The Limits of Institutional Reform in Development

Problems as entry points to complex contexts: Class 12 of Getting Things Done

In class 11 we raised the importance of contextual realities in development. Contextual factors tend to influence what kind of change is possible and what is not. I suggested that the precise aspects of a context that matter differ across challenges and places, but 4 key focal questions are pretty important in all contexts: 1. How disrupted is the context? 2. How embedded are incumbent ways of doing things? 3. How legitimate are change alternatives? and 4. How is power and agency aligned (behind change or incumbents)?

I suggested that we need a way to assess these contextual realities. But often they are not open to the kind of analysis we do--writing papers, doing political economy analysis, and more. I argued that even the best political economy analysis seldom says anything about politics in a bureaucracy, or the precise limits of capacity in a key ministry, or the organizational struggles that lead to coordination failures. These kinds of realities often 'hide' and are only made visible when they are forced out.

I suggested that one can force these realities to make themselves known by identifying problems that local agents care about and then using these problems as entry points to change and as windows onto contextual realities. 

Here is the basic argument I made (blogged about it recently as well): 

I stress problems as the entry point for development initiatives. I do this because all development is about change, and theoretically I think change only happens if 4 things fall in line:

1. There is disruption in the context (something is recognized to be going wrong, because of a crisis or some disruption to the stats quo);

2. Those who need to change are willing to question the way they do things already (I say that the 'incumbents are weakened');

3. There is an active search for a real and legitimate 'new' alternative (something that can be done and will be fit to context); and

4. The power of agency is mobilized around the 'new' thing instead of the old ways.

I think that problems help to move one in the right direction on all four dimensions.

First, problems are the basis of disruption (if you can convince people in a context that they have real problems you are essentially revealing the basis of disruption).

Second, an awareness of problems allows discussion about the failures of status quo mechanisms (if you have a problem it means that the incumbents aren't working so well).

Third, a clear  problem becomes the basis for an honest and directed search for legitimate and contextually relevant solutions (the test of the solution is 'does it solve the problem?' rather than 'does it look good?').

Finally, problems are key mobilizers of groups and power (coalitions, in particular, are groups of agents mobilized to work together to solve common problems that they can't solve on their own).

I don't think opportunities are as effective in fostering change and hence development. I don't think opportunities disrupt contexts, or create the basis for questioning the status quo (unless you ask why the opportunity is not being taken, which sounds like a problem more than opportunity), or focus the search for contextually relevant solutions (opportunities often come with prepacked solutions that often have no relevance to the context), or mobilize power and agency (indeed, literature shows that powerful agents often tend to disperse around opportunities so that they can privatize potential gains).

Because of this, I strongly believe that local problems MUST be the entry point for development initiatives.

This is not to say that using problems in the development process is easy. You need to have mechanisms to identify problems, construct and deconstruct the problems, refine the problem based on emerging experience, and ensure the problem provides some aspirational goal for action and entry points to start executing change. This is like specifying the shape of a problem and ensuring the shape allows action towards finding and fitting a solution. 

How do you shape problems as entry points for change? I discuss two methods:

• You construct problems using data, stories and crisis events: to draw attention to the problem and to gain energy around solving the problem. This is really important because many problems have festered for long periods and have not received the attention one would hope. In the literature, people speak of these as 'conditions' that agents have become used to. These conditions are turned into problems when one actually shows that they need to be dealt with. This is done by constructing the problem. In doing construction, one needs to ensure that the case is made for 'why it matters' to a wide set of stakeholders needed to foster action.
• You deconstruct problems using problem trees, Ishikawa diagrams, and more: When problems have festered for long periods it is often because they are complex and scary--people would rather ignore them than try to address them--or the causes of the problems are disputed. I believe that one needs a strategy to get past this challenge and make the problem a useful entry point--not too large, not too disputed, with lots of entry points for action. I use problem trees to break the problems down and make them useful in this way. I use the '5 whys' to probe the real causes of the problem, and build problem trees with a variety of branches--allowing all the competing explanations space in the discussion. The problem tree deconstructs the problem into manageable sub-problems or causes...allowing structured engagement and a view onto the context.

