Syndicate content

What’s the latest research on the quality of governance?

Daniel Rogger's picture
Photo: Gerhard Jörén / World Bank

Editor's note: This blog post was previously published on the World Bank's 'Let's Talk Development' blog platform.

Last week I attended Stanford University’s Quality of Governance conference, expertly organized by a rising star of the field, Saad Gulzar.  I thought I’d follow in the footsteps of Dave Evans and others and summarize the findings of the papers presented. They provide a sketch of the frontier of research on state capacity. 

In his plenary, Francis Fukuyama (presenting a paper co-authored with the Bank’s Francesca Recanatini) highlighted how corruption initiatives implemented by the World Bank since Wolfensohn’s ‘Cancer of Corruption’ speech – mainly focused on measurement - have basically failed.  That much of corruption is essentially political is consistent with the findings of the World Development Report 2017 and Stuti Khemani’s Policy Research Report.  Many of the papers presented below highlight the underlying politics of state capacity.

Accountability
A replication and extension of Bjorkman and Svensson’s famous ‘Power to the People’ (P2P) study across 376 health centers sees increases in the quality of care and patient satisfaction, but fails to replicate impacts on health outcomes and finds no impacts on community mobilization. #RCT #Uganda (Pia Raffler, Daniel Posner and Doug Parkerson)
 
35% of Ghanaian capital projects do not start (see great complementary video by Martin Williams on this).  Central government audits reduce political interference in project implementation significantly, more than civil society monitoring, with corresponding impacts on reported corruption. #RCT #Ghana (Erik Wibbels)
 
Citizens
Decentralization shifts focus of politician-citizen interactions to local level.  However, more centralized politicians act as alternative intermediaries for navigating the state. #RCT #India [paper] (Jennifer Bussell)
 
Citizens prefer public officials who pursue retribution against law-breakers, as it signals that the officials have capacity and moral character. #ConjointExperiments #China (Lily Tsai)
 
Allocation of Bureaucrats to Jobs in India
Affirmative action has no impact on the quality of district-level implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme. #IV #India [paper] (Rikhil Bhavnani and Alexander Lee)
 
Bureaucrats assigned to their home states are perceived to be more corrupt and less able to withstand illegitimate political pressure. #IV #India [paper] (Marianne Bertrand, Robin Burgess and Guo Xu)
 
Applying search and matching theory to public sector labor markets highlights the negative impacts of the recent changes in the assignment of senior #Indian civil servants.  A particularly important contribution of this paper is that it provides a formal framework for understanding how equity concerns (frequently present in the civil service setting) impact the quality of assignments in the public sector labor market. #MatchingTheory [paper] (Ashutosh Thakur)
 
Political Communication
Information campaigns are a cost-effective way to increase voter leverage over politicians, but incumbent politicians respond by increasing vote buying, leading to no effect on incumbent vote share. #RCT #Philippines [paper] (Cesi Cruz, Philip Keefer and Julien Labonne)
 
Besides sharing plans for an exciting field experiment in Pakistan, Miriam Golden also previewed her work showing that incumbency rates rise with GDP per capita. #Pakistan #Global (Miriam Golden; field experiment joint with Saad Gulzar and Luke Sonnet)
 
Information
Whilst peer effects facilitate adoption of technologies with minimal externalities (like agricultural practices), it can be more difficult for innovations with significant positive externalities (like political accountability) to spread through a network. #RCT #Uganda [paper] (Romain Ferrali, Guy Grossman, Melina Platas and Jonathan Rodden)
 
Yelp for artificial insemination of cows!  Providing feedback on the quality of government vets leads to a 37% higher insemination rate. ‘No bulls’ is a great title. #Pakistan [paper] (Ali Hasanain, Yasir Khanand Arman Rezaee)
 
Political Candidacy 
A striking gender gap in political participation and representation persists in #India, despite several decades of targeted policy interventions. Sol’edad Prillaman presented a very cool study design to understand the determinants of this fact, based on a factorial, yes factorial, natural experiment! #FactorialNaturalExperiment (Sol ́edad Prillaman)
 
