MANAGING SUCCESSFUL GOVERNANCE REFORMS:
LESSONS OF DESIGN AND IMPLEMENTATION
CONCEPTUAL FRAMEWORK
Revised draft Sept 20 2004
Anne Marie Goetz
Institute of Development Studies, University of Sussex
1. PURPOSE
Most governance reforms fail (Poldiano 2001b). They fail not for a want of top-level
‘political will’, though this is the most-often-invoked cause of failure. Most developing
country leaders today genuinely endorse efforts to reduce corruption, improve state
capacity, and deliver services more efficiently and effectively. But governance reforms
tend to threaten existing power relations: the patronage systems through which political
advantage is maintained, the patterns of collusion through which public resources are
diverted to private users. As Therkildsen notes, governance reforms are ‘highly political
and conflictual’ as they ‘go to the heart of who governs (1999, cited in Bangura,
2000:41). The phenomenal amount of political consensus and technical skill needed to
subvert these systems is often wanting in states that lack the territorial and social reach of
their advanced counterparts, and in governments that do not enjoy a broad mandate.
This paper offers a framework for the study of the political and institutional conditions at
that may support governance reforms. More detailed in-country research into the lessons
that can be drawn from the design and implementation of governance reforms in Brazil,
the Indian states of Karnataka and Andhra Pradesh, and Uganda will test the presence and
relevance of the factors and processes identified here in explaining successful governance
reform.
The few successful examples of governance reform to date appear to show that
governance reform is best achieved when visionary political leaders are surrounded by
coherent economic teams with comprehensive programs in place, acting with
considerable autonomy from interest groups in society. But each of these conditions for
successful reform is itself a good governance achievement, a sign that the institutional
capacity to improve the management of the economy and to balance social interests is in
place. Behind each of these conditions is a political process – a process through which
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competing social interests have been made to compromise on key reforms, a process
through which interest groups who benefit from clientelism and corruption may have
been bought-off, weakened, or put into temporary retreat. These political processes are
enormously complex and vary from context to context.
It has been difficult to date to formulate generalisations about the conditions under which
support can be generated for governance reforms, and bureaucratic power to take action
can be built, because political arrangements that produce good outcomes in one country
may not work in the same way in another. We know that politics affect growth and
poverty reduction, but the patterns of causality have been hard to determine and do not
operate consistently. Moreover, at least in the case of economic reform, case study work
has shown that the state-society negotiations and deal-making that pave the way for some
reforms rely upon and perpetuate social and political networks that are not associated
with liberal polities, let alone with accountable and transparent governance (Bates
1989:223; Jenkins, 1999; Sengupta 2004). To put it simply, not only is it difficult to
generalize about the institutional arrangements under which reforming elites can
consolidate their efforts, generate support, and insulate key bureaucracies, but we must
not assume that good practices produce the political deals that generate good governance
outcomes. Case study work is the only means of uncovering the episodes and practices
that gave reformers an opening in any particular instance.
In this conceptual framework therefore we try not to be prescriptive about which
particular political systems or tactics might best support good governance, but rather we
identify areas of negotiation upon which we should focus when seeking to understand
why in any particular case reformers have been able to generate support for good
governance or insulate bureaucracies from the predations of corrupt actors.
These considerations are drawn from a wide range of analyses of the politics of reform.
These include the large literature on the political economy of economic adjustment1,
literature on the politics of democratisation2, on developmental states3, new work on
imperfections in political markets4, literature on corruption and politics5, and on the
politics of contemporary PRS processes.6 Propositions about the importance of particular
institutional developments or political processes are also based upon analyses of the
failures of donor-supported accountability and anti-corruption reforms.7
1 Bates and Krueger, 1993, Haggard and Webb 1993; Harvey and Robinson 1995; Herbst, 1993; Nelson
1994; Toye 1992; Jenkins 1999.
2 Diamond, REF; Haggard and Kaufman 1995;
3 Leftwich, 1996, Sklar, 1987; Przeworski and Limongi, ref etc.
4 Keefer and Khemani, 2003; Stasavage, 2003; van de Walle, 2000; etc.
5 Kidd and Richter 2003, and other refs.
6 For instance Gould and Ojanen, 2003; Booth 2003; Bangura, 2000; Schiavo-Campo, Tommaso, Mukherjee,
1997; Nunberg, 1989; Larbi, 1999..
7 Huge number of refs to insert here – Bank and other evaluations of governance reforms.
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We suggest that it is possible to explain national differences in the pace and sequence of
governance reforms by examining the nature of channels or networks of mediation
between the state and society that are used by governments to secure support for reform.
Where these are available, trusted and legitimate (established parties, unions, business
associations, corporatist systems, caste or ethnic solidarities), the terms of state reform
can be negotiated efficiently. These networks, operating through formal and informal
institutions, can deflect, absorb, dissipate or compensate opponents of reform. Reformers
employ a range of formal and informal institutions in reform processes – formal
institutions such as sub-national levels of government or forums for negotiating with
public sector workers, or informal ones such as the patronage networks and ethnic
loyalties and the range of civil society institutions to which political parties often have
special access.
The following points of variation in institutional frameworks and reform processes are
the focus of our analysis:
a) the formal and informal political institutions that shape the incentives and
determine the levels of risk facing political actors;
b) the nature of the connections between state and society through which the
compliance if not active support of non-state actors to reform is agreed (we pay
particular attention to political parties);
c) the ways the above institutions and networks create incentives to support or resist
reform;
d) the political agency required to package reforms, moderate their scope and pace,
identify levels and arenas at which to begin, so that resistance is undermined.
We suggest that factors that influence the capacity of reformers to take political risks in
undercutting the privileges of elites accustomed to seeking rents through the state, or that
enable reformers to generate support from groups likely to benefit from reform, include:
a) The extension of time horizons. The longevity, flexibility, adaptability and
legitimacy of major formal and informal institutional channels through which
agreements are reached between contending social groups, or through which
losers are compensated, generates stronger support for reform and willingness to
experiment.
b) The devolution of responsibility for some reforms to lower levels of government
(e.g.: state levels in federal systems), and the deflection therefore of some of the
opposition to reform, but also a generalization of gain from reform;
c) A change in the composition of governing elites that, in particular, minimizes the
role of traditional (especially rural landholding) elites.
d) The sequencing of reform in such a way as to generate early ‘winners’ from
reform who can support follow-on reforms;
e) The diversity and depth of civil society and its capacity to respond positively to
reforms.
f) The technical capacity of the public administration.
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For this study we focus upon the following areas of governance reform: public financial
management (including public expenditure management and tax administration), service
delivery reform, anti-corruption measures, and civil service reform. The desk and
country studies will produce not just country-specific observations about the conditions
for reform, but also a more fine-grained analysis of success factors specific to each of
these institutional arenas. Here, in addition to identifying four points of variation in
institutional frameworks that influence the outcome of governance reforms writ large, we
also identify specific and comparable political dynamics, features of social structure, and
institutional factors that determine the outcomes of the different fields of public sector
and governance reforms.
We begin by defining our key terms, and then discuss debates on the conditions for
successful governance reform.
2. DEFINITIONS
‘Governance’ is described by the World Bank as ‘the manner in which the State exercises
and acquires authority’ (Campos and Pradhan, 2003:1). ‘Good’ governance brings in
normative judgements about what constitutes the legitimate acquisition, and efficient and
equitable exercise of power. For some donor agencies, good governance implies
democratic governance. For others, good governance means the management of national
endowments in human and natural resources in such a way as to create the greatest
quantum of public goods (including security and justice), and the distribution of these
goods in such a manner as to promote human development and to create incentives for
further wealth creation. Definitions of good governance therefore diverge between a
restricted view that identifies good governance with sound management of the economy,
and a more expansive one that embraces political liberalisation, and addresses democratic
deficits, including problems of social inequality (Santiso, 2001:4).8
A recent World Bank formulation of the key elements of governance leaves its normative
aspects open: it distinguishes two broad components of governance: the capacity of the
state to exercise authority, and the accountability of the state in the acquisition and
exercise of its authority (Campos and Pradhan, 2003:2). Capacity describes the
‘hardware’ of the state: its financial resources, the extent and effectiveness of its physical
and administrative infrastructure for distributing public goods, the number and skill of its
personnel, and the coherence of its supporting processes – budgeting procedures, policymaking systems, information generation and analysis. Accountability describes the
political ‘software’ of the state; it indicates which actors have the power to demand
answers of others, and whether and how malfeasance is detected and punished.
8 There is a growing sense that these two views of governance reform must be reconciled; that reforms to
ensure the sound management of economic institutions cannot progress without addressing inequities in the
economic system and problems with the legitimacy of the power structure. This is because for ‘economic
management’ reforms to take effect, issues of equity and legitimacy are central, not least because the ways
they are addressed will determine the extent of support these reforms enjoy from a wide range of social
groups (Santiso, 2001:4). Or, to put it another way, the effectiveness of the state will be determined in part
by its legitimacy.
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In practical terms, the governance reforms with which we are concerned are reforms to
the institutions that influence the behaviour of state actors – providing them with
incentives to act in particular ways. These include budgetary, judicial, legislative, and
electoral institutions, at both national and sub-national levels. Reforms to these
institutions have been described as a ‘second generation’ of economic reforms, following
a first reform generation of economic stabilization to control wages and prices,
adjustment, privatisation, and trade liberalisation, all of which relaxed the state’s grip on
the market. The second generation of reforms are intended to promote structural changes
in state institutions, particularly the political institutions in charge of economic policy
formulation, implementation and oversight (Naim, 1995). The second generation of
reform focuses upon building sound decision-making processes, building commitment for
poverty-reduction, and sharpening accountability systems. It includes institutional
reforms that over the long term can contribute to macroeconomic management
(independent central banks, autonomous tax boards), encourage economic growth
(protections for private property, rule of law and enforcement of contracts), deliver
services (results-oriented management in the public sector, improved budgeting and
auditing, decentralisation), and ensure accountability (anti-corruption measures, meritbased recruitment in the public service, support to the oversight committees of
parliament, judicial reform). Other governance-related reforms include efforts to
strengthen the state through securing peace and stability (asserting democratic control
over the military), as well as democracy-building through efforts to broaden the
participation of socially excluded groups in public decision-making (affirmative action to
bring women or backward castes into local government), supporting the capacity of
legislatures to perform oversight functions (improving the effectiveness of parliamentary
reporting, of public accounts committees, new powers for legislators to modify the
budget), support to new types of oversight institutions (equal opportunities commissions,
human rights commissions).
