neighboring Kenya. However, Global Integrity also publishes an ‘implementation gap’ (which is the difference between the quality of a government’s laws and the implementation of the laws) and Uganda scores more than 45 on this measure. Italy scores 12, Chile scores 20, Bulgaria 23, and Kenya 33 (as shown below). Again, we see developing country governments getting strong average scores that suggest all is good and well but actually only reflect ‘good looking governance’.

 

One could look at this kind of evidence and respond in a number of ways. One could say that the gaps I observe are probably only apparent in some countries, so it isn’t a real problem. One might also argue that you could expect gaps when reforms are new and that these close over time, so it isn’t a real problem. My recent research suggests both of these responses are not valid. By my estimates the vast majority of developing countries have gaps and ‘good looking’ governance problems and the gaps are growing in many countries after reforms—not closing.

I argue in my recent book that this is because many reforms are adopted as signals—to garner better governance scores and ensured continued support from outsiders—and not real efforts to improve governance. This approach to reform results in new laws, systems and processes being introduced that do not fit the local context, demand more capacity, political will and other content than is available, and are led by groups far too narrow to ensure diffusion and deepening of change. The result is a reform limited to changes in form, but without functionality. Good looking governance rather than good governance.

I believe that there are ways we in the development industry could do reform differently and better. The approach I suggest is (i) driven by real problems in the contexts undergoing reform, (ii) involves multiple agents in iterative processes of experimentation, learning and adjustment, and (iii) ultimately results in the production of hybrid structures that may or may not yield better scores on indicators but provide a more functional set of rules for governing. The process is called PDIA (problem driven iterative adaptation) and is something I and colleagues Lant Pritchett and Michael Woolcock have identified by looking at principles of successful change in developing and developed countries. It offers an approach to fostering development that could be the future.

If, of course, we value governments that actually perform; where transparency matters and laws are implemented and budgets are executed. Right now, I think we care about looks a lot more than this kind of real, performance. And this is why we continue getting good looking governance more often than anything we could honestly call good (or good enough) governance.

What is Governance?

There is a really interesting discussion going on in response to Frank Fukuyama's article, 'What is Governance?' Governance discussionA number of commentators including Paolo de Renzio, Bo Rothstein and Chris Pollitt have responded to Frank's ideas and the discussion and debate is really interesting. My comment is below but be sure to check the link to read the others.

Andrews on “What is governance?”

Matt Andrews of Harvard Kennedy School responds to Francis Fukuyama’s “What is governance?”:

Frank Fukuyama’s article reminds us that we have a long way to go before we fully understand what governance is, let alone how it should be measured. The comments that other scholars have made in response to Fukuyama’s piece reinforce this message and reveal many strong and varied opinions and perspectives on this topic.  This rich discussion stands in contrast to the routine and overly-confident manner in which development organizations and many academics have used governance indicators and treated the concept of governance in recent years. I hope this confidence is tempered in future and that Fukuyama’s central question — What is Governance? — gets the attention it demands.I also like the way Fukuyama attempts to sidestep the normative dimension of the governance discussion and focuses on the way governments function. I know some disagree with this approach but I feel that it is the best way of thinking about the concept in a highly varied world.

I do take issue with the way this article presents critical concepts like capacity and autonomy, however. In my reading the approach here suggests a Weberian state in which the separation of politics and bureaucracy is both possible and positive. It seems to me that governments across the world are simply more complex than this and exist in collaborative relationships where capacity is at least partly a function of the interdependent relationships agencies and organizations foster with other governmental entities, civil society and the local and global private sectors. Politics is central to many of these relationships, which makes autonomy a complex concept and one that is not necessarily positive nor possible for modern governments.

I would love to see continued research into the fundamental questions about governance that Fukuyama is raising; using his basic approach, but taking the complexities of modern government-collaborative and interdependent as such is-into account.

Matt Andrews is an associate professor at the Kennedy School of Government, Harvard University.  His book The Limits of Institutional Reform was published in 2012.

