HARVARD UNIVERSITY
JOHN F. KENNEDY SCHOOL OF GOVERNMENT
Cambridge, Massachusetts 02138
MLD-408M - Money Management and Policy
Implementation in Developing Countries
MLD-408 SYLLABUS
Spring 2013
(Updated 1/22/13)
Tuesday/Thursday 2:40 pm to 4:00 pm
RG20
Matt Andrews
R-116, 617-384-8039
matt_andrews@ksg.harvard.edu
Faculty Assistant: Derya Honça
R-110B, 5-1923
m_derya_honca@harvard.edu
Office hours: Tuesday and Thursday 12:30 to 2:30
Course Objectives and Overview
There are many demands on developing countries. It is common to find far reaching policy
interventions across the board—in education, health, environmental policy, private sector
development and beyond. It is also, unfortunately, typical for these initiatives to disappoint.
Often the initiatives hardly get off the ground because financial resourcing is too little and too
late. Time and time again policy and service provision failures resulting from poor public
financial management remind us that money is the lifeblood of public service provision.
Complaints are loud when this lifeblood fails to reach a policy domain and give policy life. It
seems that policy makers seldom learn lessons from such events, however, because policy
demands typically grow in developing countries and public financial management problems
typically recur to undermine policy implementation.
This module is designed for students who aspire to make policy in developing countries, don’t
know much about public financial management, but are intent on ensuring that money does flow
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to the policies they are interested in. It provides a strategic view of what public financial
management systems look like and what the peculiar problems with these systems are in
developing countries. The intent is to provide policy wonks with the information they need to
avoid problems and give their policies the best chance of getting funds.
As such, students can expect to learn about the architecture of a public financial management
system and how to navigate such to make policy happen. They will learn what budgeting,
internal audit and such involve and how these functions relate to each other and are critical for
those thinking about policy. They will not learn how to do a budget or conduct an audit,
however, as the class is not focused on such technicalities. They will also not learn about doing
budgets and audits in Germany or the United States as the focus is on developing countries. As
such, peculiar issues are addressed including; How do you budget without information? How do
you manage cash without domestic revenue? How do you conduct audits without auditors?
Course Outline
There is a lot that could be covered in this course, and since it is a module, our hands are tied and
content is limited. The focus is thus on governments in the development context, and how they
manage their money. More specifically, the course aims to give students an overview of the way
policy and money management relate; it pays attention to the types of public financial
management processes students should know about.
The module begins with a session that probes the fault lines between policy and financial
management systems. It then moves to discussions of problems often encountered in various
areas of the public financial management system, looking at areas varying from budgeting
through budget execution, internal audit and external oversight. The final few classes will focus
on specific issues: whether it matters where the money comes from; and performance
management.
Class sessions will involve a mix of lectures, simulations and case discussions. The aim is for
students to get a practical appreciation of the kinds of issues arising in financial management that
affect policy implementation. While some of the sessions will be applied, the class is not a “how
to” of financial management. It aims to introduce students to what the concepts are, how they
relate and what the new thinking is in each—especially in the developing context. For this reason
recent materials are also used; these happen to be published by the World Bank, but the authors
are from a variety of development organizations and academic backgrounds working on these
issues.
Audience
The class is specifically pitched at students who have not worked closely to a financial
management process in the past, and are thrown by talk of accounting, internal audit, etc. It is
particularly useful for students who see themselves as policy experts and who believe that they
will be introducing policy into complex settings in their careers. The course gives these students
a good feel for the kinds of problems they need to be wary of.
It is, however, also appropriate for more experienced students who have worked in a financial
management realm—but not in the development setting. These students will find the focus on
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development interesting and will also probably get an opportunity to focus on some issues not
often discussed—integration of processes, problems with performance management,
participation in the context of budgeting and oversight.
Requirements
The class grade will be determined by performance in a 3000 word response piece that students
will do at the end of the course.
Materials
All readings are available through links on the electronic version of this syllabus and through
links under the date of the class under Online Materials on the course web page. (Note: Links to
journal articles generally work only under Online Materials, even though they are included on
the syllabus.)
CLASS SCHEDULE
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Tuesday January 29, 2013
Topic: What does it take to get money behind policy in development? The big questions
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Thursday January 31, 2013
Topic: Education and health policy in Uganda: Does more money lead to more result?
Exercise/Case: Do Budgets Really Matter? A case from Uganda (in the readings below)
** Required Reading:
Ablo, E. and R. Reinikka. 1998. “Do Budgets Really Matter? Evidence from Public Spending on
Education and Health in Uganda.” World Bank Policy Research Working Paper No. 1926.
Washington, D.C.: World Bank.
http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/1998/06/01/000009265_3980
702115711/Rendered/PDF/multi_page.pdf (posted on course page)
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Tuesday February 5, 2013
Topic: Identifying problems in the policy-money link in developing countries
Exercise/Case: Continued discussion of Uganda.
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** Required Readings:
Schick, A. 1999. “A Contemporary Approach to Public Expenditure Management” World Bank
Governance, Regulation and Finance Division. Washington, D.C. World Bank
http://www.5m.com.tr/en/kaynaklar/AcontemporaryApproachtoPublicExpenditureManagement.
pdf, pp. 29-45. (posted on course page)
Andrews, M. 2007. “What would an ideal PFM system look like?” In Shah, A. (ed). Budgeting
and Budgetary Institutions. Washington, D.C.: World Bank, 359-383.