Public sector and governance reforms aim to improve fiscal stability, security for private
investment, public accountability, managerial efficiency and administrative capacity.
These goals overlap in the main areas for reform as outlined by the World Bank Public
Sector governance Group: anti-corruption, administrative and civil service reform,
decentralisation, public expenditure, legal institutions of the market economy, egovernment, and tax policy and administration. This concept note will consider mainly
the reforms addressed through the accompanying case studies: public expenditure
reform, anti-corruption measures, service delivery improvements, and civil service
reform.
On what basis do we assert that a governance reform has been successful? There are no
agreed measures of good governance, and the indicators currently in use (Kaufman et al
2003) are based upon data with large margins of error, drawn from surveys of the
subjective perceptions of observers about the relative quality of ‘voice’, accountability,
rule of law, or government effectiveness. Some indicators are, however, more robust –
for instance indicators on regulatory quality. Countries that score well on certain
indicators may score poorly on others – for instance, Indonesia has improved steadily in
indicators of civil and political liberties but it appears to have deteriorated in its capacity
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to control corruption or remove market-unfriendly regulations (Kaufman et al, 2002).
Different governance assessment exercises value different good governance
achievements. Thailand, for instance, ranks low on Transparency International’s
Corruption Perception index, but is near the top of the scale for the United Nations
University’s World Governance Assessment Project.9
Another problem is to be found in assessing the sustainability of governance reforms.
Periods of government alacrity in indicting politicians for corruption may be followed by
periods in which anti-corruption agencies are undermined by a head of state who is
protecting friends. An autonomous tax administration may function well for a time and
then revert to patterns of lax collection. Yet another difficulty inheres in the seeming
paucity of success stories to study. The Executive Opinion Survey of the World
Economic Forum’s Global Competitiveness Report tracks the quality of governance
annually and indicates an overall global stagnation on governance indicators (judicial
independence, corruption in public procurement) over the last 5 – 6 years.10
There is an inescapable quality of subjectivity in assessing the level of success in good
governance reforms, and in assembling indicators of the quality of such reforms. For the
purpose of this study, therefore, we have been constrained to accept the widest-shared
local assessments of the quality of reforms, and supplement these with evidence, where
available, that the governance reform in question has achieved its objectives, in the form
of rural service delivery improvements (Development of Women and Children in Rural
Areas – DWCRA – in Andhra Pradesh , the Bhoomi scheme of land registration in
Karnataka), higher response rates to client complaints and improved urban service
delivery (Metro Water in Hyderabad and the Bangalore Agenda Task Force), increased
tax revenues (reforms in tax administration in Brazil limitations on extra-budgetary
spending -- the fiscal responsibility law in Brazil), and the indictment of corrupt public
actors (anti-corruption initiatives in Uganda).
3. THE PROBLEMS OF TAUTOLOGY AND PAUCITY OF SUCCESS STORIES
a) The problem of tautology
We lack, as Sklar has pointed out, a political theory for development – one that would be
a theory of political means of achieving efficiency and equity (1987:608 – 9). There is an
expectation and an observation that governance reform is most readily achieved in states
open to economic and political liberalization, where high-capacity bureaucracies can be
insulated from social pressure and implement coherent policy delivered from government
leaders. But to observe that good things go together does not indicate causation. Worse,
it does not help to identify strategies to promote governance reform, because, as Caiden
has observed, it appears that: ‘[C]ountries most in need of state reform are least able to
implement it’ (Caiden 1994:111). In other words, the capacity needed in order to reform
economic management systems or accountability institutions requires reasonably
9 (http://www.unu.edu/p&g/wgs/pdf/worldgovassessment.pdf).
10 REF
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developed bureaucracies in the first place. What is of interest in the governance agenda
is the institutional framework in which policies are formulated. But which features of
this institutional framework best support reform? Rodrik argues that the key question in
studying the politics of governance reform is ‘which institutions matter and how to
acquire them?’ (1999).
There is rather more awareness of the shortcomings and failures of governance reform
efforts, though again, there is a lack of clarity about the reasons for failure. Recently this
has prompted a greater interest in deeper institutional issues – in understanding the
informal social relations that cut across formal institutions (patron-client relationships,
ethnic groupings, regional biases). However there is a general sense of mystification
about this – how can understanding the nature of cronyism, neopatrimonialism, or
patronage systems produce more effective reforms? If we take on board politics and
power, institutions and incentives, cultural habits – will this help point to the key
conditions for effective reforms? Is there any way that this kind of analysis can avoid
conclusions that are purely country-specific? Is it simply that certain polities are
historically better placed to achieve a political and bureaucratic reconfiguration than
others?
This is certainly the conclusion drawn by some observers of governance reforms. As
Jeffries argues, it is impossible to identify consistent cross-national causes of successful
reforms; outcomes of governance reforms are historically contingent, the processes
involved cannot be speeded up, and attempts to apply the lessons of political and
economic systems across space and time are usually misguided (1993:20). Others point
to the profound influence of historical contingency or ‘path dependence’ (Collier and
Collier 1991).
b) Differences between Economic Liberalization and Good Governance Reforms
A substantial literature examines the conditions under which successful ‘first wave’
economic stabilisation and adjustment reforms were introduced and sustained in the
1980s.11 There is much less literature available to address causes of success in
governance reforms, partly because there are relatively few unambiguous governance
reform successes. The contrasts between economic liberalisation and good governance
reforms may help to point to some of the new or different conditions for the success of
the second generation reforms.
The key conditions driving economic reforms (reactions to an economic crisis, timing of
the electoral cycle, party systems enabling a single party to dominate and act decisively,
not to say in a semi-authoritarian manner, characteristics of the state that promote highcapacity bureaucratic development, and rapid or sudden ‘shock’ tactics in introducing
difficult reforms) are not necessarily the ones that will drive good governance efforts.12
11 A truly vast literature: Haggard and Webb, 1993, Harvey and Robinson 1995; Toye, 1992; Webb and
Shariff 1992; etc etc REFS
12 Besides, this list of conditions for successful economic reform, drawn from Haggard and Web 1993,
has been challenged by other observers (see Nelson, 1990: 325 – 26).
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Speed in implementing dramatic reforms, for instance, once advocated by Haggard and
Webb (1993: 158), is now discouraged, as something that arouses resistance, and also
undermines the slow complementary institutional changes needed for things like financial
sector reform, privatisation etc.
One key difference between first generation economic reforms and governance reforms is
that market reform is expected to meet a poor reception in developing countries, whereas
certain governance reforms, particularly those that tackle corruption or expand political
liberties, are welcomed, at least by the general population. Market reforms tend to arouse
broad social opposition as well as highly focused resistance from economic actors who
benefited from their privileged access to state-controlled rents, whereas governance
reforms can be more popular with an electorate fed up with impunity. Resistance to
governance reforms still comes from a very powerful set of actors who see their access to
state-based earnings cut off. Whereas first-generation economic reforms have often had
to be pursued by stealth (for instance in India, Mexico and Ghana13), with governments
dissembling about their intentions to undercut the privileges of powerful actors until it
was too late for them to obstruct these processes, some governance reforms can be
pursued with openness and alacrity and at little cost – for instance decentralization
programmes or anti-corruption commissions. In contrast, administrative reforms related
to capacity-building and efficiency improvements in the civil service tend to generate
ferocious resistance. This is not only because of the real or perceived threat of
redundancies, but because of the enormous complexity of these reforms (Poldiano, 2001).
What remains true for both types of reform is that when shifts in economic strategy or
governance are effected, the results profoundly affect the political fortunes of the elites
that implement them, often threatening the political base of power-holders. Politicians
are likely therefore to shy away from new policies, however much economic sense they
make.
Another difference between ‘first’ and ‘second generation’ reforms is that the latter are
more complex. Macroeconomic stabilization measures can be put in place by officials of
the central bank and Ministry of Finance. But structural reform requires legislative
action, and the cooperation not only of line agencies and ministries, but also at least of
some segments of society (Nelson, 1993:438). Some first generation reforms in
protected economies with regulated markets were pushed through via elite pacts and the
suppression of labor. But those elite pacts and acts cause certain forms of clientelism or
‘nonliberal’ forms of political mediation to survive and entrench themselves in new
liberalized economies, with potentially negative consequences for negotiating second
generation reforms.
Varsheny claims that in India in the early phases of reform, India’s governments
managed to sustain liberalization in the face of hostile mass opposition by skewing the
reform agenda to mainly elite concerns (Varshney, 1998) – essentially Machiavellian
politics to narrow and pick off opposition. But second generation reforms to the
13 Herbst, 1993; Heredia, 1993; Jenkins 1999; Varshney, 1998.
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institutions of economic governance tends to move policy-makers onto the terrain of
mass politics – because governance reforms also come with language about transparency
accountability and anti-corruption of direct interest to many more people. However, the
damage to institutions – particularly those that mediate between the state and society,
such as trade unions or parties -- that is wrought by first generation reforms can make
these mass politics unmanageable (Varshney 2000: 735-6).
4. A POLTIICAL ECONOMY OF GOVERNANCE REFORMS:
INSTITUTIONS, INCENTIVES, SKILLS
The following points of variation in institutional frameworks and reform processes are
the focus of our analysis:
a) the formal and informal political institutions that shape the incentives and
determine the levels of risk facing political actors;
b) the nature of the connections between state and society through which the
compliance if not active support of non-state actors to reform is agreed (we pay
particular attention to political parties);
c) the ways the above institutions and networks create incentives to support or resist
reform;
d) the political agency required to package reforms, moderate their scope and pace,
identify levels and arenas at which to begin, so that resistance is undermined.
Historically states that have enjoyed successful reforms to public sector governance
concentrate sufficient power, autonomy, and capacity in key public agencies to shape and
implement explicit developmental objectives – promoting conditions for economic
growth and human development. To do this they have been able to establish legitimacy
for the government, security and predictability for society, generate buy-in from major
interest groups and society in general, and generate resources for public projects. This
requires internal security as well as a political agenda to which rulers are held to account.
