Are judicial reforms worth doing? It turns out, we cannot be sure, but we have a story to tell about a reform, its impact, and the impact of having measured that impact.
This is the seventh in this year’s job market series.
Developing countries regularly underperform in their capacity to collect taxes, with tax revenue to GDP ratios that are 20 to 30 percent less than those of high-income countries (Besley and Persson, 2014). This tax capacity gap represents lost revenue that could have provided much-needed public goods and services while reducing reliance on foreign aid. This issue is especially relevant in Africa, where “shadow economies” comprise up to 75% of national GDP (Schneider and Enste 2000), indicating that large swaths of these countries’ populations manage to evade taxation. What accounts for this failure to convince citizens to pay taxes?
Structural roadblocks to tax collections in developing countries include poor service quality, dysfunctional bureaucracies, and outdated equipment. In contrast, my job market paper provides a political explanation centered on clientelism, or politicians' exchange of targeted goods for votes from loyal supporters.
Over the past two decades, almost every developing country has adopted some form of public finance management (PFM) reform plan, with many currently pursuing second or third generation plans. Over the same period, development partners have provided substantial support – a total of over $20 billion since 2002. However, some countries have seen strong progress, while others have seen little, or have even experienced backsliding (see Graph 1 a and b).
This is the fourth in this year’s series of job market posts.
As the quality of a country's public sector workforce is an essential factor in its effectiveness in providing services, governments should try to hire qualified individuals in the public sector (Finan et al. 2017). However, there may be an important obstacle to the quality of this recruitment process, especially in developing countries: politicians could engage in patronage - the use of public sector jobs to reward their political supporters.
Virtually all modern bureaucracies are characterized by a civil service system, where the introduction of meritocratic hiring criteria was meant to shield public sector jobs from patronage practices. However, politicians typically retain some discretion in the selection of public workers, for instance through the use of temporary contracts (Grindle 2012). As a consequence, patronage could still play an important role in public sector hiring. Despite the potentially significant impact of this phenomenon on the quality of the public workforce, no study has systematically documented its presence in a modern bureaucracy, limiting our understanding of its consequences for the public sector.
In my job market paper "Patronage in the Allocation of Public Sector Jobs" (joint work with Emanuele Colonnelli and Mounu Prem), I study patronage in the context of Brazilian local governments during the 1997-2014 period.
Rohini Pande is Mohammed Kamal Professor of Public Policy at the Harvard Kennedy School, where she also co-directs their Evidence for Policy Design (EPoD) program. She has described her research as examining the economic costs and benefits of informal and formal institutions in the developing world and the role of public policy in changing these.
1. You have worked on a range of different topics – including rural banking and microfinance, governance, environmental regulation, son preference, and housing – but almost exclusively in one country, India. When you think about your broad research agenda, how to you think about the tradeoffs involved in focusing deeply on one country, vs exploring these topics in different places?
Starting with my PhD work on political reservations in India, I have been fascinated by the why and how of public policy in democracies and, in particular, how the political and social context shapes the choice of policy. I have also found that viewing problems of economic development through a political lens that engages with questions of power creates links across questions and topics that might before have seemed disparate.
Once you adopt this perspective, the advantage of focussing on a single country becomes apparent. Over time, one begins to understand how power structures operate and which policy lessons are generalizable and which remain specific to a location. The Indian economist Jean Drèze, who very much inspired my career choice to become a development economist, told me that he has never been to Africa. “Once I got to India,” he said, “there was more than enough for me to do for a lifetime.” His most recent book – Sense and Solidarity – provides a strong rationale for an action-research agenda that is focussed on a single country.
How can professionals looking to lead reform initiatives find the best way forward?
They can start at the World Bank-Annenberg Summer Institute in Reform Communication: Leadership, Strategy and Stakeholder Alignment, held at the University of Southern California in Los Angeles, from June 5 - June 16, 2017.
The course is designed for leaders, strategists and advisors who want to strengthen the critical competencies necessary to support change agents and reform initiatives in developing countries.
If this sounds like you, but you need a little nudge, check out these 10 reasons why attending the Summer Institute is a good decision.
1. Strengthen the critical competencies necessary to support change agents and reform leaders in developing countries: The program was developed on the premise that successful implementation of policy reforms depends significantly on non-technical, real-world issues that relate to people and politics.
2. Develop the skills necessary to bring about real change: Finding a way to push a reform forward can sometimes be elusive. Political or sectoral change is usually needed. The course will develop your skills to analyze policy options and effectively mobilize support.