When constructed and deconstructed in this way, problems allow one to introduce some change into the context--there is a sense of disruption, a critical questioning of incumbents, the start of a discussion about alternatives, and a mobilization of agents seeking change (or at least exploring whether change is needed to solve problems).

In the next couple of classes we explore actual experiences with problem driven change, and how problems have fostered views into complex contexts in places where I and others have worked. 

Here is the reading list for the class: Download Problems

And the powerpoint: Download Class12MLD1022014

Here is a video describing the way we work with problems at the Building State Capability program at Harvard:

 

 

Who is needed to make pdia work?

Last week we had a really interesting meeting at Harvard about doing development differently. In a number of presentations people spoke about 'we','us' and sometimes even 'them' when talking about development initiatives that proved successful. This raised a bunch of questions: 'who' are you talking about, and 'who' matters in stories of effective development?

Some commentators have suggested that the work we do on pdia does not address this question. Perhaps it does not address it enough, but I thought I'd gather some materials here that show how we at the Building State Capability program think about 'who' is needed to make development work.

First, we argue that you need to have multiagent leadership solutions, where multiple individuals engage in groups--playing a variety of roles, when needed...

 

I often use the example of Singapore to show that multiagent leadership solutions were often in place even when many people think it was about a key individual (note that there can be key individuals but they have impact when they have a broader group around them).

 

We also emphasize the importance of the authorizing environment when thinking about leadership and agency. 'Authorizers' are vital to effective development especially for outsiders to any given context (as I tend to be and as most of my students tend to be). 

 

Here are some readings for those with more time to engage:

Development as Leadership-Led Change ; Who Really Leads Development?; Going Beyond Heroic Leaders in Development;  Does Successful Governance Require Heroes (Download Wp2014-035_1-3)

Finally, an article in the Guardian on the topi might be interesting.

Hopefully it is apparent that the issue of agency is key to the work we are doing. It is a really difficult issue to research, however, and one where we have more questions than answers...

Dysfunctional reforms and icebergs that sink

I'm reading some work by Lewis B. Dzimbiri from the University of Malawi. His work examines the gap that exists between reforms on paper and reform results. Read the full article at http://www.ajol.info/index.php/aa/article/download/87546/77225

He argues that the blend of western systems and traditional systems will always create this kind of gap. I like the study a lot, although I think 'hybrids' need not be western formal systems plus local informal systems. What one wants is a system where the formal rules, norms and cultural cognitive structures align and allow functional behavior.

Multiple icebergs (rules of the game) are always present in any setting, and agents must navigate between these icebergs...

Dzimbiri's argument gels well with the idea I have of reforms as institutions as icebergs, however. First, there are many icebergs in any context and we need to recognize that agents are navigating between these icebergs...not having their behavior shaped by any one iceberg at any one time. So reforms should take the full iceberg landscape into consideration. Second, when trying to establish a new rule of the game, one needs to ensure that all components of the rule are provided: formal regulative mechanisms, normative devices, and cultural cognitive structures. If you only reproduce the parts you can see, and not the cultural cognitive and normative foundations, you get an iceberg without foundation: the kind that sinks.

Here is a section that captures his argument:

The current administrative system in Africa needs to be understood as amixture of the traditional indigenous and western structures and valueswhich continue to co-exist side by side. At independence, Africangovernments inherited administrative structures which were gearedtowards the requirements of the ex-colonial powers. For Balogun (1986),most African countries had experienced a dilemma in terms of whichadministrative culture to adopt. To go back to the good old days ofdespotism and kingdoms or to come to terms with the Westernadministrative system which co-existed with indigenous structures andvalues for close to a century?

Political and administrative reforms were undertaken in manyAfrican countries due to changes in political objectives and greater volumeof governmental role, especially in development (Hyden 1975). For Leys(1974), it was a move from law and order orientation of government toone of development. A hybrid administrative system is one in which thesuperstructure (institutional arrangement) mirrors the Western model while the value system remains unchanged. According to Khandwalla(1977), the wider culture influences the functioning of modernorganisations.