It also requires bargaining skills by the executive in generating cross-sectional support.
Well-governed states are able to resolve conflicts of interest in such a way as to make
decisions in the public interest and allocate resources to address priority problems. This
requires some autonomy on the part of policy-makers, and mechanisms for assessing the
needs of different groups, which implies information access and analytical skills in
financial and planning institutions. It also implies fiscal discipline. Well-governed states
are able to deliver public goods such as health and education, as well as justice, and
security for market transactions. This requires effective command and controls over
front-line delivery agents.
The search to identify the conditions under which the above tasks can be accomplished
has lately focused attention on electoral competition – on improving the extent to which
the ‘vertical’ accountability relationship between politicians and voters gives politicians
an incentive to claim credit for successful reforms, and enables voters to reward or punish
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them accordingly. Analytical work by Keefer and Khemani and others14 has zeroed in
on market imperfections in political relationships, and asserts that much poor governance
could be eliminated if particularistic patronage relationships were excised from politics
because politicians who could credibly claim responsibility for policy successes would
have incentives to focus their energies on reform rather than on fuelling the particularistic
relationships that undermine effective economic management.
Attention to electoral politics is timely and valuable. But it may exaggerate political
agency and the extent to which deeply-embedded practices and systems of resource
distribution can be altered through improved information. A market analogy is applied to
political relationships, using principal-agent frameworks and rational-choice theory to
predict the behaviors of politicians responding to a primary incentive to be re-elected.
While this is highly plausible most of the time, it does not help to explain the profound
influence of informal institutions on formal politics, and the ways they distort political
incentive systems. Gordon White’s distinctions here may be helpful: ‘democracies differ
not merely in the character of their political institutions, but also in the ways these
interact with society. The organisation of state-society relations has two basic
dimensions: first, the constitutionally defined realm of formal political, administrative,
and legal entities which set the institutional framework of a democratic regime, and
second the informal and formal organisations and channels which connect politicians,
officials, and agencies with social constituencies in ‘civil society’. These could be called
the ‘exterior’ and ‘interior’ worlds of democratic politics’ (White 1995:32, cited in
Jenkins 1999:121).
a) Institutions
It is frequently asserted that independence from politicians and the political process is a
key prerequisite for performing governance tasks -- hence anti-corruption commissions,
audit offices and revenue-raising authorities are set up as enclave authorities with formal
autonomy, sometimes as a commercialized entity at arms length from government rather
than as a department within the government administration. Uganda, Tanzania, and
Gambia have followed this rule, establishing executive revenue agencies in 1990s
(Gloppen and Rakner, 2002: 39). But the South African Revenue Service (SARS) shows
that active political support for the institution, and a cooperative relationship between the
revenue service and the relevant government department (Treasury) made for success
(Smith, 2003:7). This illustrates the problem with the term ‘autonomy’ – what is
required is not isolation for governance and accountability institutions but political
support of the ‘right’ kind.
These connections between the state and society are often best supplied by informal
institutions – White’s ‘interior world’ of politics that, we argue, determines the relative
success of reform. Informal institutions in this interior world include clans or tribes or
the ethnic loyalties they encourage. These are what are sometimes called ‘first-tier
associations’ – of ‘a more ascriptive nature (kin, clan, ethnic, or religious)’ (USAID
14 Keefer and Khemani, 2003; Stasavage, 2003; van de Walle, 2000; etc.
10
1996: 2). They also include all manner of civil society associations, though obviously
some will be more ‘formal’, with codified rules and articles of association, than others.
While ‘modern’ informal institutions such as civil society groups and the media are
supportive of accountability systems, ‘traditional’ informal institutions are seen to have at
least two damaging effects on governance. First, they undermine the incentives to
political parties to make broad programmatic appeals to the electorate, encouraging
instead narrowly-focused promise-making and clientelist resource distribution once in
office. These informal institutions based on ethnicity or other ascriptive identities
prevent poor clients of services mobilizing broadly on the basis of shared interests in
better service provision and instead the incentives are to fight each other in order to be
the privileged recipients of targeted transfers. Second, loyalties and networks based on
informal ascriptive institutions infuse public formal institutions, working at crosspurposes to formal incentive and accountability systems. Informal social institutions and
formal accountability institutions often involve exactly the same actors but they function
in different accountability ‘jurisdictions’15 and employ radically different standards of
what is right and fair in decision-making about the distribution of resources.
Informal institutions have not always undermined reform, and indeed in some cases they
can support it. This is so, for instance, where ethnic homogeneity in a high-level
decision-making group can support risk-taking on reform measures, and can produce a
coherent and dynamic coterie of reformers at top level – as seems to be the case (at least
for a time) in Uganda’s reform process. The price of this may be uneven ethnic
distribution of the benefits of reform (evident perhaps in an ethnic near-monopoly over
new productive resources released through reform), but this cost may be lower than that
of considerable delay or hesitation while a much more difficult cross-sectoral consensus
on reform is negotiated.
Informal ‘first tier’ institutions have formidable resilience. They thrive when formal ones
suffer decay and discredit. Their substantive norms remain deeply meaningful to
participants, influencing behavior and expectations, and producing efficient and mutually
accepted (legitimate) decision-making processes. They often permit more effective
interest-articulation and conflict-mediation than formal systems do, they minimize
transaction costs, and lessen inequalities of access to information for their own members.
In the context of reform, they can help to defer or defuse conflict between groups who
stand to lose from reform and those who gain. Mainstream good governance discussions
pay little attention to informal institutions, with the exception of patron-client networks,
yet a wide range of informal institutions are essential transmission belts between the state
and civil society, and have the effect of generating support for reform, dissipating
conflict, and compensating losers.
These institutions cannot be wished away, and we know very little about how they can be
reformed so that they are not so corrosive of formal accountability systems. Informal
institutions, unofficial loyalties and patterns of dispensing privilege, are among the
15 For there is accountability in informal institutions – but it is not democratic accountability. It is often reverse
accountability – with clients answering to patrons, weaker parties answering to power-holders, not the other
way around.
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problems that governance reforms address, yet they also profoundly shape the outcomes
that can be expected of governance reforms. Governance reforms have few tools to deal
with informal institutions – the dominant approach is to hope that reform measures can
gain a foothold in formal institutions before they are undermined by informal systems,
before they are swept away by the very processes and structures that they aim to
transform.
We propose therefore an institution-centered approach to understanding governance
reform. The central importance of institutions inheres not only their role in structuring
relationships between governing elites and sectoral interests, but in their potential to
shape incentives and react to changed circumstances in ways that can alter interest
perceptions of various affected parties. We rely here on a broad understanding of
institutions as sets of rules (these can be formally codified or informally understood) that
shape roles and behaviors and expectations of social, political and economic actors (Hall
and Taylor, 1996: 936).
Formal and informal institutions shape the way policy actors calculate the political tradeoffs of risky reform decisions, and negotiate the political bargains that underwrite the
sustainability of reform – i.e. – secure buy-in from dissenters, compensate losers (Jenkins
1999).
Institutions shape the willingness and capacity of policy actors to take these calculated
policy risks, and the willingness of social and economic elites to strike bargains and
negotiate. They are the theatre in which political skills are deployed and incentives to
support reform are shaped. We distinguish, of course, between formal and informal
institutions on the basis of whether an institution is part of the formal state apparatus or
not, and on the basis of the degree to which its rules and practices are codified and
formalized. Informal institutions shape perceptions of political risk much more reliably
than do formal institutions in developing contexts
A survey of the institutional landscape may show where there are fragments of
accountability and capacity that are supportive of reform. For instance, in some countries
a strong judicial and constitutional culture supports good governance when, for instance,
the judiciary supports property rights or lifts immunity from prosecution of members of
the security forces, and thereby enhances citizens’ personal security and ability to pursue
developmental goals. Activist supreme or high courts that defy the current regime by
striking down government legislation are rare, but do exist – in India today, Nigeria in the
1980s, and perhaps this judicial activism is emerging in Kenya now. Alternatively,
legislatures may be found to be growing in their assertiveness in relation to the executive,
taking a cue from neighboring countries to demand powers to censure corrupt members
or to impose budgetary sanctions on overspending government ministries.
Electoral systems, intensity of political opposition, coalition versus majority
governments, and the legislature’s powers are other features of the formal institutional
environment that affect commitment to or sustainability of reform. In Europe, the
coalition governments that are produced through Proportional Representation in electoral
12
systems require executives to cultivate cross-sectional and popular support for reforms.
In Latin America and Eastern Europe, most leading parties in government likewise lack
working parliamentary majorities – so policy reforms are achievable only by pursing a
politics of concertation among multiple parties, or by ruling by presidential decree as in
Argentina and Brazil – a path that carries risks not only of authoritarianism but of rapid
reversal of reform programmes (O’Donnell, 1994). Radical institutional reforms have
been possible in countries with first-past-the-post electoral rules that endow
overwhelming majorities to governments. Where political systems are highly pluralist,
as in India, constant negotiation between the executive and the legislature, as well as the
successes of entrenched interest groups in influencing policy, undermine the decisiveness
of reform.
An effective governance reform programme will have attempted to establish a sensible fit
between these structural characteristics and reform ambitions. In the absence of a basic
infrastructure of formal accountability, successful reforms will be modest and targeted
narrowly on those institutions most amenable to change.
Distinction between institutions and institutional change
Understanding what triggers change is the key to effective governance reform. Both
rational choice and historical understandings of institutions suggest that they are the
expression of an agreement amongst dominant actors to a certain set of ‘rules of the
game’. They are an equilibrium solution to competing interests – in other words, they
represent a pact between the main actors involved (North, 1990; Bates et all 1998).
Institutional change involves a re-negotiation, revision, or rejection of that pact. Thus the
institutional changes envisaged in governance reforms may provoke the destruction of
established institution and the creation of new ones – with new actors coming into new
pacts – or, more commonly, tinkering with pacts and adjusting institutions at the margins.
The latter type of change has been possible in governance reforms where dominant actors
find that reform does not threaten their political power or patronage networks.