"Getting Stuff Done" Sina Odugbemi from the World Bank on the new book

The Limits of Institutional Reform in Development - Changing Rules for Realistic Solutions: Getting Stuff Done

Submitted by Sina Odugbemi on Thu, 02/21/2013 - 15:30

 

There is a silent struggle going regarding how you do governance reforms in development. It is between the prevailing tendency and a small but growing band of practitioners saying things need to be done differently. The prevailing tendency is the packaging of experts-devised best practice packages that we take from country to country…model anti-corruption laws, model designs for the civil service, procurement systems, and financial management systems and so on. Our highly trained experts are invested in their solutions, and the modern global system has a growing array of policy networks on every issue under the sun, and they amass and disseminate norms of ideal practice. So, donors and their experts move from one country to another, offering money, loans, and these packages.  So, how are things working out? Not very well is the answer. To use an Americanism; we are not getting stuff done that much when it comes to governance reforms, whatever the sector. Isn’t it high time we changed our ways?

If you are in any doubt about any of this and if you want to learn about how we might get more stuff done, you need to read as carefully and as avidly as you can an important new book on the subject: The Limits of Institutional Reform in Development – Changing Rules for Realistic Solutions. The author is Matt Andrews. He is an Associate Professor at the Harvard Kennedy School of Government. This is the kind of book that might turn out to be seminal if enough practitioners pay attention to it. For what he does is to review evidence from interventions from around the world in order to show beyond reasonable doubt that reforms exhibiting best practice bias have a dismal record, and many developing country governments have figured out how to manipulate international aid agencies. There are some truly hilarious stories about how they do this in the book. And donors keep falling for the tricks because of the nature of their own incentive structures. The book is filled with case studies from around the world. When you read the book please look for my favorite story: the two budgets trick (p. 119).

Andrews’ thesis, in my opinion, is summed up in the title of Chapter 4 of the book: Reforms are overspecified, solutions are oversimplified. That says it all. Reforms are overspecified because for every area of reform we have our prepackaged solutions…in detail. Solutions are oversimplified because donor agencies are not really keen on taking on the complexities of the specific context: the rules of the game, the disposition of interest groups, the state of local politics and so on. Too difficult; takes too long. We look for a local ‘champion’, launch the reform and hope for the best. When the desired change is not achieved or sustained we blame the natives, blame the realities on the ground in our evaluation reports, shrug our shoulders and move on. What Andrews does is analyze these widespread failures frankly and elegantly. I say elegantly because the diagrams in this book are brilliant; you will find your own favorites when you read the book.

But The Limits of Institutional Reform in Development does not encourage despair; rather the opposite. Andrews discusses in detail the minority of cases where reforms happened on the ground and were sustained; in other words, cases in which stuff got done. But before we sum up what unites these instances,  let’s discuss three aspects of the book that I like the most.

The first is the astute deployment of insights from the new institutionalists of political science and related social sciences. The book contains a rich discussion of complex institutional structures in different societies and how they shape the behavior of actors/agents. It also shows – not through mere theory but field research – how institutions change and under what conditions new ones take root. Andrews demonstrates that many of the reforms we seek in developing countries can only succeed when the rules of the game change but we are often too impatient or indifferent to really focus on this vital process.

The second aspect of the book that I really like is the push for a problem-driven rather than a solution-driven approach to reforms.  This is something communication specialists know and have been saying. You go to a country as a donor and you say there is a problem to be fixed. Well, as I like to ask, who says there is a problem? If those whose country it is do not see a problem, or they do not define the problem the way you do, well, we have a problem, don’t we? For, problem recognition and problem definition form the basis of mobilizing action and building support for a shared solution. These are crucial communicative processes.

Which brings me to the third aspect of the book that I really appreciate: Andrews’ insistence, backed by his case studies, that what fosters change is multi-agent or broad leadership…not the lone champion. As the reform process unfolds, these multiple agents provide multiple functions: there are conveners, there are connectors, and there are motivators and so on. There are elegant charts in Chapter 9 breaking all this down from real cases.  There is a lot of trade craft to be gleaned from these pages.