Thus, the wider culture has a significant impact on the extent to whichcitizens obey and follow national constitutions, laws, rules andprocedures created for the effective functioning of nations andinstitutions. For example, Dzimbiri (1996) noted that while organisationalstructures and process in Africa mirror exactly those in the West, andthat Western management theory and literature is used by trainers intraining experienced managers, the latter are too aware of the gapbetween what the theories propose and the actual practice inorganisations. For example, while the literature talks of merit, competence,official verifiable qualifications for deciding recruitment or promotion ofofficers in organisations or public service in general, managers as well astrainers are aware that such objectivity or meritocracy is overtaken byextended family considerations, nepotism, bribery and favouritismwhich are in line with some African cultures. The dilemma of the trainerat this point is whether he/she should be talking of nepotism andcorruption which are hard realities in the organisations where thesemanagers come from, or should continue to talk of merit or objectivity aspropounded by western literature when this is not what is happeningon the ground.

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From political economy analysis to political economy engagement

Building on the post I just drafted, I would summarize PDIA as a process of political economy engagement, where one is constantly pushing on, learning about, and responding to, political contexts. This is different to political economy analysis where one looks at an writes about political contexts, assuming what one sees is both accurate and real. I think we need to move beyond PEA to PEE.

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Arrested Development!

This came from Sophia Kagan and is available at whydev.org http://www.whydev.org/its-arrested-development-why-fixing-dysfunctional-states-is-a-bit-like-fixing-dysfunctional-families/#sthash.Jf3n5oeS.dpuf

It’s Arrested Development! Why ‘fixing’ dysfunctional states is a bit like fixing dysfunctional families

By Sophia Kagan | Posted in: Foreign Aid, Governance | June 26, 2013 | No comments yet.

The story of a ‘wealthy family who lost everything and the one son who had no choice but to keep them all together’ might not sound like a great allegory for why technical cooperation assistance to least developed countries has so often been unsuccessful, but look closer and important parallels emerge.

Anyone who’s laughed along with protagonist Michael Bluth’s futile attempts to get his family to be frugal, or to find employment to pay for their extravagant spending, will know that prolific spenders will always find creative ways around the limitations you place on them.

Cut personal credit cards and they will find a way to the company checkbook. Place them in jobs and they will shirk. Drive them to rehab clinics and they escape through the back door. Hilarity ensues.

But the joke might be lost on the citizens of countries run by kleptocratic dictators who, despite whatever institutional reform programs international financial institutions choose to throw at them, always seem to get away with lavish consumption.

Indeed, Bill Easterly’s The Elusive Quest for Growth: Misadventures in the Tropics reads pretty much like an episode involving the Bluth family… with some import licenses and domestic liability dollarization thrown in. According to Easterly, “a government irresponsible before an adjustment loan has unchanged incentives to continue being irresponsible” and will thus simply create the illusion of adjustment through creative fiscal accounting – freeing up funds for today by “borrowing from tomorrow” (eg. skipping infrastructure maintenance, robbing pension accounts, dodgy privatizations and the like).

Indeed, many would argue that it was not so much the policies of structural adjustment that led to disaster (though I would question the empirical evidence behind uninhibited liberalization!) but rather the fact that the prescription didn’t pay any attention to the wily nature of the patient. Thus, failing to get incentives right for elites meant that they gratefully helped themselves to donors’ money, introduced ostensible reform and surreptitiously sabotaged it.

A (developing) world of sponges?

So, can we equate Michael’s misguided but sincere attempts to change his financially irresponsible family with equally misguided donor intentions? And, have the disastrous consequences of ignoring political economy realities improved aid-giving?

Probably not, at least according to two recent books on development assistance – Development Aid Confronts Politics: The Almost Revolution by Thomas Carothers and Diane de Gramont, and The Limits of Institutional Reform by Harvard academic Matt Andrews.