Institutional change at the other end of the spectrum may be just as gradual, but results in
the destruction of old institutions and the wholesale substitution of new ones, based on
new pacts. Preferences and incentives are altered, weakening some actors and
strengthening new ones. The main example of this kind of profound institutional change
in our case studies is the Brazilian fiscal responsibility law which is the outcome of new
approaches to spending controls and new relationships in Brazil’s federal system.
Institutional change of this magnitude tends to be triggered by serious crises that weaken
entrenched interest groups and newly empower others.
b) Connections between state and society
Institutions such as the legislature, the judiciary, local government, political parties and
civil society are the ‘transmission-belts’ between state actors and society. Institutions to
link state and society are essential both to facilitate public oversight of governmental
processes, and also to negotiate the new understandings or pacts that promote
institutional change. In order to deflect, absorb, dissipate or compensate those who resist
reform, reformers engage a range of formal and informal institutions in reform processes
13
– formal institutions such as sub-national levels of government or forums for negotiating
with public sector workers, or informal ones such as the patronage networks and ethnic
loyalties and the range of civil society institutions to which political parties often have
special access. Institutions, formal and informal, that provide the main points of day-today contact between government and citizens, particularly rural citizens, deserve special
scrutiny for their role in mediating reforms. In highly centralized and closed systems of
governance such as have characterized many African states it is precisely these
connective institutions that are particularly weak (Barkan 2000:4) or have been co-opted
by the state to extend dominant party control over rural citizens.
We can explain national differences in the pace and sequence of governance reforms by
examining the nature of channels or networks of mediation between the state and society.
Where these are available and legitimate (trusted parties, unions, business associations,
corporatist institutions, ethnic solidarities, caste groups), the terms of state reform can be
negotiated more efficiently and swiftly than when such networks have frayed or lost
credibility. Once strengthened though negotiation, these systems of political
representation endure, even when they are incompatible with liberal economies and
politics because they are not the outgrowth of economic organization (i.e. class system).
We draw particular importance to the following institutional arenas:
Civil society: we distinguish between ‘traditional’ and ‘modern’ institutions, though
without assigning either any normative weight as preferred contributors to good
governance. Of significance in negotiations over reform are representative networks –
and these can be ‘modern’ networks based upon union organization or business
association, or ‘traditional’ networks based upon vertical patron-client ties. Governments
seek out representative networks with which to negotiate and advance reforms because
these can command compliance with reform measures and mediate/publicize/popularize
reform at levels of society that it is difficult for the formal institutions of the state to
reach. Where representative networks are already in a formal relationship with
governments, as in corporatist systems, this can greatly ease the task of negotiating
compliance with key reforms.
According to one observer, civil society and a free press are perhaps more significant to
accountability systems than the holding of competitive elections in the early stages of
democratization, because they are the only non-governmental organizations linking state
and society together. They are also the key institutions for explaining the logic of
macroeconomics and institutional reforms to the public (Barkan, 2000:2).
Political parties: these key institutions have attracted insufficient attention in debates
about good governance. They claim and often have a representativeness that many other
non-state institutions lack. They preside over complex relationships established between
leaders and a range of informal institutions, sometimes constituted as special interest
groups. Where parties are poorly institutionalized and lack discipline (agreements struck
with party leaders are not binding on the delegations of these parties, whose votes must
be won one at a time, often through ‘inducements’, and who are prone to defection to
14
other parties) the sheer cost of generating a coalition in support of reform rises, since it
must be purchased first from a party’s own members, then from other parties. Some
observers feel this is precisely what delayed economic reform in Brazil in the 1980s and
1990s (Hagopian, 1998).
The public sector bureaucracy: these formal institutions function differently according
to the sector in question; the Ministry of Finance, for instance, will have different
channels for influencing decision-makers and society than the Ministry of Health, and of
course the informal institution of their organizational cultures will differ too. This
formidable public institution is often seen as having the most to lose from governance
reforms.
Executive decision-making: formal decision-making in Cabinet and the legislature will
often draw upon a range of informal systems for influencing decision-makers and for
implementing their decisions. The choices open to chief executives and governments in
negotiating to generate support for reform will depend upon whether or not a country’s
constitutional arrangements require governments to have political allies in a constituent
assembly in order to reforms to be initiated and to succeed. If reform can proceed by
administrative regulation or executive decree, some bold and rapid actions may be
undertaken, at least in the short term, by the executive.
Party systems:
The nature of political competition -- the party system and the construction of majorities
in the congress, parliament or national assembly – becomes salient when governments
cannot advance reform through decree but must win legislative backing for it.
Fragmented party systems, where a large number of parties compete (as in Brazil – 19
parties in 1990, 18 in 1994), or where large parties are highly factionalized, makes it
difficult to build governing majorities in the constituent assembly, and this can undercut
decisive reform action.
Sub-national jurisdictions for reform: Executive decision-making at sub-national levels
is important in that the responsibility for some reforms – and the pain and gains from
these reforms – can be delegated downwards. This draws in sub-national leaders and
interest groups, generates competition and experimentation, and can also fragment and
weaken opponents of reforms by dividing them between different sub-national
jurisdictions. On the other hand, if the party system is fragmented and parties are
undisciplined, the availability of sub-national political forums in which to fight political
battles can weaken the resolve and command capability of reform-oriented governments.
In Brazil, for instance, deputies to the national Congress depend for their careers on statelevel politicians, and will be motivated to vote in ways that support state governments.
This means that national government reformers cannot advance reforms in areas that
state-level politicians want to resist because they would affect state-level patronage
systems. For instance, in order to generate agreement on key economic reforms in the
1990s, the Collor and Cardoso governments were obliged to roll-over billions of dollars
in state-level debts, making it impossible for the central government to bring its fiscal
accounts into order (Hagopian, 1998:29).
15
Political parties and their leaders (apex leaders and faction leaders) are particularly key
institutions for transmitting signals between the state and society. They tend to be
animate all manner of other informal systems in order to galvanize support for or
resistance to reform. Parties provide channels through which leaders are able to construct
relationships with other social groups. A party is not just an institution, but a device
through which other, more informal institutions are nurtured and pressed into service
when other formal institutions cannot produce compliance. Parties enable a great
diversity of transactions to take place between holders of state power and independently
constituted economic and social interests.
In recent reviews of PRSP exercises in Africa (Booth, 2003), and of new participatory
public expenditure management experiments in Latin America (Brautigam, 2004), the
absence of representative institutions (parties and trade unions) in many of these
exercises is noted and lamented. Brautigam comments that this is particularly
unfortunate considering that a constant in all cases of effective pro-poor spending in
Latin America has been the commitment of democratic and ideologically left-of-center
parties, which, regardless of whether they encouraged participatory decision-making,
were able to fend off (or compensate) resistant elites and provide incentives to front-line
state agents to implement responsive approaches to delivering services to the poor
(2004:10 - 11).
Parties have been neglected in governance analyses for two reasons: because the
rational-choice method encourages greater attention to individual than collective
incentives and calculations, and because the informal characteristics of parties make them
difficult to analyze – they often do not function in predictable ways because their formal
policy positions, alliances, and internally codified systems are often rapidly abandoned in
the face of considerations about electoral advantage.
The program orientation and discipline of political parties will be low where there is
pervasive clientelism and segmented state corporatism – because state subsidies to
different social groups create dependencies, and dissuade them from organizing to
demand national goals or to form broad coalitions. This has been the case in Brazil.
Social groups try to advance their narrow interests through direct links to the state, not
through parties. So parties are bypassed and excluded from crucial debates and
decisions, and have limited importance. And since they have limited importance, they
turn to clientelism for support. This undermines programmatic commitments and their
capacity to serve as interest channels for the poor. Party systems are fragmented, as is
civil society with multitudinous narrow interest groups pursuing special favors. This
encourages politicians to focus on personal political survival to the neglect of collective
goals.
When several reformist parties compete, the capture of poor voters is impossible, and
anti-poverty efforts must be followed through (Lakshman p 13). Arguably therefore, an
institutional reform that is necessary for successful governance reforms is the removal of
16
formal and informal barriers to free entry and exit from party system. Democracy makes
forecasting and adapting to change a necessity. Political openness enables politicians to
assess continuously the relative worth of political backing from competing socioeconomic groups. This enables them to decide which to accommodate, which to
abandon.
Historically the developmental successes and reform leaders amongst democracies have
been those with dominant party systems (Botswana, Malaysia, Singapore, Mexico), in
which one party has been continuously returned to power for extended periods. Is the
same true for governance successes? Continuity creates incentives for reform-minded
elites to unite rather than paralytically fragment, and to tackle reforms with extended
maturity horizons – provided, of course, that they expect to take credit eventually for
these reforms. Frequent changes of government or unstable coalitions restrict the focus
of reformers on efforts with more immediate pay-offs. But intense competition between
parties can impel politicians to seek to improve governance and broaden the set of groups
receiving benefits in order to win more votes next time. The contrasting approaches to
public policy in Kerala and Uttar Pradesh demonstrates this. Long-established and
vigorous competition with incumbent parties helps to make oppositions good at investing
substantially in mobilizing poor voters, promising them services, and building grassroots
party structures. Without opposition, dominant parties are not pressed to mobilize poor
voters or to deliver services (Keefer and Khemani 2004:938).
Minority governments and systems where the president and the legislature are of different
parties can produce bidding wars among contending political forces, make legislative
support for reform difficult to mobilise and ruling coalitions hard to sustain. This
‘longevity’ and stability effect has even been found for non-elected governments: leaders
with more years in office protect property rights more effectively than those with fewer
(Clague et al, 1986). Arguably stability of this kind is particularly important for reform
prospects in Africa – it may be the most significant contribution that the ‘Movement’
system makes to such reforms as have succeeded in Uganda. Needless to say, however,
weak or repressed political opposition eventually becomes a profound limitation on
governance reform, undermining the development of institutions to link state and society
in ways that can facilitate public oversight of government (Barkan, 2000:4)..
c) Incentives: reputation, survival
What encourages politicians and policy-makers to promote good governance efforts in
the first place, what incentives can they offer to other elites to support reforms, and what
incentives will encourage bureaucrats to turn away from rent-seeking behavior and focus
on improved performance? A focus on incentives shifts gear from the macrofoundations of political action to the micro-politics of decision-making and responses to
particular inducements.