To sum up, what do successful reforms have in common as Andrews tells it? They have the following in common:

1. They  respond to context, especially the underlying rules of the game;
2. They focus on the problem be solved, a sense of which those whose country it is share;
3. They have multiagent leadership, not merely lone champions; and
4. They experiment and adapt, and are often incremental in their approach.

Andrews is a scholar-technocrat, so he has his own jargon for all this: problem-driven iterative adaption (PDIA). Professors seem to need these things.

Great book and a massive contribution. I urge you to get to know it and its riches.

Picture Credit: Cambridge University Press

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Cookie Cutters and Context: Alan Hudson from ONE on the new book

This is a blog posting by Alan Hudson, rom ONE, on my nw book.

Cookie cutters and context: The limits of institutional reform in development

Billions of dollars have been invested to improve the quality of government in developing countries. The evidence shows that the chances of those investments being effective are about the same as that of calling heads or tails correctly. While the quality of government matters, the development community is still somewhat confused about what “good governance” is and struggles to identify ways in which outsiders can help to make governance more effective. Afghanistan is perhaps the most striking demonstration of this: hundreds of billions of dollars and thousands of lives have been spent on rebuilding state capability, yet the likely outcome is a state less capable than it was in the 1970s.

In his new book – “The Limits of Institutional Reform in Development” – Matt Andrews examines the effectiveness of efforts to promote institutional reform (a.k.a. the “good governance” agenda) and sets out an alternative approach. His argument begins with the observation that development organizations such as the World Bank, USAID and the UK’s Department for International Development have tended to promote a standard set of reforms that might look good on paper but which rarely work in practice. According to Andrews, and to other commentators who have made similar points over the last 5 to 10 years, these reforms fail because they pay insufficient attention to the context in which they are applied.

For example, many countries have implemented reforms in their Public Financial Management systems that introduce new accounting practices or procurement mechanisms. In practice, these reforms might help a country receive a higher score on a World Bank rating, but do little to change the underlying processes and power dynamics that determine how resources are actually allocated. Furthermore, such reforms can close off space for the emergence of locally-appropriate ways forward.

After demonstrating the limits to the standard approach to institutional reform – a “best practice” cookie-cutter approach – Andrews sets out a more promising approach which is about fostering the emergence of solutions that fit the local context. In this way, he moves beyond the standard critique of one-size-fits-all development blueprints, offering a way out of the “good governance” impasse and outlining a path for avoiding what Dani Rodrik refers to as “the tyranny of political economy”. The way forward is – wait for it – the Problem-Driven Iterative Adaptation. Not the snappiest of titles, but an extremely promising and practical approach.

Problem-Driven Iterative Adaptation is about “purposive muddling” – local people and organisations focused on specific challenges and working, innovating, experimenting and learning together to come up with solutions that are viable and relevant, and therefore have a chance of working, in the local context. This approach is consistent with the idea – popularised by Owen Barder, amongst others – that development is, and always has been, about adaptation, context and complexity.

One example of this approach is seen in Burundi’s HIV/AIDS Control and Orphans Project. In that project there was a clear focus on the problem, but also flexibility about how best to address it. For instance, anti-retroviral treatment had not been part of the initial project plan, but when such treatment became affordable the plan was revised to take account of this change of context. Not rocket science, but the sort of flexibility that has often been lacking. Another example, on a different scale, comes from Rwanda’s Decentralization Reforms. This initiative was successful, Andrews argues, because it embraced flexibility and incorporated existing practices and norms – around voluntary work, collective action for community development and prioritizing support for the needy – rather than seeking to follow a standard recipe for reform.

Matt Andrews is now hard at work, applying this approach – focus, flexibility and learning – to specific problems, in specific contexts, working with others to craft solutions that work. At ONE, we’re keen to learn more and to think through how ONE’s agenda on transparency and accountability can empower people with the information that they need to craft locally-appropriate solutions to the specific challenges they face.