Offering a lawyer to help non-elites file papers for candidacy improves the likelihood that they run.  #RCT #Pakistan [paper] (Saad Gulzar and Muhammad Yasir Khan)
 
Oversight and Delegation 
Switching to democracy changes the way bureaucrats are promoted. Democratization amplified the positive effects of educational attainment on career advancement but simultaneously worsened the career prospects of female and religious minority civil servants. #EventStudy #Indonesia [paper] (Jan Pierskalla, Adam Lauretig, Andrew Rosenberg and Audrey Sacks)
 
Giving politicians formal power over bureaucracy through membership of legislative committees increases project completion rates by 18% in members’ constituencies but reduces the likelihood of being of satisfactory quality of those projects by 15%. #IV #Nigeria [paper] (Dan Rogger; disclaimer: this is me)
 
Providing procurement offices with autonomy reduces procurement prices and might increase quality. The net effect of performance incentives is zero. #RCT #Pakistan (Adnan Khan, Oriana Bandiera, Michael Best, and Andrea Prat)
 
Government Jobs 
Paying public officials using biometrically-validated mobile money systems reduces the total wage bill by 9.6% by eradicating ghost workers. #RCT #Afghanistan (Michael Callen)
 
The reward systems for slave-soldiers in #Medieval Egypt undermined the long-run viability of the state by incentivizing them to transfer land assets out of state control. Looks like the rulers got their just deserts. #OLS (Lisa Blaydes)
 
Patronage
Political party turnover leads to greater replacement of headmasters and teachers, lowering 4thand 8th grade test scores by 0.05 to 0.08 standard deviations. (For comparison, the World Development Report 2018 [http://www.worldbank.org/en/publication/wdr2018] highlights, “across eight countries that have been studied, a 1.00 standard deviation increase in an index of [school] management capacity is associated with a 0.23–0.43 standard deviation increase in student outcomes.”) #RDD #Brazil [paper ] (Mitra Akhtari, Diana Moreira and Laura Trucco)
 
Road contracts connected to local politicians are more expensive and are less likely to generate an actual road. #RDD #India [paper] (Jonathan Lehne, Jacob Shapiro and Oliver Vanden Eynde)
 
Institutions 
Self-assessment and certification of local state capacity and public goods provision have parallel impacts: real increases in local government performances for the already strong local governments, and manipulation of assessment scores for the weaker local governments. #DiD #Mexico (Soeren Henn, Horacio Larreguy and John Marshall)
 
Kate Vyborny presented initial results of a pilot experiment studying the impact of different types of information on donor decision-making.  Exciting scale-up results coming soon. #RCT #Pakistan (Hamna Ahmed, Asha Gul, Simon Quinn and Kate Vyborny)
 
Leonard Wantchekon has developed a framework to explain how the intrinsic effect of a political institution (such as voting, deliberation or decentralized governance) can be identified by randomized experiments. #Theory #Everywhere [paper] (joint with Yves Atchade, Pierre Nguimkeu and Leonard Wantchekon)

Comments

Submitted by David Harold Chester on

The research that the World Bank should be doing is that directed at means for reducing poverty. The following suggests one way:

The Most Socially Just Tax

Our present complicated system for taxation is unfair and has many faults. The biggest problem is to arrange it on a socially just basis. Many companies employ their workers in various ways and pay them diversely. Since these companies are registered in different countries for a number of categories, the determination the general criterion for a just tax system becomes impossible, particularly if it is to be based on a fair measure of human work-activity. So why try to do this when there is a better means available, which is really a true and socially just method?

Adam Smith’s (“Wealth of Nations”, REF. 1) says that land is one of the 3 factors of production (the other 2 being labor and durable capital goods). The usefulness of a particular site of land is expressed by its purchase price and in the amounts that tenants pay as rent, for its access rights. Land is often considered as being a form of capital, since it is traded similarly to other durable capital goods items. However it is not actually man-made, so rightly it does not fall within this category. Indeed, the land was originally a gift of nature (if not of God), for which all people should be free and have equal rights to share in its use.