Rational choice theory has offered a useful framework for understanding how public
actors might respond to changes in their environment – to, for instance, a stiffer dose of
17
sanctions on rent-seeking behavior, to a more open and transparent information regime,
to more participation from citizens and clients in decision-making. While we
acknowledge the contribution of rational choice approaches to micro-political approaches
that identify the motivations of utility-maximizing actors, we contend that complex endsmeans calculations in the context of reform cannot fully be explained through rational
choice because there are so many unknowns in processes of reform. Winners and losers
cannot be identified clearly because they change all the time and are as much created by
skilled political action as given in a strict accounting of the rational preferences of
different players. As noted by Zhou and White in their study of reform in China, a
rational-choice calculation of the preferences of different actors is difficult because
‘people often have an interest in making sure their ideals remain ambiguous, not
choosing among preferences until the net benefits of doing so are clear’ (1995:482). The
actions and even awareness of different actors may be less rational than ration-action
accounting of preferences suggests.
Principal-agent models are another well-established set of tools for studying the impact of
changing incentive systems in organizations. Like rational choice approaches, there are
positive strengths to these and some weaknesses. To cite one of America’s leading
contemporary applied organization theorists:
“…. Principal-agent models of bureaucratic behavior (…) are far better at
explaining why bureaucrats shirk (goof off on the job), subvert (commit acts of
administrative malfeasance) or steal (use public office for private gain) than they
are at explaining why bureaucrats behave as ‘principled agents’ – workers who do
not shirk, subvert, or steal on the job even when the pecuniary and other tangible
incentives to refrain from these behaviors are weak or nonexistent. These workers
also often perform thankless tasks, go above and beyond the call of duty, and make
virtual gifts of their labor even when the rewards of behaving that way are highly
uncertain at best” (DiIulio, 1994).
Accordingly, governance reforms seek to punish the unprincipled agent and to empower
the principal to create clearer contracts for services from the agent, to monitor them
better, to track spending more carefully, and to see that punishments are enforced more
effectively for malfeasance (see the proposals for improved accountability in service
delivery in the WDR 2004). They emphasize hard accountability – enforceable
commitments from bureaucrats for defined outputs, as opposed to investing in trust or
responsiveness.
Since our object here is to explain the conditions under which governance reforms
succeed, not the obstacles to these reforms, we are moved to seek other approaches for
understanding incentive systems. In other words, while recognizing the value of trying to
establish the utility calculus made by various actors when contemplating an engagement
in risky reforms or in reforms that do not offer obvious rewards (in the form of rents), we
also seek explanations that move beyond the individual level to help us understand the
political causes of bureaucratic efficiency or of public actor probity.
18
Thus, while it is true that reforms that increase the risk that a politician or bureaucrat will
get caught in corrupt acts will create incentives to avoid detection or to eschew corrupt
activity, we need to consider the incentives enabling power-holders to establish a credible
corruption-detection process in the first place.
Two sets of incentives seem to trigger governance reform efforts in the first place, and
then to ensure compliance in the second. The first set of incentives apply to the apex
power-holders and decision-makers who must take the first steps in setting up and
sustaining credible reforms. Political survival and reputation is the main incentive for
engaging in reform, and reform often has to be constructed in such a way as to:
-
-
not in fact suggest an end to rent-seeking or to old-style political deals. From
politicians’ points of view, there is an incentive to reform if they know that
reform does not spell an end of their ability to derive illegal income (Jenkins
1999:83; Roberts, 1995; Booth, 2003). They have an incentive to reform if they
see some new source of funds to maintain their political careers, and also if they
see that they can preserve their means of cultivating political support. Old-style
politics is not necessarily threatened with extinction. The transition to multi-party
politics in Ghana, according to Booth, has been much eased by the perception of
politicians that they would easily be able to adapt pre-existing patronage systems
to competitive politics (2003). However, the new patronage politics departs from
previous versions in that politicians respond to an incentive to extend ‘porkbarrel’ patronage to poor voters from beyond their traditional ethnically and
regionally-defined supporters. This is an example of incremental institutional
change – it does not unravel previous practices, understandings and pacts, though
it may subtly alter patronage relations to embrace clients from beyond narrow
ethnic groups.
Create opportunities to cultivate new support groups and alliances. There will be
no such incentive if politicians do not feel confident that social groups will
respond creatively, rather than intransigently, to new policies. And for politicians
to feel confident of this, it helps if civil society is diverse and complex, and
political freedoms to associate and articulate oppositional perspectives are secure.
Sometimes (in Brazil, for example) achieving good governance reforms depends on
keeping the decision making process open to pressure from organised interests because
they are mostly progressive, whereas in other places (Madhya Pradesh) it depends on
keeping them closed because the most potent organised interests are reactionary.
The second set of incentives that must be considered are those animating the mid and
lower-level bureaucrats who must comply with reforms. A key practical constraint on
governance reform is that while some of the most entrenched resistance to reform comes
from the public administration, the public administration is also the key executive agency
of most governance reforms, and its capacity limitations constitute a fundamental brake
on the pace of reform. Yet reforms that tackle cost containment, organisational
restructuring, fiscal hygiene, internal accountability systems have rarely been able to
reduce incentives for corruption and moonlighting, and have tended to entrench
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bureaucratic resistance to reform. The creation of enclave centres of excellence in
administration (apex bureaucracies such as the ministry of finance) has seen successes,
but these are costly and unsustainable. Moreover, they do not bring improvements to the
‘front line’ of the public administration, or improve the command relationship between
top-level policy-makers and service providers.
Any systemic reform that threatens established means of doing business, and more
important, established channels of generating income, will be resisted or subverted by
mid-level staff, however sincere the top-level support for reform. Mid- and front-line
state workers mediate relationships between the formal state institution that employs
them, and the many informal institutions of which they are a part, and for which they are
gate-keepers to unmerited access to state resources, whether that be jobs for ethnic group
brethren or rural irrigation schemes for regions producing large numbers of state
employees. A key incentive for changed behavior on the part of these state workers is
therefore not necessarily the (usually barely credible) threat of exposure and punishment,
but rather, an institutional survival alternative to partisan resource allocation patterns.
State workers need not just level of remuneration that rewards effort, but also a sense of
mission, renewed professionalism, inspiration, and social status, enough status to offset
the disapproval and condemnation that will flow from refusing to favor a specific social
group.
Case studies of effective reforms to service-delivery bureaucracies suggest that punitive
control measures can be subverted, but that changes that build the sense of organizational
mission shared by staff, that celebrate successes, and that include civil society as
monitors of the performance of public sector workers, can be very effective.16 Tendler
and Freedheim’s study of a primary health service reform in North-eastern Brazil
demonstrates this (1994). Also important in that case were measures to detach local
politicians from control over front-line health sector workers, notably at the level of
recruitment. This insulated workers from politics, activating incentives to implement
development policies with a longer time horizon. Information-provision that confronts
public sector workers with the effects of their actions (for instance Report Cards on
public services) may generate more interest in client needs and commitment to improved
performance.
Substantial differences between top levels and bottom levels of the public administration
in attitudes to (and awareness of) reform must be eliminated if the bureaucracy is to rally
behind governance reforms. These differences will be harder to eliminate when sheer
physical distance, substantial resource constraints, skills gaps, and communication
failures make sub-national administrations virtually oblivious to reform.
d) Leadership/ political skills/ agency
16 Tendler and Freedhiem, Grindle and Hildebrand, Nunberg, etc.
20
Single-minded leadership can push through reforms in the absence of popular consent let
alone elite consensus -- this was the case in Britain under Thatcher, Chile under Pinochet,
and to some extent Ghana under Rawlings. In each case leaders were able to rely upon a
highly secure political position even without a broad mandate, but the conditions for
achieving this political security are not only unusual, but in the case of Chile and Ghana,
undesirable. While the exercise of ‘persistent political will’ (March and Olsen 1989) can
serve to bring radical change against tremendous odds, for most leaders, it is essential to
generate support from opponents and to cultivate constituencies for reform. According to
Guillermo O’Donnell the prisoner’s dilemma that confounds efforts to manage economic
and political change simultaneously can be overcome by ‘finding areas … in which
skilled action (particularly by the government) can lengthen the time horizons (and
consequently the scope of solidarities) of crucial actors’ (1993:1376, and Gourevitch,
1993:1271).
Tactics employed by skilled political actors attempting governance reform often require
deception – what has become known as ‘reform by stealth’. These strategies are intended
to ‘soften the edge of political conflict by promoting change in the guide of continuity,
and to arrange clandestine compensation for groups who perceive reform as a threat’…
(Jenkins, 1999:52). Informal and formal institutions that connect public decision-makers
to society are crucial for the effectiveness of strategies to drive under the table bargains,
to divide interests, or rationalize exemptions for particular groups from painful aspects of
reform. Leadership and political skills, and the types of tactics that will work in effecting
constructive buy-in to reform efforts, are therefore shaped by the overall institutional
framework.
Leadership also involves achieving effective central coordination of reform. A major
challenge in reform efforts is bridging the ‘vertical’ divides between different central
government agencies – the ministry of finance, the ministry of public service, the
president or prime minister’s office, and the public service commission. A reform
initiative hosted in any one of these bodies is sure to experience resistance in extending
its mandate to aspects of management that are the concerns of the others. The common
approach to overcoming this is to host reform processes in committees that have
representatives of all central governance bodies, but this of itself does not guarantee
effective action unless there is a powerful sense that the head of government backs
reform. If effective central coordination structures have been set up, the next problem is
overcoming the ‘horizontal’ divide between central government units and the front-line
where government business is transacted.
According to Poldiano, effective reform leadership requires a rapid transition to a focus
on end results, whether defined as greater efficiency, more equitable or quicker service
delivery, or reduced corruption. Procedural initiatives focusing upon internal
mechanisms – such as the improvement of personnel records or the introduction of new
budget planning techniques – tend rapidly to become the focus of reforms instead. They
become an end in themselves. Worse, procedural initiatives make reform look like the
exclusive concern of central agencies to cut costs or to tighten control over staff, instead
of focusing on the concerns of line agencies. The result is onerous new procedures for
21
line managers, who may not see the connection between these and their work, and will
seek to get away with a bare minimum of compliance (2001:15). A focus instead on
performance and results may generate the buy-in of line managers because it may
highlight the delivery problems they experience. Poldiano argues that certification
schemes that audit and reward the performance improvements of line departments
generates incentives for reform at the front-line while enabling line managers to retain
leeway to respond to reform demands in ways tailored to their needs. A developingcountry example of this is Malaysia’s ISO 9000 certification initiative, where rewards are
made through a specialized semi-autonomous body – the Malaysian Administrative
Modernization and Management Planning Unit (Bin Besar, 1998).
