Ports, trade and governance: Another functional indicator

In the past few days I have blogged about a few potential indicators of governance: road deaths, peace/conflict, and hunger/food security. These are ideas for potential indicators if those pushing to include governance in the post 2015 exercise get their way. Some have asked why they are about improvements in services and if I don't care about issues like participation, transparency, etc. This is a reasonable question. In reflecting on it, let me acknowledge clearly that these are specific examples but are not comprehensive; there are many other potential indicators one could include here. I would also say:

1. The examples are not merely about service delivery (if service delivery is a 'mere' thing in countries with little to no services). Rather, they reflect how responsive governments are to things that citizens generally care about. In this way, they meet one of my concerns with other so-called governance metrics (that do not reflect a theoretical idea of 'governance'). In terms of theoretical validity, all of these are the kinds of things that citizens give governments authority to work on (where I define governance as the exercise of authority by governments on behalf of citizens).
2. The examples are as normative-neutral as I can get, which is important when we recognize that governance processes actually (empirically, in reality, and appropriately) look different in different countries. What I have tried to identify are the roles that governments are typically authorized to play in countries, and which have an important influence on development. These are roles that foster development positively when well played; when poorly played, these roles can hinder development. Governments can take many different routes to play these roles well (allowing for variation in approach) but these roles are pretty much common to all governments.
3. Finally, for those who think these are just indicators of service provision and not governance, I would like to suggest that governance should not be seen an end in itself (or at least not only as an end, which I will address in a couple of days). Governance is mostly a means to an end, reflecting "the exercise of authority by governments on behalf of citizens, to further the interests of citizens". If one thinks in this way the key indicators of governance are not how transparent or participatory government is, but how well governments are playing the roles citizens have authorized them to play (which we should assess by looking at the results of many different government interventions in metrics like road deaths, peace and conflict, and hunger and food security). This is not to say that normative 'good processes and characteristics' like transparency and participation don't matter. They may frequently be important factors in fostering performance on these other indicators (as means) and do have value as ends themselves (in fostering an accountable relationship, which I will discuss in a few days' time). But they are not the be-all and end-all of governance.

So, let me suggest a fourth indicator of governance that relates to the economic role of the state: trade competitiveness.

Governments across the globe are commonly entrusted with many roles when it comes to economic management. They are commonly authorized to manage many key aspects of a country's trade regime, for instance, and have the sole authority to set laws in this domain, tend to own the country's ports, regulate movement of persons and goods across borders, and more.

We know that trade matters a lot to developing and developed countries. And we know that governments that play this role well have a significant impact on their countries' trade performance and economic growth. Consider the figure alongside and how governments are given authority over many of the factors that a recent World Economic Forum publication found were key to facilitating cross-border engagements (http://reports.weforum.org/global-enabling-trade-2013/view/appendix/). These include laws and quotas, and import/export fees and phytosanitary requirements and procedures and customs procedures and import/export procedures and border administration and transport infrastructure (ports, roads and more), transport services (regulated, monitored, often run by the state), regulations and physical security. Whew. A long list. And a complex one, involving many government-government and government-private sector relationships. And requiring real governance solutions to work!

There are many potential indicators of the governance performance of states in this area. The World Economic Forum has many that deserve attention (especially a report co-authored by my colleague Robert Lawrence http://www3.weforum.org/docs/WEF_SCT_EnablingTrade_Report_2013.pdf).

Many of these indicators capture real performance in the system and show that developing countries have real problems that require serious governance interventions. The figure alongside shows the average turnaround time in ports across the globe, for instance, which is a function of many of the factors mentioned above and is more problematic in developing countries than developed countries (creating bottlenecks for trade and development, as discussed in a fascinating OECD report on trade and world cities, http://www.oecd.org/gov/regional-policy/Competitiveness-of-Global-Port-Cities-Synthesis-Report.pdf ).

Imagine a governance goal that focuses, among other things, on decreasing turnaround times in major ports? Could this mobilize governments to do the hard work of making ports work better?

This is not to say that we don't see reforms in many countries now, but many of the reforms we do see are not having as much of an impact on port performance as one would hope. I believe that this is because port and trade reforms suffer the same isomorphic tendencies as other reforms. Smart folks have identified a model for what reforms should look like and international organizations push countries to adopt these reforms. So you get countries' port reforms assessed against an international blueprint (that asks whether there is private sector involvement, specific kinds of policy oversight, and more). But many of the countries that do well in adopting these reforms see lower levels of functionality at their ports—and trade—than others. I write about this briefly in my book, reflecting on a World Bank study of trade reforms, but one can also see it when looking at a recent study on why cargo spends weeks in African ports (http://issuu.com/world.bank.publications/docs/9780821394991). One interesting finding in this study is that reforms that improve competitiveness of ports (as suggested by the blueprint) do not always improve functionality of the port because the context is not characterized by a competitive economy that fosters appropriate incentives. The result is what I would call a square peg in a round hole and an example of a country (or countries) where governance reforms should have focused on improving functionality GIVEN the context instead of reproducing best practice forms that don't fit.

The proposed indicator does not capture a form (like private engagement) but rather focuses on a key functional aspect of trade and port management, which always involves governance. These data could be used to indicate governance quality in a country or even in different parts of a country (as in the table below, showing Indian ports and variation in the average turn around times over three years). The table shows another potential measure to use in this respect—the average length of pre-berthing detention.

There are many other measures one could think about in this area—and other areas where governance matters for economic wellbeing. It will always be important to present these measures in a contextually sensitive way, to foster contextually relevant discussions of governance and governance reform. For instance, one would want to show data on capacity utilization and traffic for the ports shown in this chart (as below) to better understand why turn around rates might be high or low (Cochin's low utilization rate may explain its low turnaround times for instance). Putting data like this together can go a long way to inform governments about where they need governance reforms (the negative outliers or negative deviants) and even where they can learn about doing governance reform (from the positive outliers or positive deviants).

The goal is to adopt indicators that are real, relevant and that foster thinking about governance solutions that matter (improving the way governments exercise the authority citizens have given them to manage key national resources like ports).