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf
(posted on course page)
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Thursday February 7, 2013
Topic: Connecting policy to money in the budget, part 1
Exercise/Case: Budgeting in Gromatia simulation (to be provided by Professor)
** Required Readings:
Students will be required to prepare for the simulation in advance and read the following.
Fölscher, A 2007. “Budget Methods and Practices.” In Shah, A. (ed). Budgeting and Budgetary
Institutions. Washington, D.C.: World Bank, 109-134.
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf
(posted on course page)
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Tuesday February 12, 2013
Topic: Connecting policy to money in the budget, part 2
Exercise/Case: Continued discussion of Gromatia.
** Required Readings:
Wilhelm, V.A. and P. Krause (eds). 2008. Minding the Gaps: Integrating Poverty Reduction
Strategies and Budgets for Domestic Accountability. Washington, D.C. : World Bank, 11-37.
http://siteresources.worldbank.org/INTPRS1/Resources/3836061106667815039/MindingTheGaps4-9.pdf (posted on course page)
Schiavo-Campo,S. 2007. “Budget Preparation and Approval.” In Shah, A. (ed). Budgeting and
Budgetary Institutions. Washington, D.C.: World Bank, 235-277.
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf
(posted on course page)
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Thursday February 14, 2013
Topic: Identifying problems from planning and budgeting to execution
Exercise/Case: Why does planning fail in Nepal? (based on the reading below)
** Required Readings: Wildavsky, A. 1972. “Why Planning Fails in Nepal.” Administrative
Science Quarterly, Vol. 17, No. 4. (Dec. 1972), pp. 508-528. http://www.jstor.org.ezpprod1.hul.harvard.edu/stable/2393830?seq=1 (posted on course page)
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Tuesday February 19, 2013
Topic: Budget execution problems; and potential solutions
Exercise/Case: Paying the Bills at the Junta of Andalusia -- HKS Case 869.0 (posted on course
page)
** Required Readings:
Tomassi, Daniel. 2007. “Budget Execution” in Shah, A. (ed). Budgeting and Budgetary
Institutions. Washington, D.C.: World Bank, 279-322.
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf
(posted on course page)
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Thursday February 21, 2013
Topic: What is accounting and reporting all about?
Exercise/Case: Gromatia simulation part 2: What do you want to know, when and how? (to be
provided by Professor)
** Required Readings:
Chan, J.L. 2003. “Government Accounting: An Assessment of Theory, Purposes and
Standards.” Public Money and Management, Vol. 23 (1), 13–20.
http://www.tandfonline.com.ezp-prod1.hul.harvard.edu/doi/pdf/10.1111/1467-9302.00336
(posted on course page)
Roberts, J. and R. Scapens. 1985. “Accounting Systems and Systems of Accountability —
Understanding Accounting Practices in Their Organisational Contexts.” Accounting,
Organizations and Society, Vol. 10, Issue 4, 443-456. http://ezpprod1.hul.harvard.edu/login?url=http://dx.doi.org/10.1016/0361-3682(85)90005-4?nosfx=y
(posted on course page)
Wilhelm, V.A. and P. Krause (eds). 2008. Minding the Gaps: Integrating Poverty Reduction
Strategies and Budgets for Domestic Accountability. Washington, D.C. : World Bank, 40-50.
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URL: http://siteresources.worldbank.org/INTPRS1/Resources/3836061106667815039/MindingTheGaps4-9.pdf. (posted on course page)
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Tuesday February 26, 2013
Topic: What is accounting and reporting all about?
Exercise/Case: Exercise/Case: Gromatia simulation part 2, continued (posted on course page)
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Thursday February 28, 2013
Topic: Using IT systems to make PFM work.
Exercise/Case: To be advised
** Required Readings:
To be advised
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Tuesday March 5, 2013
Topic: Does it matter where the money comes from?
Exercise/Case: NAFINSA case (to be provided by Professor)
** Required Readings:
Moore, M. 2004. “Revenues, State Formation, and the Quality of Governance in Developing
Countries.” International Political Science Review, Vol. 25, Issue 3, 297–319. http://ezpprod1.hul.harvard.edu/login?url=http://www.jstor.org/stable/1601669 (posted on course page)
Andrews, M. 2003. “New Public Management and Democratic Participation: Complementary or
Competing Reforms? A South African Study.” International Journal of Public Administration,
Vol. 26, Issue 8-9, 991-1015. (posted on course page)
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Thursday March 7, 2013
Topic: Thinking about change in the PFM system: Sequencing and context
Exercise/Case: West Bank and Gaza case
** Required Readings:
To be advised.
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Tuesday March 12, 2013
Topic: Performance budgeting: Some basic ideas
Exercise/Case: Changing to a performance approach: Re-doing the Gromatia simulation. (to be
provided by Professor)
** Required Readings:
Shah, A. and C. Shen. 2007. “A Primer on Performance Budgeting.” In Shah, A. (ed). Budgeting
and Budgetary Institutions. Washington, D.C.: World Bank, 137-176.
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf
(posted on course page)
Curristine, T. 2005. “Performance Information in the Budget Process: Results of the OECD 2005
Questionnaire.” OECD Journal of Budgeting, Vol. 5, Issue 2, 87-131.
http://www.oecd.org/dataoecd/13/2/37714836.pdf (posted on course page)
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Thursday March 14, 2013
Topic: Transparency, PFM, and fiscal crisis: Lessons from Europe after 2008
Exercise/Case: To be advised.
** Required Readings:
To be advised.
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