5. PRACTICAL CONDITIONS FOR SUCCESSFUL GOVERNANCE REFORMS
We suggest that factors that influence the capacity of reformers to take political risks in
undercutting the privileges of elites accustomed to seeking rents through the state, or that
enable reformers to generate support from groups likely to benefit from reform, include:
a) The extension of time horizons. The longevity, flexibility, adaptability and
legitimacy of major formal and informal institutional channels through which
agreements are reached between contending social groups, or through which
losers are compensated, generates stronger support for reform and willingness to
experiment.
b) The devolution of responsibility for some reforms to lower levels of government
(e.g. state levels in federal systems), and the deflection therefore of some of the
opposition to reform, but also a generalization of gain from reform;
c) A change in the composition of governing elites that, in particular, minimizes the
role of traditional (especially rural landholding) elites.
d) The sequencing of reform in such a way as to generate early ‘winners’ from
reform who can support follow-on reforms;
e) The diversity and depth of civil society and its capacity to respond positively to
reforms.
f) The sheer technical capacity of the public administration.
These are elements of the formal and informal institutional set-up in any country and they
not only promote risk-taking on the part of governing elites, compromise and
accommodation on the part of obstructive elites, sustainability (through on-going
experimentation and challenges to replicate successes) of reform, but may also produce a
pro-poor focus in decision-making and policy implementation. We address each element
in turn.
a) Institutional longevity, predictability and legitimacy.
Longevity and security of the formal institutional arenas in a country – the political
regime, the rules of political competition, and the systems for civilian control over the
22
military – reduces risks and increases willingness to bargain because a sense of
institutional permanence extends the time horizon of elites and increases their tolerance
of short-term reform costs. This sense of institutional predictability and legitimacy
enables politicians, who are known for tending to privilege the short over the long term to
introduce reforms that impose costs on well-organized interests close to power-centers,
but have only an unrealized and often not fully appreciated promise of gains for latent,
disorganized, or otherwise politically weak groups. Where there is insecurity and a live
memory of catastrophic failure in the formal institutional set-up (as in Uganda) there is
less willingness to take risks. On the other hand, where public institutions have survived
threats and crises, there may be a greater willingness to submit to painful reforms. One
study of civil service pay reform in eight African countries argues that it is this feature
(which the authors simply label ‘high institutionalization’) that explains the relative
effectiveness of pay reform in Tanzania and Botswana (Morin et al, 2004).
Secure, predictable, and difficult-to-alter formal institutions help to convince special
interests of the practicality of engaging in negotiations. Time-tested institutional
adaptability, capacity to accommodate new actors over differing periods, also supports
the legitimacy of institutions and the willingness of stakeholders with conflicting interests
in reform to participate in negotiations. Institutions of particular importance in this case
include corporatist arrangements for brokering deals between government, business and
labor, and sometimes other civil society interests as well. Others include the judicial
system, audit institutions, and channels for access to and negotiation with the Executive.
A study of the role of the Irish National Economic and Social Council – a corporatist
structure set up in the 1970s to mediate relations between business, government, labor,
and civil society, shows how its consistency in delivering on negotiated changes in tax
policy and other responses to recession in the 1980s has made its members secure about
the value of engaging in negotiation processes. According to one analyst, the other side
of longevity is predictability – the ‘shadow of the future’ – which generates patience and
trust amongst its members, and increases the cost of defection.17 Informal institutions
are also important in this respect – time-tested and predictable informal channels for
accessing decision-makers via ethnic, friendship, caste, or business connections may
likewise support reform because they make different actors put more confidence in
negotiations.
Features of formal political institutions that encourage time-intensive pact-building and
negotiation may also support sustainable reform. Most modern democratic systems do
not grant majority powers to single parties, and the negotiation and compromise involved
in coalition-building tends to enhance the public ownership and legitimacy of reform
programs. Dominant parties or single-party governments may offer the attractions of
rapid adoption of reform – Uganda is a good case of this. But the sustained pursuit of
reforms falters in the light of a lack of accountability and weak elite and popular support.
b) Levels of reform: Devolution to sub-national governments
17 World Bank, n.d., cited in Brautigam, 2004: 4.
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Governance reforms can be pursued at sub-national levels prior to being attempted in
central government. When central governments oblige, through the use of
conditionalities, federal or lower-level governments to take charge of some painful
reforms, this can be an effective means of triggering buy-in to reform, as well as
encouraging innovative and locally appropriate strategies. Federalist systems may endow
sub-national governments with the autonomy to experiment with reforms that can
provoke adoptions elsewhere. This seems to have been the case with budget reforms in
Brazil, and a range of sector-level reforms in India.
There are several reasons why federalist systems can make some governance reforms
easier. First, economic or political groups that would be powerful at the national level,
acting in concert, may be faced down one at a time, state-by-state. This appears to have
been the case in Brazil, where the resistance of provincial governors to fiscal discipline
may have been eroded through state-by-state budgetary reforms. Some disputes can be
quarantined in this way – for instance the wage increase demands of a public sector union
may be faced down within a single state, as was done by the Chief Minister Gehelot in
Rajasthan and the chief Minister Jayalalithaa in Tamil Nadu prior to 2004 (though this
may have cost both of them re-election).
Second, pursuit of reforms at sub-national levels can enable policy learning from state to
state, and state to centre. Competition among jurisdictions opens space for
experimentation with reform, and can help in undermining resistance to reform.
Devolution of responsibility for reform serves many functions – it deflects conflict from
the national to a sub-national level, it distributes costs and benefits of reform, it engineers
buy-in from doubters not only within the ruling party but amongst opposition parties who
may be in charge of sub-national legislatures. It also initiates a race to reform – a
phenomenon that has been noted in China and India, where sub-national governments
compete with each other in reforming their states in order to attract investment, or to
attract international attention for their pro-poor reforms to service delivery systems. Thus
in China, Montinola et al note that ‘federalism, Chinese style’, ‘provides considerable
protection for China’s reforms, including limits on the central government’ (1995:52;
cited in Jenkins 1999). This is because political and economic reform has built up the
authority of provincial politicians, making it more difficult for the central government to
retreat from reform. Decentralization of reform efforts also creates incentives to
experiment and sustain reforms. Experimentation attracts attention, praise, and
investment, and provokes neighboring or rival jurisdictions to follow suit. Elites
benefiting from reform in one state lose interest in obstructing reform, while those in
jurisdictions that have not reformed lose credibility when they oppose reform that has
clearly worked well elsewhere in the country (Jenkins, 1999:71).
More commonly, of course, reforms that rely upon the competitive dynamic of
devolution and decentralization face a number of risks owing to capacity constraints. For
instance, public management reforms that expand the autonomy of local administrations
require good monitoring, inspection and information systems, sound budgetary control,
reliable performance indicators and measurements, and a capacity to manage
24
communications and accountability systems between central ministries and a multitude of
decentralized agencies (Larbi, 1999; Nickson, 1999). These are precisely the capacities
that are very weak at sub-national levels of government in developing countries, and thus
decentralized management can exacerbate problems of capture and corruption – as was
discovered in Ghana’s decentralized management units (Larbi 1999; Ayee, 1994) and
Zimbabwe’s regionalized performance management system (Therkildsen, 1999).
c) Changes in composition of governing elites
The sustainability of reforms depends upon the formation of durable pacts among the
major interests and actors in a society. Leftwich suggests that elite policy circles can be
effective in developing countries precisely because the ‘dense traffic between top levels
of the civil and military bureaucracies and high political office, [which] is very rare in
Western liberal democracies’ (1996:285) enables reforming elites to get things done. For
instance, in Japan and other East Asian countries, intimacy between key bureaucracies
and economic agents in the private sector made state and market pull in the same
direction to ensure that the combined public-private drive to attain growth was so
effective (Wade, 1990). However, the composition of the governing elite, and of the
special interest groups who have access to these elites, will have an effect on the
willingness of politicians to take risks with reform and in particular influences their
ability to support pro-poor spending (Lakshman, 2003:14). Governing elites are a
bureaucratic, political, economic, and often military core policy circle surrounding the
chief executive, and it should above all exclude traditional proprietary interests (see Sklar
1996 and 1987) if it is to avoid cronyism (the Marcos regime in the Philippines), a
predatory character (Haiti, Zaire, Uganda under Obote), or the immobilism resulting from
conservative elite interests as has been the case in India during some periods.
We observed earlier that left-of-centre parties have been more effective than others in
promoting pro-poor spending, and this is not least because they have been able to conduct
an ‘end-run’ around the traditional land-owning elites who most directly oppress the rural
poor. In Latin America this has been the case wherever effective land reform was
pursued (Ascher, 1984). In India, this is said to account for some of the differences in the
capacities of states to support pro-poor agricultural growth. Moore and Putzel, for
instance, claim that that Karnataka’s weaker record than Andhra Pradesh in poverty
reduction owes to the persistent local political dominance of particular landed castes.
Party competition in the state is fragmented and factions are headed by these landed
castes. In Andhra Pradesh, in contrast, the Telugu Desam Party has appealed to a more
‘modern’ business and professional group of elite castes, whereas the Congress party still
relies on traditional landed interests. The TDP has also, of course, invested in developing
a party machinery that reaches to the village level as a means of channeling resources to
poorer supporters. Stable two-party competition there, in contrast to party fragmentation
in Karnataka, has encouraged discipline in both major parties and has had the effect of
entrenching effective anti-poverty performance at the centre of the legitimacy claims of
politicians on both sides (Moore and Putzel, 1999:11). The overall effect in both parties
is a greater incentive to invest in cultivating a constituency amongst the poor, rather than
relying upon traditional landed patrons to organize clients in voting blocks for the party.