Carothers and De Gramont outline why the modern aid enterprise which emerged in the late 1950s and 1960s was an apolitical endeavor, focused on socioeconomic objectives, and then track how this changed in the 1990s. This change was both in terms of increased ‘democratization’ aid, and also improved sensitivity to political realities in relation to aid projects more generally (but specifically public finance management).

The problem is however two-fold. First, according to Carothers and de Gramont the new changes do not go far enough – donors still invest relatively little in trying to understand political realities of countries and often prefer to fall back on ‘best practices’.

Second, just as the ‘political revolution’ is slowly gaining momentum amongst donors, it is increasingly becoming less and less relevant to least developed countries who can often choose from a host of less picky financial sources (eg. China, and other players, as identified in a recent Overseas Development Institute (ODI) Report). Russia rejected US assistance in September last year claiming it was too political, Bolivia followed suit last month and there is growing pushback in other countries too.

But, before we characterise donors as misguided technocrats who have finally ‘seen the light’ about understanding political landscapes, let’s look at Matt Andrews’ book on institutional reform. Andrews argues that donors have for too long been ‘hawkers of best practice’, not only failing to see how ineffective institutional reform has been through basic ignorance, but perhaps even engaging in willful blindness.

Ok, so he doesn’t actually say that in the book, but the implication certainly seems to be that donors are not just overly optimistic about developing countries’ capacity to push through painful reforms (that would never get through in the donor countries) but that they are guilty of lazy policy design and perhaps even ulterior motives. How else can we understand failure rates of between 40-70% according to the donors own calculations?

During the book launch at ODI, Andrews gave an example of a country so under-developed that Ministry of Finance officials were drafting the national budget with paper and pencil – not a single computer in sight. At the same time, it turned out that there was a World Bank consultant engaged to help the Ministry with some kind of sophisticated double accounting.

Some nations may need analysts and therapists, but not both at the same time.

Wouldn’t it have been better for the guy just teach the Ministry officials how to use Excel, and for the donors to supply a handful of computers? Perhaps. But that’s not what he’s going to want to put on his resume. He wants to boast about the technical sophistication he brought to this impoverished nation, and so does the army of technical development economists and specialists with sharp minds, expensive degrees and lofty career objectives. They certainly don’t want to experiment with new strategies and risk failure. Stick with the tried and tested and once legislation is passed, reap the media benefits and never mind about whether it actually leads to long-term change.

So what’s in store for the next season?

Where does that leave Michael Bluth and his donor community brethren trying to achieve economic prosperity? Carothers and De Gramont would advise him to hire governance consultants to undertake a careful review of the incentives which drive his relatives and work on reforming them. They would advise being ‘politically smart’ and ‘taking seriously how all aid programs in a country fit into and affect the broader political environment’. Andrews would pipe in with a focus on Problem Driven Iterative Learning (‘PDIA’) – get the Bluths together to focus on their own problems, reflect on the opportunities and stop focusing on best solutions. Andrews positively references such initiatives as Cash on Delivery, though some of the projects undertaken by Tony Blair’s Africa Governance Initiative, which provides technical know-how for policy making also seem to be consistent with his approach.

All jokes aside, this is a serious issue which exposes everyone’s flaws – the donors, the donees and perhaps even us, development practitioners. And of course, not all administrations in developing countries can be compared to money grabbing former socialites! Perhaps the most that a more ‘politically savvy’ approach can teach donors is how to separate those who are unwilling to reform from those who cannot for plausible political reasons (the Carothers and de Gramont approach) and design initiatives appropriately. Next, focus on small steps that reward enforcement not just passing flashy legislation not worth the paper it’s written on (the Andrews approach).

Most of all, don’t hold your breath. Development is long, painful and messy. Lucky that Arrested Development fans are such a patient lot.

 

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The Limits to Public Financial Management Reform in Development

My book is due out in two weeks. As prior blog posts noted, it discusses the limits of institutional reforms in development. 