For more information about Problem Driven Iterative Adaptation see this paper – co-authored by Matt Andrews, Lant Pritchett and Michael Woolcock, from the Center for Global Development.

Photo credit: larsenamanda.wordpress.com

Governance Looks Different in Different Countries: A Chinese Translation

I'm really happy that my 2010 Governance article looking comparatively at governance regimes is now available in Chinese, at Chinese Translation .

I'm taking this from the Governance Blog, April 2012 (see below).

The GOVERNANCE blog

Governance: An international journal of policy, administration and institutions

Download translation of Andrews article on good governance

哈佛大学Matt Andrews教授所著《"因国制宜"话善治（Good Government Means Different Things in Different Countries）》的中译版现在可以免费下载，其英文原文发表在2010年第1期《治理（Governance）》，该翻译由北京大学政府管理学院博 士生臧雷振完成。下载译文.

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April 30, 2012 at 12:46 pm

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Context and Institutional Reform in Development: A Perspective from Chris Pollitt

One of the more interesting papers I have read so far this year was written a while ago by Chris Pollit. He asks if 'Time and Place' are endangered species in public administration. The article is available from page 33 in the following link and I would recommend it as a great read. Chris Pollitt: Time and Place in Public Administration. The basic argument is that context matters when thinking about public administrative structures and reforms and that this was well recognized before the more recent decades where reforms look the same everywhere and the assumption seems to be that all places are the same. As you will see in my book, I argue that this assumption of sameness undermines many reforms and leads to limits.

Consider the following from Pollit's piece:

The subtitle of the chapter signals that time and place were once important parts of the study of public administration, but that concern with them has dwindled. Prior to, say, 1975, place and time were fairly central to public administration discourse. Thus it was widely assumed that French public administration was, well, French, and necessarily different from public administration in, say, the UK for the USA. The institutions, procedures, culture and legal framework of an administration would vary from jurisdiction to jurisdiction. It was also commonly assumed that changes to the basic institutions and processes of government would be rare events, and would need a good deal of time to evolve and subsequently bed-down. Tradition, in other words, was important, and traditions differed from one country/jurisdiction to another…

…

More recently, much of that sense of specificity has been lost.

Elitism, Meritocracy, and Governance in South African Companies

I want to get back to the messiness of governance.

The issue of meritocracy and elitism in good governance

'Meritocracy' is a key element of most 'good governance' models. The idea behind this is that governments, companies and the like should hire those who are most competent to do the job, not those who are most connected. The assumption is that we can measure—objectively—what it means to be 'most competent'. We say these are the ones who have the 'merit' for the job. Hence meritocracy.

Elitism is often presented as the opposite of meritocracy and is something that many 'good governance' advocates reject. These good governance advocates don't like the idea that some people get key jobs because they are elites—connected, wealthy, enjoying power.

Good governance, as many suggest, requires having principles of meritocracy that replace practices of elitism in key appointments, contracts etc. in governments and the private sector. The idea is to have authority in the hands of those who have the merit, which means that authority is not concentrated in the hands of the elite and is in fact located in a distributed group of agents who enjoy the skills and 'merit' to get the job done.

Meritocracy and elitism in South Africa's listed firms

A few years ago (in 2008) I did some research into the background of directors of South Africa's listed firms. These are people who have the kind of positions many would say matter in society (they have power over how resources are allocated, for instance, and authority). You would want to make sure these folks were appointed on merit, so that they did what was required to keep their companies growing and being successful. South Africa scores pretty well on most good governance indicators (given its income levels) and so one would expect that directors would be appointed based on merit.

Some might expect that this means they have qualifications like advanced degrees, in accounting, engineering and management perhaps. And this is what one finds. As the table below shows, 772 of the 873 directors (89 percent) I looked at in a random sample of 97 listed firms had advanced degrees from universities. 562 of these (64% of the sample) had what I would call targeted advanced degrees (in accounting, law, business, and engineering) that one would expect of directors with 'merit'. There is an issue with gender and racial composition in South African boards, so I broke the data down to show how 'meritocratic' directors in different groups were. One can see that more than half of the directors in all 4 sub-groups I looked at (white women through to non-white men) had these targeted degrees. Over 85 percent of the directors in all sub-groups had tertiary education. The lowest percentage was 86 percent (for white men).

