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Rethinking governance for more effective policymaking

WDR Team's picture

We’ve all had those hallway conversations or coffee meetings or been privy to overhearing those chats… the ones where we have quick exchanges on why so many ‘best practice’ polices – such as those designed to reduce teacher absenteeism-- continually fail on implementation. Or why policies such as energy subsidies are so difficult to get rid of when they are universally recognized as regressive and encouraging inefficient energy use.

That’s where today’s launch of the 2017 World Development Report (WDR) on Governance and the Law led comes into play. The new report, co-directed by Luis-Felipe Lopez-Calva and Yongmei Zhou, starts by acknowledging that all countries share a similar set of development goals: to minimize the threat of violence, to promote growth, and to improve equity. But too often, carefully designed, sensible policies to achieve these objectives are not adopted or implemented—and when they are, they too often fall short of achieving their goals. The report argues that the development community needs to move beyond asking “what is the right policy?” and instead ask “what makes policies effective in achieving desired outcomes?” As this WDR suggests, the answer has to do with governance—that is, the process through which state and non-state actors interact to adopt and implement those policies.

The report stresses three key underlying determinants of policy effectiveness, which influence how these different actors bargain to reach and sustain policy agreements. According to the report, effective policies require credible commitment to policies in the face of changing circumstances, and are able to promote coordination to change expectations and elicit socially desirable actions by all, and encourage cooperation to prevent free riding and induce voluntary compliance. For example, achieving security requires conflicting parties to be able to reach credible agreements to renounce violence, catalyzing growth requires that firms and individuals believe that others will also invest, and ensuring more equitable access to opportunities requires that citizens contribute to funding public goods.

However, who is –and who is not—included in this bargaining process is one critical determinant of whether or not these functions are performed in a way that promotes better development outcomes. According to the report, the unequal distribution of power among people in society (power asymmetries) can lead to the exclusion of certain groups and can distort policy effectiveness through capture and clientelism.  “Talking about the importance of power relations in governance is not new,” said WDR 2017 Co-Director, Luis Felipe Lopez Calva, “But one of the main contributions of the Report is that it offers a better analytical structure, from a microeconomic perspective, to the discussion of how power asymmetries can break commitment, coordination and cooperation and thus undermine policy effectiveness.

The 2017 WDR stresses that despite the fact that the distribution of power in society is partly determined by history, meaningful change is possible. This happens by shifting the incentives of those with power, reshaping their preferences and beliefs in favor of good outcomes, and reducing the barriers of entry for previously excluded actors to participate in decision making. All actors in society have an important role to play in bringing about these changes. The report explores how change happens when elites reach agreements to restrict their own power, when citizens are able to engage through complementary mechanisms (including voting, political organization, social organization, and public deliberation), and when international actors support rules that strengthen coalitions for reform.

These messages will have important implications for the way the development community approaches policy and governance reform in the coming decades. The report provides a new and helpful framework for approaching and resolving challenges faced not only by us, but our many partners in this process. The team carried out extensive consultations and seminars in over 24 countries and with more than 50 external stakeholders in bilateral and multilateral development institutions, government ministries, think tanks, civil society organizations and universities.

Next steps on the WDR 2017

The WDR has a wealth of insights to inform and further strengthen the Bank’s work on governance. But also the findings and operational implications are very relevant for all our work in-country. These insights could be helpful, particularly in different sectors, such as energy, domestic revenue mobilization, water, or education.

We now need to look at how these the WDR concepts can help us think through and do our work differently. We want to help countries implement policies more effectively, help them find practical solutions, and explore how to explicitly navigate and understand better the political economy and local dynamics from the get-go.

The World Bank’s Governance Global Practice will lead discussions about what we can learn from this WDR, and how its findings could affect our day-to-day work at the Bank. The first step will be to “brainstorm” around the ideas presented in the WDR by sharing the findings more widely inside and outside the Bank.

We will reflect on and study the concrete examples and further clarify and understand the concepts. This is so Bank staff and the wider development community becomes familiar with the overall WDR Framework, and can explore its value for their work. Then, driven by country demand, and in consultation with Bank country teams, the next steps will be to see where the WDR framework might be applicable for existing lending and analytical products and useful for country partners and Bank country teams.

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