In the last few blog postings I used the example of Uganda's anticorruption reforms as an example of why I think institutional reforms are limited in development. I will continue the discussion of anticorruption reforms in future blogs, and discuss examples of reforms that were not limited (like Hong Kong in the 1970s and 1980s). I discuss cases of Malawi and Indonesia in the book.

The book also uses examples of public financial management reform to showcase limits in reform.

I have been playing with online maps to show some of these limits online. This morning I used a map to show PEFA data of PFM process scores in 80-odd developing countries (PEFA scores for 80-odd countries). The PEFA data comes from a multi-donor assessment used to determine the degree to which countries' systems reflect 'good international practice'. The map showed lots of variation across these countries, with countries in green doing better than those in yellow, orange (brown?), and red.

One of the similarities across over eighty percent of these countries, however, is the presence of limits....

The first limit is what I call the de facto limit: Laws are made better than they are implemented.

• I calculated this limit by first identifying what I call the de jure dimensions of the PEFA dataset. These are the areas where countries could get a B on the PEFA assessment by just passing a new law or adopting a new procedure. Think about getting a B for adopting a new procurement law that requires ministries to use competitive procurement methods (this is not an actual PEFA example but gives a clear indication of what I was looking at). 
• I then identified what I call de facto dimensions of the PEFA dataset. These are the areas where countries can only get a  B if they actually implement a new law.  Think of a requirement that governments show that 70% of their procurement bids are actually procured according to competitive methods.
• I then calculated the difference between the average scores on de jure and de facto dimensions. The difference reflected the degree to which laws are better than the implementation of laws.

The method is imperfect, but I took a range of measures to ensure the de facto and de jure distinctions were as well done as possible (including having multiple coders). The method has been used in my own work and in others' work on the subject as well, suggesting that other PFM folks think there is some validity to the approach. 

Anyway, the map below shows where the de facto gaps are in 80-odd developing countries. The bigger the blue dot, the bigger the size of the gap. Notice that there are gaps in almost all countries. Reforms in many places are limited to the improvement of laws and procedures; Implementation is a harder task and implementation results are much weaker.

For those who see South Africa with an average above 3.5 (out of a possible 4, which equates with an A...given that a lowest score 1 equates with a D), you need to also consider that the de facto gap is o.47...Quite large. In Mozambique the average score is 2.83 but the de facto gap is 0.87. Meaning that the PFM system looks much better in legislation than it is in practice.  I argue in my book that this is the product of pursuing reforms as signals. 

Which country has the biggest de facto gap? I will leave it up to you to reflect on the question...

This is the same observation one can make in respect of anticoruption initiatives (based on Global Integrity data, which I will chart in due course).

In navigating the map, you can also look at data for deconcentrated and downstream gaps. I will explain these in future blogs. Or, just order my book here! Buy me!

 

The Limits of Institutional Reform in Development: In Uganda

My forthcoming book grew out of a growing awareness of institutional reforms that did not deliver significant results in developing countries. Uganda's anticorruption reforms are an example, and the story of reform limits is in this month's headlines--unfortunately.

Anticorruption reforms in Uganda date back to the 1990s and have absorbed tens of millions of dollars. The full range of donors have been engaged, including the IMF, World Bank, British DFID, Norwegian, Swedish and other bilaterals. The reforms have yielded new laws  and a range of organizational changes in offices of the auditor and accountant general, and beyond. The reforms also introduced new mechanisms and practices that stood out as best or first in class for sometime; Uganda was the first country to do a Public Expenditure Tracking Survey (PETS) for instance, and some key participatory mechanisms were launched here before going on to broader use in international development.

Yet, the impact on corruption seems limited, cogently described in this summary statement supporting the U4 Anti-Corruption Resource Center Overview of Corruption in Uganda http://www.u4.no/publications/overview-of-corruption-in-uganda/:

Since the National Resistance Movement (NRM) came to power in 1986, Uganda has undertaken an ambitious set of economic and political reforms. These reforms have led to the establishment of a solid legal, administrative and institutional framework to fight corruption. In spite of initial success widely heralded by the international community, corruption remains widespread at all level of society and the country faces major implementation challenges. Recent political developments tend to demonstrate a lack of political backing for anti-corruption efforts. Combined with understaffed and underfinanced anti-corruption bodies, the state faces considerable challenges in its ability to effectively enforce the legislative framework against corruption.

