Addressing challenges in public financial management and public sector reform in East Asia

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Reforming the public sector is a constant process to address emerging challenges stemming from an increase in economic sophistication and expanded citizens’ expectation. However, reforming public sector organizations – their structures, policies, processes and practices – is notoriously difficult, in rich and poor countries alike.
 
Typically, significant challenges emerge from the enormous scale and complexity of the reform tasks to be undertaken. This requires levels of commitment, coordination and collaboration that may be without precedent for those involved even when the circumstances are most favorable. These kinds of challenges can be especially difficult in low-income countries.

Contradictory pressure from domestic constituencies and international agencies can create a dynamic where enacted “reforms” have the allure or appearance of change without fundamentally altering underlying structures and performance capability, leading to cynicism about the very possibility and desirability of reform.
 
A question to pose is how can particular ‘binding constraints’ to public sector reform be more readily identified and resolved in a way that transforms aspirations into real improvements? As development practitioners, it is useful to look at alternative approaches, which build on both international good practices and adaptation to local contexts, to maximize development impact to help the international community and developing countries address the toughest governance challenges that we face today.
 
From our exploration of eight country cases in East Asia and the Pacific, we found a combination of three key factors to be especially important to the outcome of public sector reform.
 
First, high quality design, to be implemented at an accommodating pace and with coherence, matters.  Beyond their technical merits, reform design, whether they were carefully designed to adapt to subsequent shifts in speed and sequencing, had significant impact on what would happen later as the reforms got implemented. A sequenced reform design enables more orderly progress without overburdening those responsible for implementing reform.
 
Second, high quality design is necessary, but not sufficient. Even the most carefully structured reforms will not go far without constant political support and nurturing.  Committed, reliable and effective political leaders, who actively sought to build a shared understanding of problems and solutions and communicate effectively among key stakeholders, play a significant role in reform outcome.  
 
Third, public sector reform may not progress well without adequate implementation capability to adapt and adjust.  The very complexity and uncertainty of the reform ‘journey’ means that it is impossible to pre-identify all the challenges and contingencies that will be encountered. Therefore, the reform champion’s ability to ensure appropriate ‘Design Adaptation’ by modifying international best practices to fit local circumstances and to innovate in response to emerging challenges and make real time adjustments matter greatly when it comes to making change happen.  
 
In summary, implementing public sector reforms is a tough (and inherently contentious) task. But precisely because of the great difficulty, decision-makers undertaking public sector reforms should draw renewed energy and inspiration from identifying and learning from countries, sectors and sub-national spaces where substantive (not merely cosmetic) change has, and has not, been achieved.
 
The cases presented in a recent book on “Alternative Paths to Public Financial Management and Public Sector Reform” provide some food for thought to development practitioners and reform champions in their public financial management and public sector reform endeavors. 
 
Check out the book and tell us what you think in the comments.

Authors

Jim Brumby

Director, Public Sector & Institutions, Governance Global Practice

Sokbunthoeun So

Senior Public Sector Specialist, Governance Global Practice, World Bank

Michael Woolcock

Lead Social Scientist, Development Research Group, World Bank

Join the Conversation

DAN MARAYE
February 07, 2019

The crux of the matter is about governance in both the public and private sectors in under developed, developing, and most developed countries around the world. However, we cannot afford to waste valuable and scarce resources in trying to reinvent the wheel. Why not learn from countries like Singapore, New Zealand, Denmark, Finland, and Norway, and adjust our governance strategy accordingly.

David Harold Chester
February 07, 2019

This article does not describe the older ways of the financial management so the reader cannot decide whether the alternate paths are any better. In particular a simplified tax system is always a good thing and since this plays so big a part of the financial management, it should be getting much attention.