	Tertiary qualification	Chartered Accountant	Law	MBA	Engineer	Targeted degrees (CA, Law, MBA, Engineer, Medicine)
Number	774	285	98	121	78	562
Percent of total	89	33	11	14	9	64
White women (ex 31)	27	6	2	4	1	14
White men (ex 560)	484	219	66	66	58	409
Non-white women (ex 80)	77	16	7	16	4	44
Non-white men (ex 212)	188	44	23	35	15	119

So far, so good. Directors of South African firms seem to reflect the kind of 'meritocratic' profile good governance advocates would support. But this is not the full story.

Directors are not just hired because of their qualifications. Other factors matter, which companies communicate in annual reports to shareholders (which boast about the backgrounds of directors). When one looks at these other factors things get messy and one starts to see the social and political complexities of South African society come out. One also starts to see variables that speak to the presence of 'elites'.

• The primary historic South Africa 'elite' variable must relate to race; one sees this squarely in that 68% of directors were white (592 in total)…14 years after apartheid ended.

• Gender variables also reflect 'elitist' tendencies; 87% of directors were men (762 in total).
  • Interestingly, white men had enjoyed more and more appointment over time. 26 % of the directors in 2008 were white men appointed after 2003. (This is greater than the share of non-white male directors appointed in all periods (23%)). 41 % of directors in 2008 were white men appointed after 1998. (This was greater than the share of non-white directors appointed in all periods (32%)).
• Another 'elitist' variable could relate to age; over 90% of directors were over the age of 40.
  • Interestingly, the average appointment age of a director increased from 41 and 46 between 1994 and 2008. Also, the appointment age of white male directors is significantly higher (statistically) than the age at appointment of other groups in most recent periods (post 2003).
• Another 'elitist' variable could relate to access to capital and ownership of the firm. 36% (317) directors came to their positions in this way.
  • Interestingly, 69% of all non-white directors (183) were members of a Black Economic Consortium that held partial ownership in the firm.

There are some variables I captured to reflect on the many times an annual report would speak of a director's past experience when introducing their profile. I was not sure if many years of experience is a mark of merit or of elitism, but the influence of this variable on director selection mattered a great deal.

• 560 of the 873 directors (64%) had big business background (ten years or more working in a listed company, most often the company in which they became a director or a similar company in a similar industry).
• 167 (19%) had experience in the public sector, which involved a mix of political office and public office (being part of the public administration) (100 had direct, publicly advertised political affiliations). Most of these were non-white directors, over 55% of whom had a past public sector career.

So much data. I know. I'm sorry. Sort of. But let me get to the point.

When one looks at directors of firms in South Africa, one sees a group of people who have both the attributes of meritocracy and elitism. And both sets of attributes seem to matter in getting them where they get to. There are very few white male directors who got to be a director without being able to say that they had merit (lots of experience and advanced degrees). Non-white directors may have found an entry way through the capital of an elite-owned Black Economic Empowerment Company, but most of these directors also had tertiary education and advanced degrees and high level experience working in government.

In short, elites are often also the ones who claim points on meritocracy scales. They go to the best schools, get the most targeted degrees, enjoy opportunities to get lots of work experience, etc. And they often define what it means to have merit as well…. Elitism and meritocracy are thus not mutually exclusive but actually form two sides of the same coin.

Pushing meritocracy as part of a good governance agenda is thus not a simple antidote to concentrated power in societies.

I'd love thoughts on this….

Post 2015 MDGs should be shaped around country-specific problems, not global agendas

Yesterday I wrote a short post on the post-2015 MDG goal setting exercise. I got loads of responses online and offline. Just to be clear, I think the exercise of setting global goals raises many questions: about the role of  governments versus international organizations, the idea of 'eminent persons' making high level policy decisions versus normal people doing the implementation, and the gap between high level planning and actual implementation.