Performance budgeting (PB) has a deep and enduring appeal. What government would not want to allocate resources in a way that fosters efficiency, effectiveness, transparency, and accountability? However, such aspirations have proven poor predictors of how performance data are actually used.
The potential benefits of identifying and tracking the goals of public spending are undeniable, but have often justified a default adoption of overly complex systems of questionable use. Faith in PB is sustained by a willingness to forget past negative experiences and assume that this time it will be different. Without a significant re-evaluation, PB’s history of disappointment seems likely also to be its future.
While independent journalists are bastions in support of good government, “independence” is not always an available choice. In Nigeria, for example, in a highly competitive job market that underpays and has little respect for journalists, many sway their coverage according to explicit and implicit political pressures and are sometimes expected to take bribes. One member of the media explained it this way:
“If there’s a cholera outbreak from contaminated water sources and the Ministry of Water Resources is doing an event, reporters will cover the event and not bother about the cholera outbreak itself. This is not because they don’t care; [editorial choices] have mostly become economic decisions. The Ministry will pay for the event to be covered, that is how the system works. You aren’t supposed to pay for news but you can pay to make news.”
In a media landscape like this one, where economic and editorial decisions are in conflict, international donors can provide vital financial support to independent media organizations, empowering them to hold governments accountable. But as my team at Reboot detailed in a report published this summer, providing strategic support requires a holistic approach, beyond program funding.
Because of its flourishing media ecosystem, Nigeria is a powerful regional case study for how funders might take such an approach. Even though Nigeria formally ended state-owned media monopolies when it deregulated broadcasting in 1992, the government maintains informal control of the news through political patronage, corrupt practices, and direct threats and violence. This is true both at the federal level as well as subnational; state and local governments, to varying degrees, use these tools to bend media coverage.
Examples can be found across West Africa, such as in Ghana, where we learned that the practice of purchasing coverage is so widespread it has entered common parlance under the word “soli,” or solidarity money. In this landscape, independent media struggles to be truly independent.
Nevertheless, the rise of the digital age is democratizing coverage control in West Africa. Citizens are breaking news and analyzing stories through social media. Their voices are transforming media—upending the traditional media models and inspiring new ones—and demanding that media uncover corruption and hold leaders accountable. This citizen-powered media landscape has in turn pushed the government to become more responsive to public discourse, potentially driving more citizen engagement.
Nowadays, forming strategic alliances across sectors has become the new operating norm. But the blurring of sectoral boundaries among governments, businesses and NGOs makes it increasingly difficult to assess functions traditionally performed by a certain sector, since conventional boundaries have dissolved, and power and influence are distributed in networks. One sub-set of such collaborations – business-NGO interactions – has attracted much attention, as NGOs begin to move away from their informal, social roles and venture into economic and political territories.
Business-NGO collaborations may come in many forms: NGOs could partner with firms to function as “civil regulators”, primarily by addressing market and government failures through the development of soft laws, social standards, certification schemes, and operating norms; leverage social capital to transfer localized institutional knowledge to firms; mobilize collective action between governments and firms; and serve as information brokers to connect otherwise disparate groups.
How do we assess business-NGO dynamics? Why are they are established? And in what forms are they governed? I source a few inspirations from business, political science, and public administration theories and offer three theoretical lenses through which we can examine business-NGO partnerships.
Over at the Center for Global Development, Charles Kenny wants comments on the draft of his book on Aid and Corruption (deadline end of May). Let’s hope this becomes standard practice – it worked brilliantly for me on How Change Happens – more varied voices can chip in good new ideas, spot mistakes or contradictions, and it all helps get a buzz going ahead of publication.
But let me take it one step further. As a contribution to the corruption summit, hosted by David Cameron on 12 May 2016, I thought I would summarize/review the book. Charles gave the green light, provided I stress the ‘preliminary, drafty, subject-to-revisiony nature of the text’. Done.
The summit is about a lot more than aid – for example the rich countries putting their houses in order on tax havens. Which is just as well, because the book poses some real challenges to the whole ‘anti-corruption’ narrative on aid. What’s more, it is erudite, engagingly written and upbeat – as you’d expect given Charles’ optimistic previous takes like Getting Better. He’s got a great eye for telling research and ‘man bites dog’ surprise findings. Example: ‘Taking a cross section of countries and comparing current income (2010) to corruption perceptions in 2002 and income in 2002, results suggests more corrupt countries in 2002 have higher incomes in 2010.’
His core argument is pretty striking – when it comes to aid and corruption, corruption does indeed matter, but the cure is often worse than the disease: ‘an important and justified focus on corruption as a barrier to development progress has led to policy and institutional change in donor agencies that is damaging the potential for aid to deliver development.’ Ouch.