The emphasis in this excerpt is mine. It reflects a general perspective that, whereas reforms have achieved some gains in Uganda, these gains have actually proven quite limited over time. The excerpt reflects on some potential reasons for this, including implementation challenges, lack of political support for reform, and weak staffing and financial capacity to reforms. The excerpt also notes that these constraints were not fully appreciated by international donors who initially saw reforms as a success.

The headlines this month have the same donors pulling money from the country because of corruption charges. Andrea Bohnstedt has an amusing account in Saturday's Nairobi Star http://allafrica.com/stories/201211240609.html. Aljazeera covered the topic last week http://www.aljazeera.com/news/africa/2012/11/20121117155051480786.html.

Donors have halted aid before on the basis of serious corruption charges. Each time the government works with them to revive anticorruptionreforms. Usually the result is a better law, or better organized auditor's office, or some other change to the formal rules or rule makers in government. Expect the same kind of signal this time as well.

It seems, however, that changing formal institutions like this does not yield the kind of better government many might expect. The question is why? And, what could be done differently in future so that Uganda's anticorruption reforms have a greater impact on corruption?

The example of Uganda is just illustrative of many others I see regularly in development, where institutional reforms create better looking governments that ultimately are not better. My book explores the questions I pose above, in an effort to move towards reform approaches that yield more successes in more countries more often.

For further reading on Uganda and others, see:

Persson, Rothstein and Teorell's paper, 'The failure of Anticorruption-Policies: A Theoretial Mischaracterization of the Problem'

http://www.sida.se/PageFiles/39460/Failure%20Anti_Corruption%20policy%20(2).pdf

DFID's perspective on the issue: The Uganda Anticorruption Fact Sheet.  

http://humansecuritygateway.com/documents/DFID_uganda_anti-corruption-factsheet.pdf

Roger Tangri and Andrews Mwenda's 2006 article in the Journal of Modern African Studies on  'Politics, donors and the ineffectiveness of anticorruption institutions in Uganda'  http://journals.cambridge.org/action/displayFulltext?type=1&fid=399925&jid=MOA&volumeId=44&issueId=01&aid=399924

Global Integrity's article on the 'Implementation Gap' in anti-corruption reforms. The article is wonderfully titled,  'The Doomed Track for Reform'.

http://www.globalintegrity.org/node/550

In reflecting on the Global Integrity article, I would have to say that my book asks why many institutional reforms seem doomed, and what can be done about it. Wish I had their title for my book!

The Limits of Institutional Reform in Development

I have a new book coming out in January 2013. It is called The Limits of Institutional Reform in Development. I intend to use this blog site to discuss topics related to the book. I hope you find it an interesting place to visit, and am asking for any readers to comment on their experience with reform in development--especially where that reform has been focused on changing institutions ('the rules of the game') in governments.

Here is the first paragraph from the preface to my book, which should give you an idea of its content:

This book emerged in response to mounting evidence that institutional reforms in development often do not work. Case studies and multi-country analyses show that many governments in developing nations are not becoming more functional, even after decades and hundreds of millions of dollars of externally sponsored reforms. These studies increasingly suggest that disappointing results cannot be explained by routine excuses either. One cannot simply blame governments in these countries for not doing reforms, for instance, because many governments remain deeply dysfunctional even after many satisfactorily completed projects introducing best practices advocated by international organizations. The work on institutional reform in development has seldom explored reasons for failure beyond such excuses, however. This has created a gap in the literature, which is important from both an academic and practical perspective. The academic challenge is to see if theory and evidence can help promote a better understanding of why many reforms do not lead to better governments. The practical imperative is more fundamental: Can a better understanding of past experience help improve the likelihood of more institutional reform success in more developing countries in the future?