One of the reasons I focused on governments identifying their problems (note problems, not goals) and then beginning a process of finding solutions is because this is the best way to mobilize the kind of energy required for implementation. And no matter how much people want to spin the story, the MDGs lacked implementation power in many places (local money, energy, political authority etc. were not provided to push the global goals forward). In my other blog (that supports my book) I argue that problems are the entry point to real change, which also requires experimentation and broad-based ownership (see a link to the blog here http://matthewandrews.typepad.com/the_limits_of_institution/2013/01/looking-like-a-state-the-result-of-limited-institutional-reforms-in-development.html).

One of the responses to my blog yesterday reflected on this issue really well. It is from Natalia Adler at UNICEF and I include the full comment below (emphasis is mine).  Her references to Mozambique reflect our common experience there, and are relevant in many other countries. Thanks, Natalia:

"These types of global goal-setting initiatives   [post 2015 MDG type initiatives] are rarely able to inspire or mobilize concerted action for change, particularly in everyday actions in public management at the country level (never heard government officials saying they have to change course because of the MDGs...).

But the problem is not necessarily related to whether these indicators are globally or nationally agreed upon. I think the same logic applies to national goals as well... The problem is that it's just difficult to translate these outcome-level indicators into a series of operational interventions that will eventually contribute to their achievement. 

As you know, Mozambique is/was developing a national planning system aimed at bringing synergies among all these plans/goals in hopes of making them more strategic, coherent and linked to the budgeting process. But making even well-designed plans and their goals operational is hard work. Plus, politics and power relations influence the extent to which these plans yield concrete results. In addition, the goal-setting agenda carries the assumption of a ‘clean slate’ often neglecting existing arrangements and commitments (to other goals), which cannot be easily brushed aside to give place to new plans/goals, whether they are agreed nationally or globally.  

I personally don't have a problem with the post-2015 discussion identifying a set of 'global' indicators (e.g. child mortality being one of them). What should change are the targets, which, I agree, should be country specific/defined and focused on existing implementation issues and a realist understanding of the pace of development efforts.  I agree with you. The focus on solving problems can trigger change better than goal-setting exercises..

A Post 2015 Menu of Development Indicators, With Fitted Goals?

I'm going to veer off the topic of governance for a short post this morning.

Last week saw a high level meeting in Monrovia to discuss the post 2015 Millennium Development Goals (if that is what they are called). Yesterday the ever-sharp Charles Kenny and some others were active on twitter discussing some of the ideas emerging from the meeting (and in other spaces where post 2015 indicators are being discussed). Charles was questioning the number of proposed goals that not only identify the specific indicator that will hold for all countries but will also note a wildly perfect set of goals--infant mortality to be reduce to zero, for instance.

My immediate response to this is to scratch my head and wonder what all the discussion of country ownership in development really means. Surely countries should be choosing the specific goals they care about themselves. This meas choosing the area and field they want to see particular impact in and choosing the goal in that field.

I understand the international community wants to have international and global goals, but the goals will be met by actions in individual countries and it is vital that these countries are the ones:

• identifying the problems
• accepting baseline measures of the problems
• defining goals
• counting the cost (direct and opportunity) of setting these goals
• looking for solutions
• owning the process of change
• ensuring feedback and learning throughout the process of change

I would propose that the high level meetings focused on post 2015 indicators develop menus of potential goals, with baseline data for as many countries as possible in all of these menu areas. Then let countries choose the areas they want to focus on and what they see as do-able targets, and let the countries drive the discussion about how they will get there.

If ownership matters in development and change, let's allow for ownership through choice.

Economic Governance: Using unemployment rates as an indicator

This morning I suggested that we could use comparative GDP growth stats to shed light on economic governance (how governments are exercising the authority citizens give them to support the goal of economic growth). I noted that GDP growth should be one of a number of indicators of economic governance as citizens are not only concerned about growth.

