A variety of readers have asked if I can explain why the form-function gap is in place. Beyond this, if I have any idea how to close the gap.
I think there are a number of ways to think about this. First, we could look for instances where the gap is smallest and try to explain why. Second, we could try and think theoretically about whether and why we should expect the gap. Third, we can put the two together and see if there is any mixture of theory and empirics that could help suggest different ways of doing reforms--that foster functionality over form, for example, as recommended by Lant Pritchett.
In thinking about the evidentiary basis, I can draw on PEFA data on public financial management and suggest the following as starting observations about the form-function gap.
First, when looking across over 100 developing countries, it is apparent that most have gaps between laws and implementation of the laws. So there are very few exceptions to a general rule of form-function gaps. We should thus expect the gaps in most circumstances (as evidenced by the figure below, which shows the size of this gap for each country...where 0.5 is the equivalent of half a symbol in a range from A to D).
Second, there are some countries that have no form-function gap. Interestingly, these are mostly small island states (including poor ones). Even more interestingly, the same small island states have better implementation than laws in Global Integrity data as well. Johnathan Eyler-Werve from Global Integrity suggests this may be because such countries have "more of less functional traditions of less formal governance; it's a small country and they just make things work."
I like the idea and wonder if we could check this out more concretely. Is this the full story? What does it mean to have less formal governance systems that 'just make things work'? Is it also that smaller Pacific Island states are left alone more by donors, so don't face some of the 'fashion show' pressures?
Third, there are some countries that have small form-function gaps (32% of the countries have a gap less than 0.3). I have tracked this in detail in past work on African PFM (where the focus was on 31 African countries, not the 100 countries shown above). Last week I showed that the form-function gap was smallest in a group of countries I called 'league 5' countries ('c5' in the figure below) and highest in the 'league 1 countries ('c1' below). I ask how the smaller form-function gap matters and what factors might be influencing it.
I find that countries in higher leagues don't only have smaller form-function gaps, but also have better process and outcome scores. The following figure shows both the quality of PFM processes and PFM outcomes--as measured by the donor-generated PEFA indicators--for five leagues (league 1 countries had weakest processes and poorer outcomes; league 5 countries had strongest processes and outcomes). (Readers should see that the process scores are broken down by different areas in the PFM process--from strategic budgeting through external audit).
What I take from this is that some countries are doing better in reforms in every sense. They have better laws, better implementation of laws, and better outcomes. Others are really weak in all of these dimensions--weak forms, weak functions and weak outcomes. This suggests some important contextual endogeneity. 'International good practice' takes root in some places where things generally go better... and does not in others.
I then asked what kinds of factors differentiated countries in the different leagues. I found a range of factors that have various levels of influence over the quality of PFM processes and outcomes and--it seems, at least--on the extent of form-function gaps: (i) a growing economy (ten years of robust growth); (ii) political stability (for over ten years); (iii) larger domestic, non-mineral income sources; (iv) longer periods of broad reform commitment, and (v) an Anglophone colonial heritage.
These factors are commonly shown as positive influences on reform and governance (although other research of mine casts doubt on factors like the length of reform commitment). I find here that league 1 countries are characterized by few of these factors and league 5 countries are characterized by most of these factors (as in the Figure below). (I show the 31 countries on the horizontal axes, as they fall into the five leagues, and the vertical bars show the number of 'positive factors' in evidence...the higher the bar the more positive factors are evident).
**Multivariate analysis shows that some of thes factors matter more than others... (forthcoming in International Public Management Journal).
So it appears that context really does matter when talking about reform progress--countries with positive contextual factors in abundance adopt more reform, implement more reform, and have better outcomes than others. Countries with weaker contexts are likely to do worse in reforms, will adopt only new laws (no implementation) and see very little improvement in outcomes.
As with any blog, let me stop now and ask some questions (hopefully getting some responses): Does this kind of work help to think through ways of doing reform better? What ideas emerge from this kind of work?
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