25
Other characteristics of the governing elite that seem to affect a willingness to take policy
risks include the degree of ethnic (or caste) homogeneity and the degree to which caste or
religious or other characteristics are shared by the main special interests with which
governing elites negotiate. Homogeneity probably promotes trust between governing
elites and special interests. The nature of relations with business elites are probably even
more important than the capacity of the governing elite to create communication channels
with poor groups, as business elites supply the revenues needed for pro-poor spending,
and their buy-in is essential (Brautigam 2004:12). The arguments, scares, and devices
used by governing elites to engineer buy-in to reform from business and professional
groups are therefore an important element of reform. In Brazil, for instance, modern
urban elites tend largely to support the Landless Workers Movement’s proposals for land
reform, because of an (actually mistaken) expectation that land reform will help to clear
urban slums (Moore and Putzel, 1999). In Maharashtra, urban professionals have
supported the rural Employment Guarantee Scheme through shouldering an extra tax
burden for decades, out of a similar expectation that this will contain poverty and its
discontents in the country-side (Joshi and Moore 2000).
An emerging trend is the infiltration of economic policy elites by professionals trained in
international financial institutions. According to a recent study by Sengupta, economists
once employed by the World Bank entered key economic planning institutions in the
Indian central government over the 1980s. Sengupta argues that this cadre of high-level
lateral entrants made a significant input to economic reform in the 1990s, using informal
levers and networks rather than much-resisted conditionalities to create a persuasive
argument for reform and to provide support to reforming politicians (2004).
d) Sequencing and intensity of reforms
The sequencing of reform in such a way as to generate early ‘winners’ from reform, who
can then support follow-on reforms, si one means of diffusing resistance. The substantial
time frame needed to pursue some reforms can either dissipate resistance or entrench it (a
policy of accommodation and consensus-building may simply give opponents of reform
more time to strip public assets in anticipation of an eventual loss of access to illicit
rents). Reform leaders will take decisions on the best combination and sequencing of
reforms according to their calculations of likely resistance as well as calculations about
the reputational pay-offs of reforms in relation to the timing of electoral tests. They may
sequence longer-term and more painful reforms (civil service reform) after more visible,
popular, and easier to implement ones (decentralisation, performance measures in public
services, strengthened public expenditure accountability systems). Or they may envelop
reform clusters with economic populism in order to make the entire bundle more
palatable and to distract some opponents.18 These strategies of sequencing and bundling
will influence the performance of reforms.
18 Drake calls this the ‘bait and switch’ explanation for contemporary populism – (1991:36)
26
It is a common-sense observation that incremental reforms attract less protest than
wholesale institutional restructuring. In addition, reforms that involve the creation of
new institutions are more palatable than those involving the demolition of failing
institutions.
William Ascher’s study on the politics of redistribution in Latin America found that
cautious and stealthy reform worked best: ‘the virtues of forthrightness, openness,
ideological consistency, and courage to face attack often turn out to be liabilities’ –
success in reforming, in fact ‘may be more readily effected when regime leaders indulge
in improvisation, obfuscation, and even insincere threatening’ (1984:18; cited in Jenkins
1999). Designing reform so that it is barely noticed, introduced gradually, changing
institutions over the long run, requires substantial political skill
e)
Diversity and depth of civil society
When governing elites take a gamble on reform they often hope that new constituencies
will emerge that benefit from and will therefore support reform. They depend upon the
elasticity of civil society to absorb shocks and re-group around new interests that emerge
from reform. Civil society institutions can sometimes help interest groups to change
their perceptions of their interests and help them to capitalize on new opportunities
available through reform. Civil society and the media also play a key role in alerting
voters to policy failures, corruption, or to the absence of a pro-poor focus in the work of a
particular government. A ‘thin’ (i.e., mostly urban-based associations, with no
engagement with traditional informal rural institutions) or a fearful (wary of repression or
co-optation by the state) civil society will be able to do none of these things (Friedman
and Robinson 2004).
The nature of civil society also influences the extent to which the poor may find effective
engagement with policy-makers. In most contexts, the poor face well-known collective
action difficulties (lack of physical, social, and human capital etc), and are therefore
attracted to the vertical patron-client solidarities that promise them benefits but that do
tend to segment, rather than unite the poor. But in contexts where the poor have been
effective in forming a political block, it has been through finding an ‘institutional host’
(Houtzager 2001) that has access to governing elites – in Latin America, these have
classically been the Church, trade unions, agrarian movements, or left-of-centre political
parties. These do not automatically represent the interests of the poor, but under some
circumstances they can do – this, for instance, was the case in post-Pinochet Chile, when
trade unions dropped their focus on the needs of urban and industrial workers and began
to defend the interests of informal sector workers (Weyland, DATE).
In a diverse civil society interest groups can perceive new ways of achieving goals – a
sheer diversity of interests leaves their constituent members many options. It also
protects civil society from cooptation by government. Where single apex ‘front
organizations’, led by individuals with few alternative career paths negotiate the labor or
business position with government, they can be either cowed by government repression
or take unrealistically intractable positions.
27
Where there is an independent and diverse media, media freedoms, and reasonably high
levels of literacy, there will be a growing citizen interest in governance reforms. In
federal systems, when the media reports on governance experiments in some areas of the
country, this will trigger interest in replication in other parts. Use of the media for stateinspired good governance measures, such as the publication of block grants to Districts in
the local press in Uganda, will stimulate citizen interest in accountability, including
demands for further transparency.
Claims by public sector and governance reformers that their work will automatically
stimulate accountability systems have been discredited (Ferlie et al, 1996 reviews cases
exposing the imperfections of quasi-markets and the collusion of managers with powerful
interest groups). This has stimulated the exponential growth over the past decade of
citizen-centered accountability mechanisms, such as public service surveys (Report Cards
- Paul and Sekhar, 1997), public hearings on environmental impacts of industrial
development plans, or on spending patterns of local governments (Jenkins and Goetz,
1999), as well as new institutions such as public complaints commissions, ombudsmen,
and Citizen’s Charters. Few of these measures equip ordinary people with the capacities
or the rights or demand answers of power holders or to see punishments enforced for
illegal acts or corruption. However, these and other measures to encourage selforganized citizens to influence public policies are an essential part of the cultural change
needed to make governance reforms work. If citizens do not act collectively and
individually on information about the performance of politicians and officials, the quality
of governance cannot change. If donor pressure and the threat of conditionality is used as
a surrogate for citizen scrutiny, problems of weak ownership of reform processes will be
exacerbated.
f) Technical capacity
Public sector reform in industrialized countries over the past 20 years has shown that
even where the case for reforms is championed by political leaders, and accepted by
society, attitudinal and capacity problems can blunt the impact of reforms (Caiden, 1991).
Capacity problems are acute in low-income crisis-ridden countries, and bureaucrats who
lack the infrastructure, training, and commitment to pursue reform will eliminate any
positive effects that might emerge from having well-organized constituencies for reform
and enthusiastic champions. As noted earlier in this paper, the paradox is that complex
institutional reforms to improve fiscal stability, managerial efficiency, and political
accountability rely for their implementation upon high state capacity – the very quality
that is not only lacking in many developing country administrations, but is being
undermined by downsizing programs (Hutchful, 1999; Mkandawire and Soludo, 1999).
Technical capacity has been a particular problem in Africa (Schiavo–Campo et al, 1997)
– exacerbated by the decline in funding for higher education (Bangura, 2000:35). The
skills limitations of African administrators have been if anything exacerbated by the
reliance on expatriate technical staff to lead autonomous agencies and to implement
adjustment measures. Expatriate staff have been deployed in massive numbers in African
administrations – in the 1980s about 100,000 resident expatriates at any given point – to
28
formulate and monitor adjustment programs in order to enable governments to act
quickly to disarm domestic resistance, alter the state’s role in the economy and stimulate
markets. This haste, it is now recognized, prevented the development of national
ownership and commitment to reform, and further weakened the capacities of domestic
bureaucrats to support reform. The former vice president of the World Bank’s Africa
Region, Edward Jaycox, denounced this expatriate technical assistance as ‘a systematic
destructive force, which is undermining the development of capacity in Africa’ (Jaycox,
1993, cited in Bangura, 2000:36).
Public sector reform programs in the 1990s, in recognition of this problem, have sought
to enhance local ownership through compensatory schemes for top civil servants,
training, and equipment supply. Bangura argues that these efforts to rectify the
dependency problem in African technical capacity have not achieved much because the
continued emphasis on quick results prioritizes short-term palliative measures rather than
long-term investment in tertiary education and professional public service training
(2000:3). The practical and political problems of improving administrative capacity in
low-income states are phenomenal. The costs of pay reform, retrenchment, training, and
improving infrastructure are considerable, and frequently contradict reform objectives of
reducing the wage share of recurrent expenditure and the overall central government bill
as a percentage of GDP per capita (Schiavo-Campo et al, 1997). Adequately financing
state capacity building would detract from other vital recurrent inputs, particularly in
public services (Therkildsen, 1999).
Specialists in public administration argue persuasively that capacity reforms that rest on
market models (such as new public management) cannot be pursued where a professional
civil service is still not fully formed (Nickson 1999). Flexible and deconcentrated
administrative structures, performance measurement systems and the like will not work
outside of a shared professional culture and common ethical standards (Bangura
2000:43). In other words, as Bangura spells out, ‘Only those countries that have
established a professional civil service – the foundations of ‘old public administration’ –
may be in a position to move towards ‘new public administration’ (ibid).
6.
DIFFERENCES BETWEEN PUBLIC SECTOR AND GOVERNANCE
REFORM TYPES
How far do the six factors identified above (longevity and legitimacy of formal
institutions, capacity to devolve some reforms to sub-national levels, changes in the
composition of governing elite, sequencing of reform to pick off resisters or create early
winners, diverse and ‘deep’ civil society, and good technical capacity) shape the
prospects for reform in the main arenas of public sector governance? Though PSG
reform areas overlap considerably, we distinguish between four main areas of reform
here: reforms aiming to build fiscal stability, reforms improving service delivery,
capacity-building reforms in the public administration, and public accountability reforms.