Unemployment is another potential indicator of economic governance. It reflects on whether government is using its authority to ensure jobs are provided for those needing them. Note I am not suggesting how government uses its authority to do this, just that it has authority and unemployment rates show if this is being used (could be in providing jobs through fiscal expansion or changing regulations to promote small business, etc. etc.).

I used a similar method as the one discussed in the last post to compare unemployment rates in countries. First, I looked at whether unemployment rates were higher between 09 and 11 than they had been in the prior decade (as a measure of whether unemployment had crept above levels considered acceptable). My own country South Africa shows lower unemployment rates (23%) in the 09 to 11 period than the higher rate (27%) between 00 and 09. Second, I looked at whether the unemployment rate was higher or lower than that in comparable income countries. When compared with forty countries around South Africa's income level, the nation turns out to have higher than average rates (about 11% higher).

As with the analysis this morning, one end up with four categories:

• Countries in green (with scores of 3) have unemployment rates in the 2009-2011 period that were below the ten year average before. They also have unemployment rates lower than those in comparable income countries. The analysis does not suggest that this is because of 'good' governance but governments in these countries are bound to face less pressure than others. A critical outcome citizens often look for (jobs) is in good shape, compared with the past and with other countries, indicating that government is using its authority appropriately. Denmark and Norway are here right now.
• Countries in orange (with scores of 2) have unemployment rates that are lower than they were in the prior decade but higher than they are in comparable countries. Governments in these countries face the challenge of exercising authority in a way that enhances the country's economic competitiveness. They probably have the political room to do this given that unemployment rates are down from the past--more people are in jobs than before in relative terms.
• Countries in yellow (with scores of 1) have unemployment rates that are higher than they were in the prior decade but lower than they are in comparable countries. Governments in these countries have the challenge of dealing with a higher percentage of people out of work who will likely perceive that government is not using its authority to create jobs.
• Countries in red (with scores of 0) have higher unemployment rates than they had in the past and that comparable countries are experiencing. Governments in these countries are likely under a great deal of pressure to show that they can use the authority citizens have given them to deal with this problem. It does not suggest 'bad' governance as the causes of unemployment are not always directly attributed to the actions of government. This situation does create a severe economic governance challenge, however, that is common in many countries right now. The USA, Portugal, Ireland and Georgia are in this territory right now.

We should always question unemployment data like this, and there are some countries I am unsure of when I look at the data, but this kind of comparative analysis is useful--I think--in revealing what kind of governance challenges different countries are likely facing. The differences in colors should show how much variation there is in challenges. These varied challenges should be the basis of varied reforms.

 

Economic Governance: Using GDP growth as a governance indicator

I am moving away from debt now, but still on the subject of governance and the question: What would good governance indicators look like?

As readers will know, I take the basic definition of governance as 'the exercise of authority by government on behalf of citizens.'

Digging into the definition, I ask why citizens give governments authority. My answer is: To produce outputs and outcomes that require some kind of collective engagement.

I think these outputs and outcomes are the things we should be looking at as governance indicators. They are not measures of governance, but they are indicators (something observed or calculated that is used to show the presence or state of a condition or trend). The outputs or outcomes tell us if governance arrangements seem on track or off track, and can be used to guide discussions of needed reforms, etc. I resist saying that weak outputs or outcomes tell us that governance is good or bad. These are value-laden words that I find misplaced in any discussion of governance.

I think we need to look at outputs and outcomes in different fields of governmental engagement, and stop pretending we can create single measures across whole-of-government structures. Governance indicators developed at the country level assume that governance challenges are the same in different domains where governments operate. This is an amazingly simplified assumption. Governments operate in the health, education, road safety, economic management, sanitation, energy, and national defense fields to name just a few. In all of these fields the outputs and outcomes governments are authorized to help produce are different, conditions affecting production are different, traditions and rules of the game are different, and indicators should be different too.