However over many years, as communities became established and grew, the land has been traded as if it were items of durable goods and today it is treated as a form of capital investment. It is apparent that for a particular site, its current site-value greatly depends on location and is related to the community density in its region, as well as the size and natural resources. Such bounty manifest in the exploitation of rivers, minerals, animals or plants of specific beauty and use are available only after infrastructural developments have made possible access to the particular place. Consequently, most of the land value is created by man within his society, by his need and ability to reach it. Therefore its advantage should logically and ethically be fairly returned to the community for its general use, as explained by Martin Adams (in “LAND” REF 2.).

However, due to our existing laws, land is owned and formally registered and its value is traded, even though it can’t be moved to another place, like other kinds of capital goods. This right of ownership gives the landlord two big advantages over the rest of the community. He can determine how it may be used, or if it is to be held out of use for speculative reasons, until the city grows and the site becomes more valuable. Secondly the land owner enjoys the rent from a tenant or its equivalent if he uses the land himself. Speculation in land values and its rental earnings are encouraged by the law, in treating a site of land as personal or private property—as if it were an item of capital goods, although it is not, see Prof. Mason Gaffney and Fred Harrison: “The Corruption of Economics”, REF. 3.

Regarding taxation and local community spending, the municipal taxes we pay are partly used for improving the infrastructure. This means that the land becomes more useful and valuable without the landlord doing anything—he/she will always benefit from our present tax regime from which the land value grows. This also applies when the status of unused municipal land is upgraded and it becomes fit for community development. When this news is leaked, after landlords and banks corruptly pay for this valuable information, speculation in land values is rife.
There are many advantages if the land values were taxed instead of the many different kinds of production-based activities such as earnings, purchases, capital gains, home and foreign company investments, etc., (with all their regulations, complications and loop-holes). The only people due to lose from this are those who exploit the growing values of the land over the past years, when “mere” land ownership confers a financial benefit, without the owner doing a scrap of work. Consequently, for a truly socially just kind of taxation to apply there can only be one method–Land-Value Taxation.

Consider how land becomes valuable. Pioneers and new settlers in a region begin to specialize and this improves their efficiency in producing specific goods. The land central to the new colony is the most valuable due to its easy availability and least transport needed. After an initial start, this distribution in land values is created by the community. It is not due to the natural land resources. As the city expands, speculators in land values will deliberately hold potentially useful sites out of use, until planning and development have permitted their more intensive use and their values to grow. Meanwhile there is fierce competition for access to the most suitable sites for housing, agriculture, manufacturing industries, etc. The limited availability of the most useful land means that the high rents paid by tenants make their residence more costly and the provision of goods and services more expensive.

Entrepreneurs find it difficult or impossible to compete with the big organizations who have already taken full advantage of their more central sites. The greater cost of access, or the greater expense in transportation from less costly outlaying regions, discourages these later arrivals. It also creates unemployment, causing wages to be lowered by the land monopolists, who control the big producing organizations, and whose land was previously obtained when it was relatively cheap. Consequently this basic structure of our current macroeconomics system, works to limit opportunity and to create poverty, see above reference.

The most basic cause of our continuing poverty is the lack of properly paid work and the reason for this is the lack of opportunity of access to the land on which the work must be done. The useful land is monopolized by a landlord who either holds it out of use (for speculation in its rising value), or charges the tenant heavily for its right of access. In the case when the landlord is also the producer, he/she has a monopolistic control of the land and of the produce too, and can charge more for this access right than what an entrepreneur, who seeks greater opportunity, normally would be able to afford.

A wise and sensible government would recognize that this problem of poverty derives from lack of the opportunities to work and earn. It can be solved by the use of a tax system which encourages the proper use of land and which stops penalizing everything and everybody else. Such a tax system was proposed 136 years ago by Henry George, a (North) American economist, but somehow most macro-economists seem never to have heard of him, in common with a whole lot of other experts. (I would guess that they even don’t want to know, which is worse!) In “Progress and Poverty”, REF. 4, Henry George proposed a single tax on land values without other kinds of tax on earnings, sales of produce, services, capital-gains etc. This regime of land value tax (LVT) has 17 features which benefit almost everyone in the economy, except for landlords and banks, who/which do nothing productive and find that land dominance and its capitalistic exploitation have their own (unjust) rewards.