29
a) Fiscal stability: public financial management reform, Medium Term
Expenditure Frameworks, performance-based budgeting
These reforms aim to strengthen the accountability relationship between policy-makers
and civil servants in line ministries, and between central and sub-national levels of
government. They include the imposition of constitutional constraints over spending and
borrowing, the establishment of independent Central Banks, and the passing of fiscal
responsibility legislation to curb the excesses of national or sub-national executives. The
application of ‘New Public Management’ principles has encouraged the establishment of
autonomous revenue-collection agencies. Where it has been possible to reform fiscal
institutions in the direction of fiscal discipline, allocative and operational efficiency, this
has sometimes been because fiscal discipline supports the political goals of the national
leadership.
The case study of Brazil’s fiscal responsibility law (Schneider 2004) shows how the
central government was able to exploit a fiscal crisis to impose limits on state-level
spending and in the process, to curb fragmentation in Brazil’s party system. In this case,
the relative longevity of Brazil’s federal system must have contributed to the willingness
of a number of state-level leaders to acquiesce, bit by bit, to fiscal discipline. This case
also illustrates the way sub-national governments can be played off against each other by
a central government promoting reform. After 1994, Brazil’s President and the ministry
of finance began restructuring state-level debts on a state-by-state basis, rather than
producing the same conditions for all. Clever bargaining bought larger states’ early
compliance with of harder budget constraints, isolated the recalcitrant governor of Minas
Gerais when he attempted to default in 1999, and enabled supporters of fiscal controls to
overwhelm other resisters.
Of the six factors influencing reform success listed in the previous section, we would
expect all but the civil society variable to have an impact on the success rate of fiscal and
budgeting reforms. Longevity and legitimacy of budget and tax institutions as well as
the legitimacy of the executive may improve chances that changes can be negotiated. As
the Brazil case shows, variations in deficit management across sub-national levels of
government enabled the executive to incrementally introduce changes and to isolate
resisters. A change in the composition of the governing elite may also have prompted
willingness to tolerate greater fiscal discipline. And good technical capacity enabled
sequencing of technical improvements to the budget over time.
The role of civil society seems so far less pronounced in the area of fiscal stability
reforms than in other areas of PSG reforms. Partly this owes to the paucity of
opportunities for civil society to engage in budget processes. The weakness of
legislatures tends to be pronounced in respect of the budgetary process and this
exacerbates the distance of civil society from fiscal reforms. In many countries there has
been a long-term decline in the influence of legislatures over budget policy -- often
annual budgets are submitted to legislatures by Minister of Finance for approval or
rejection in total without amendment (Schick 2002). MPs have no power to reorder
30
government spending priorities. This problem afflicts industrialized countries as well as
developing ones. This undermines ownership of fiscal control measures, and disables
legislators from linking members of the general public and local elites to senior decisionmakers (Barkan, 2000:21). One way of building the connective role of legislators is
through strengthening the capacity of the committee system to review legislation and the
work of central government ministries. Survey instruments such as public expenditure
tracking surveys can have some effect in informing and alerting legislators and civil
society organizations to budget performance issues.
b) Service delivery reforms (decentralization, performance measurement etc)
Service delivery reforms are increasingly seen as the most promising arena through
which external accountability mechanisms (civil society scrutiny, elected local councils,
new institutions such as the office of the ombudsperson) may be strengthened, and in the
process, improve expectations about probity in other state processes such as the rule of
law, fiscal discipline, and capacity building. In the area of service delivery reform, the
variable of civil society diversity and ‘depth’ seems to be one of the most important
determinants of success. A major constraint to this expectation is the weakness of civil
society at local levels and particularly rural areas. Local government or decentralized
services, if they are to be more accountable and responsive to local citizens and service
users, require local populations to voice their concerns. Efforts to build local capacity
and managerial efficiency must therefore be matched by enhancing the capacity of local
civil society. This is an enormous problem in many African countries where civil
societies are weak because of suppression of independent associational life under oneparty regimes, because of the urban location of most existing civil society organizations,
and because most CSOs are community development groups focused upon service
delivery themselves, not on making claims on the state.
31
In our case studies from India, the urban-based service-delivery improvement efforts
(BATF in Bangalore and Metro Water in Hyderabad) have enjoyed more striking
successes than the rural ones (the Bhoomi land registration program in Karnataka and the
DWCRA program in Andhra Pradesh). However, while public concern about service
quality can have a significant impact on performance (Putnam, 1993), it is no substitute
for effective internal target-setting and accountability mechanisms in the public
administration. Public concern is, regrettably, usually too diffuse for reformers to
mobilize as a direct reform tool (Poldiano, 2001a). Because performance measures and
internal target-setting can arouse resistance, and because it is difficult to change
incentives across the board in diverse public sector agencies, sometimes reforms have
been more successful when they are sequenced to target just a small set of services or
even a small sub-set of functions within an agency, or when they connect control
measures to other measures that build the professionalism of staff. This is the case with
the reforms to the complaints department at Metro Water, Hyderabad, and has been the
case with the health sector reforms documented by Tendler and Freedhiem in North-east
Brazil (1994).
.
c) Capacity-building and Civil service reform
Civil service reforms are complex, multi-faceted, and often overly complicated in design
(Poldiano 2001a). More importantly, they can arouse ferocious resistance from the
politically powerful bureaucratic class. Such a wide range of institutions require reform –
problems of poor performance and low administrative capacity can be rooted in social
norms and behavioral patterns rather than administrative structures – that the difficulty
lies in knowing where and how to limit reform efforts, and to resist the temptation to
reform society before reforming government. Because causes of poor performance are so
complex and deeply-rooted, the temptation has been to design complex and
comprehensive civil service reform programs. Dia for instance argues that neopatrimonial systems require a comprehensive reform program across all public
institutions (1994:19), and Kiggundu extends this to civil society as well in a model of
‘transformational capacity development’ (1998).
This push to ‘advance on all fronts’ requires coordination and technical capacity that is
precisely what is wanting in many poor quality public administrations. Other observers
of public sector reform urge a much more cautious and incremental approach. Klitgaard,
for instance, argues in relation to performance incentives that ‘[t]he idea of designing an
incentive master-plan for every part of the civil service at once is misguided.
Performance measures are so problematic that we are well-advised to begin with
experiments and then learn from experience’ (1997:497). Practical experience even in
high-capacity industrial states bears this out. New public management reforms in the UK
and Australia (though not New Zealand) apparently succeeded to a large extent because
they were more incremental than popularly imagined (Poldiano 1995; Nunberg REF).
32
Reviews of issues of design and sequencing of civil service reforms have not come up
with optimal solutions to the choices to be made between comprehensive or incremental
approaches, nor to the challenge of dealing with the political and financial costs of any
reforms that involve retrenchment (Nunberg 1989). The more recent proposals for
incremental and context-specific approaches have started to stress that a first step to civil
service reform is the creation of a professional culture and a sense of public trusteeship
(Bangura 2000). It is hard to see how this will of itself enable an effective assault on
entrenched clientalism but this ‘positive’ rather than ‘punitive’ approach may generate
pockets of performance excellence that can trigger improvements elsewhere.
d) Public accountability (anti-corruption measures, judicial reform, support to
legislatures)
A common approach to supporting public accountability has been to invest in capacitybuilding in institutions intended to hold executives to account, and indeed to create new
ones: anti-corruption agencies or supreme audit institutions. Experience with these has
been disappointing, not least because of weaknesses in the many complementary
institutions needed to make these work well (police, the legal system, the legislature, the
media, civil society, the central bank, and reporting systems in the administration). There
are problems establishing the legitimacy of these institutions and in endowing them with
sufficient authority to function effectively. And above all, political interference in the
functioning of these agencies has been difficult to resist, as the case study of Uganda’s
Inspectorate-General of Government shows.
Judicial reforms have suffered from similar problems. A general focus on technical
capacity improvements have failed to make an impact on the investment that the police,
lawyers, clerks and judges have in court delay and in a lack of transparency in
proceedings. Reforms to formal public accountability institutions suffer from the fact
that in many countries they lack legitimacy and social embeddedness, at least in
comparison to much better-entrenched informal justice institutions and accepted cultures
of graft and patronage.
Successful reforms in public accountability institutions probably need to start with
challenging popular acceptance of impropriety and patronage, and also must be tied to
reforms to legislatures in order to strengthen the capacity of political opposition critically
to scrutinize government spending and other actions. The emphasis needs to be on
‘preventive’ rather than ‘curative’ or ‘punitive’ measures. ‘Preventive’ measures aiming,
in the case of anti-corruption agencies, to limit opportunities for graft and to increase
transparency in the public sector are institution-building efforts that should contribute to a
sense of predictability and legitimacy in these institutions. Civil society development is
an important support to public accountability reforms, as are legislature reforms, though
this last area has seen the least donor-funded reform activity owing to the politically
sensitive nature of efforts to support critical oversight in parliaments and national
assemblies (Manning and Stapenhurst, 2002). Reforms to information systems that
enable public accountability institutions to produce and disseminate accurate information
33
on government spending patterns, or on reform legislation and implementation can make
an important contribution to accountability if civil society groups are able to access and
analyze this information. Public accountability reforms perhaps more than any other
except for service delivery reforms rely upon strengthening and multiplying connections
between state and society.
7. CONCLUSION
Institutions shape incentives to engage in reform, and informal institutions appear
decisive in some contexts in determining the prospects of reform. They can ensure that
reform is accepted and internalized, or they can subvert reform by reproducing narrow
and exclusive systems of access to state resources. The way the connections between
state and society enable successful negotiation and internalization of pacts in favor of
reform, and provide for the improved development of external accountability systems,
has perhaps not received enough attention in public sector and governance reform
programs. Instead, there can be an emphasis on treating institutions as somewhat selfcontained bodies, treating internal processes and mechanisms rather than the connections
between the public sector and society (Carothers, 1999).
Reforms that involve incremental institutional change and do not profoundly modify the
elite pacts upon which institutional equilibrium rests are more easily pursued than
wholesale institutional change. Examples of the latter are rare, and appear to coincide
with – or be instrumental to – major changes in the political landscape, for instance in
relationships between the executive and the legislature, or in the nature of party
competition.
The key conditions that appear to support governance reform are a combination of
institutional factors and policy design characteristics: extended time horizons that are
created in legitimate and long-lasting formal institutions; devolution of responsibility for
some reforms to lower levels of government; changes in the composition of governing
elites to minimize the influence of traditional power holders; the sequencing of reforms to
generate early successes, the diversity and depth of civil society, and reasonable technical
capacity.
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