In my own thinking, there are five major 'fields' where I think governance indicators should be developed for all countries—assuming that governments have some role to play in producing outputs and outcomes in these fields, in all countries and at all times. These are broad fields (that break into sub-fields) and are focused on (i) Economic management; (ii) Safety and security, (iii) Infrastructure provision; (iv) Social service provision;(v) Societal participation and engagement.

I think economic management is one of the crucial fields where governments engage, with other agents in the international, private, nonprofit etc. sectors to produce key outputs and outcomes citizens care about. These include stable financial sectors, controlled inflation, jobs, etc. GDP growth is one key indicator of whether government is using its authority effectively in this area.

This is a simple indicator that measures growth in economic activity in a country from year-to-year and indicates (shows the state of) governance (the exercise of authority by government on behalf of citizens). Where GDP growth is low it suggests that governments face a challenge in the way they exercise their authority: they need to do something different if they are to exercise it effectively and contribute to producing the outputs or outcomes citizens care about (jobs, etc.).

It is a measure that needs to be contextualized, however, as the authority governments are given is linked to expectations and to contextual opportunities and constraints. I'm playing with two approaches to contextualize these indicators. First, I measure how much a country's GDP growth over the most recent three year period (09-11) differs from the average growth rate evidenced in the previous ten years (which shows what was possible in the context and sets some idea about the expectations citizens might have…what they authorize government to do). Brazil scores about a quarter of a point higher in recent growth stats than the prior decade avrage, for instance. Second, I measure how much a country's GDP growth over the most recent three year period (09-11) differs from the average growth rate in countries with similar per capita GDP levels in the same period (09-11). This shows something about what is possible in the global economy, which could also influence citizens' expectations and gives a comparative benchmark. Brazil scores about three quarters of a point higher in recent growth stats than other comparable countries, for instance.

The map below shows GDP growth data in this manner (taken from the World Bank), and there are three kinds of economic governance situations that emerge:

• The countries in green and scoring 3 are those where recent GDP growth is above both the country's own ten year average and the recent average in comparable income countries. Countries in this category include most of Latin America, Turkey, Mongolia, and India. The data tells me that these governments are probably not facing huge pressure in respect of the way they 'exercise their authority in economic management'—at least in respect of general GDP growth. Governance in these countries is not necessarily 'good' but it is—in the short period under consideration—producing the goods. It has been given authority to play a role in the economic management arena of the country and short term results of the 'exercise of authority' are quite convincing (at least measured in terms of GDP growth).
• Governments in the orange countries ad scoring 2 (like Nepal, Kenya and the Central African Republic) face a bit more of an economic governance challenge. They have higher GDP growth rates now than they recorded on average in the past ten years but they still lag average growth rates in countries with comparable income levels. Citizens are likely feeling that the economy is better managed in these countries (most of which are emerging from some kind of fragility) but they are still relatively low growth contexts compared with others.
• Governments in the yellow countries and scoring 1 (like Australia, Sweden, Mauritius, China, and Mozambique) face a different economic governance challenge. They have GDP growth rates that are higher than other comparative countries but lower than the averages in the prior ten years. Many of these countries are the ones that have been able to withstand the world's post 2008 economic slowdown and this may be the message their governments use to explain the slowdown.
• Governments in the red countries and scoring 0 (a large group including the USA, Canada, South Africa, Angola, Pakistan, and Mali) are facing serious economic governance challenges. Their GDP growth rates are lower than the average of the prior decade and the average in comparable countries. Many of these governments will also argue that the slowdown is a result of the 2008 crisis but they may face some tough questions about why other countries slowed down by less after 2008. Governance in these countries is not necessarily 'bad' but is not—in the short period under consideration—producing the goods. It has been given authority to play a role in the economic management arena of the country and short-term results of the 'exercise of authority' are not convincing (at least measured in terms of GDP growth).

 

I am going to propose that this is one way of looking at governance in the economic management domain. Other variables need to be considered when putting this entire picture together, however, showing if growth is translating into jobs for instance, if prices are under control, and if economic participation is improving. Would love any thoughts you have on this as it is my 'thought exercise'.