17 Aspects of LVT Affecting Government, Land Owners, Communities and Ethics

Four Advantages for Government:
1. LVT, adds to the national income as do other taxation systems, but it should replace them. The author has shown in REF.5, that taxation of any kind is beneficial to the country as a whole due to its income providing for more work too, but that when the tax applies to land the topology and spread of its effects are about 3 times as beneficial as when the same amounts of income are taken.
2. The cost of collecting the LVT is less than for all of the production-related taxes–tax avoidance becomes impossible because the sites are visible to all and who owns each is public knowledge. The army of tax collectors who are opposing a similar set of lawyers, are no longer busy with tax loop-holes in the law, so the number of people more productively employed will grow and the penalty on the country of having complicated taxation is less.
3. Consumers pay less for their purchases due to lower production costs (see below). They can buy more goods and enjoy a raised standard of living. This creates greater satisfaction with the management of national affairs and more prosperity.
4. The national economy stabilizes—it no longer experiences the 18 year business boom/bust cycle, due to periodic speculation in land values (see below). The withholding of unused land is eliminated see item 7, so there is less need for the complications of frequent land sales, developers searching and buyers hunting for unused sites.

Six Aspects Affecting Land Owners:
5. LVT is progressive. The owners of the most potentially productive sites pay the most tax.
a) Urban sites provide the most usefulness and have to pay greater resulting taxes per unit of area. b) Big rural sites have less value and can be farmed more appropriately, to meet their ability to provide useful produce. c) Small-holder farming closer to population centers becomes more practical, due to local markets and reduced distribution costs.
6. The land owner pays his LVT regardless of how his site is used. A large proportion of the present ground-rent from the tenants (who do use the land properly), becomes transformed into the LVT, with the result that land has less sales-value but still retains a significant “rental” value.
7. LVT stops speculation in land prices, because the withholding of land from its proper use is not worthwhile.
8. The introduction of LVT initially reduces the sales price of sites, even though their rental value can still grow over a longer term. As more sites become available, the competition for them is less fierce and entrepreneurs have more of a chance to get started
9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to the additional sites that comes into use.
10. With LVT, land prices will initially drop. Speculators in land values will want to foreclose on their mortgages and withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow these speculators sufficient time to transfer their money to company-based shares etc., and simultaneously to meet the increased demand for produce (see below, items 12 and 13).

Three Aspects Regarding Communities:
11. With LVT, there is an incentive to use land for production or residence, rather than it being vacant and held unused.
12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses and because they pay less ground-rent–demand grows, unemployment and poverty decrease.
13. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods too because the effectiveness of labor has been raised.

Four Aspects About Ethics:
14. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this national extortion by gathering the surplus rental income, which comes without any exertion from the land owner or by the banks– LVT is a natural system of national income-gathering.
15. Previous bribery and corruption for gaining privileged information about land cease. Before, this was due to the leaking of news of municipal plans for housing and industrial development, causing shock-waves in local land prices (and municipal workers’ and lawyers’ bank balances).
16. The improved use of the more central land of cities reduces the environmental damage due to a) unused sites being dumping-grounds, and b) the smaller amount of fossil-fuel use, when traveling between home and workplace.

17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way– to provide more jobs because their production costs are reduced. Then untaxed earnings will correspond to the value that the labor puts into the product or service. Consequently, after LVT has been properly and fully introduced as a single tax, it will eliminate poverty and improve business ethics.

References:
1. Adam Smith, 1776: “The Wealth of Nations”, UK
2. Martin Adams, 2015: “LAND– A New Paradigm for a Thriving World”, North Atlantic Books, California, USA
3. Mason Gaffney and Fred Harrison, 2005: “The Corruption of Economics”, Shepheard-Walyn, London, UK
4. Henry George: “Progress and Poverty” 1897, reprinted 1978 by the Schalkenbach Foundation, New York, USA
5. David Harold Chester, 2015: “Consequential Macroeconomics—Rationalizing About How Our Social System Works”, Lambert Academic Publishing, Saarbüchen, Germany

Add new comment