Last week I blogged about research I am involved in that looks at whether governance reforms have led to better governance indicator scores (WGIs, QOG, etc) and more robust economic performance (growth in particular) in a sample of 40 countries. The work shows that countries undertaking governance reforms are as likely to see declining governance scores and slow growth records as they are likely to experience improvements in these indicators. Success is as reliable as the chance of getting heads when tossing a coin.
I had some responses online and off. Some people challenged me to go deeper, into factors that could make a difference between the two groups of countries. Great suggestions that I try to act on in forthcoming work. Here is a taste of the findings.
First I ask whether the countries with better scores/growth records simply had more successful records of reform. I find this is not the case. World Bank project assessments are as likely to be 'satisfactory' in countries with declining and improving indicators. While these ratings are inherently political and unreliable, they are all we have, and they are reinforced by the fact that countries with declining and improving scores continue to get loans for new governance reforms and other interventions. Usually, donors explain that the new loans are a result of improvements stemming from other projects--in all countries, even with worsening governance scores and low growth.
Second, I ask if the declining score countries did different things. The answer is no. Interestingly, I find it quite easy to see a common pattern of reform design across the 40highly variant countries. They typically all start with stabilization, privatization and liberalization interventions and public financial management and civil service reforms that formalize and rationalize the public administration. They then move into more 'modern' public management interventions like multi-year budgeting, meritocratic hiring, performance management and decentralization reforms, efforts to enhance transparency, promote participation and others. These interventions are focused around changes in laws in most countries, and the introduction of new systems and processes, as well as the strengthening of central agencies. Some countries that do these things see improvements in governance indicators and more robust growth, others do not.
Third, I ask if contextual factors at the country level matter. As with past research I find that they do. Extreme contextual stresses like instability certainly account for low governance scores and growth records in a number of countries. Past income levels also make a big difference, as do measures of democratic influence and a variety of others. What these variables tell us is that different countries have different challenges, endogeneity matters, and we face major limits to doing governance reform in many contexts. As one commentator noted last week, 'the coin toss may depend on context'. The coin toss does depend a lot on context. So, why do reforms look so similar in so many contextually different places? If we want to improve the odds of success, shouldn't we better fit reforms to context?
Fourth, I looked at whether time makes a difference: Did countries with longer reform histories produce better results, regardless of context? The argument is frequently made that governance reform takes time, and we should be patient. The assumption is that externally designed, defined and supported reform matters but only in places where there is long term commitment to its implementation. But this is not what I found. I analyzed the degree to which the number and cost of World Bank governance projects influenced WGI and QOG scores and growth records over time, with key dates every year from 1998. I controlled for contextual factors (briefly noted above) and identified World Bank projects in four year intervals preceding each date when the dependent variable was captured.
I found that projects had a positive impact on dependent variables (WGIs, QOG scores in particular) in the short run, but not in the long run. In fact, it seems to me that countries get a bump in governance scores by introducing new projects and passing the new laws associated with such, but then commonly see scores drop when they cannot follow through on the reforms--the laws are not acted upon, the new procurement offices do not work, the multi-year budget and fiscal rule fails to improve spending quality and discipline. They then look for new projects to take eyes of the poorly implemented old ones. Often the new projects lead to new laws replacing the ones introduced in past projects.
Examples are easy to find: Argentina, Afghanistan, Georgia, Niger, Rwanda...countries that get short-term rewards for agreeing to do reforms that ultimately prove difficult (or impossible) to implement, and add new reforms every four to six years regardless of problems implementing those that went before. Reforms are signals, not changes.
This work is part of a bigger project on the failure of governance reform in development. It seems to me that the observations I am making are not simply that WGIs are poorly measured because they are based on perception. It seems to me that there are deeper and more salient issues in development that we need to look into more deeply:
- Why do we have a view of governance--and indicators--that we cannot say is actually conducive to development?
- Why do we continue with reforms that don't seem to improve things in many places?
- Why, when we know context matters, do we continually ignore it?
- Why do reforms look the same everywhere?
- Why do we seem continually satisfied with interventions in form with limited function?
- Is it even possible--or desirable--for external agents to engage in the internal change process of developing country governments?
I have recently been calling this the problem of Hippos in the Sahara. The developing world is full of countries with contexts that are as problematic as the Sahara. And as peculiar. They need some functional solutions to real problems; think of camels to help provide transport.
Reforms that look like camels are difficult for the development community to deal with, however. These evolve particularly for the context in which they emerge and fit a lot less outside of such. They are not found as best practices in more developed contexts (where 'best practices' arguably always come from). Instead of helping developing countries find contextually frunctional camels, therefore, external agencies encourage these countries to adopt what they see as best practice in developed countries.
These are often the equivalent of hippos. They are impressive looking reforms, like the strong creatures themselves. When countries adopt them, they look fantastic--"How in the world did they manage to introduce a Hippo into the Sahara?" The problem, of course, is that the hippo takes over the scarce resources in the context (whatever the equivalent of water and shade is) and ultimately proves useless and impossible to keep going. It is a reform of form, with little functional promise.
I found this great picture of a Hippo in the Sahara by Leslie Sealey, a painter who has given me permission to show it here. (Her own blog is http://lesliesealey.blogspot.com/). I love the picture, especially with the bedouin sitting outside the tent--ousted by the large hippo. I have shared it with many officials in developing countries who initially chuckle and then quietly confide, "I am a hippo keeper, you know." I hope that their countries also have some good camel seekers.
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