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Feasible policy: Beginning with things as they actually are

Brian Levy's picture

Taking governance seriously is profoundly discomfiting for development work. It forces each of us to examine critically and with humility what we bring to the development endeavor. The more we know about a country’s governance and political realities, the more we are confronted with the limitations – as well as continuing relevance – of our hard-won technical knowledge.

The challenge is to more than our technical skills: the country-specific difficulties that arise in translating much-cherished values into action confront us with the reality that not all good things necessarily go together. (Click here for a complementary take on country specificity.)

But taking governance seriously also liberates us – opening us to understand things as they actually exist ‘on the ground’, and thus, be less prone to arrogant prescription, more receptive to genuine partnership, and more curious to explore and innovate.

To illustrate, let us consider the variety of things we thought we knew that have proven to be ‘just not so’:

• In public sector and governance work, we have learned how limited in usefulness for designing and implementing an effective agenda of reform is the ability to describe the characteristics of well-functioning public institutions. In most countries, most of the time, comprehensive reform of the nature needed to mimic these characteristics is infeasible. Even if mimicry were a desirable approach – which it is not – political incentives and constraints offer room for incremental change at best. 

•  For decades, the Washington Consensus prescription that low and uniform tariffs on imports was thought to offer the best route to sustained and competitive industrial development. However, the implicit assumptions as to the quality of institutions and organizational (including private sector) capabilities have emerged as flawed  – long evident in the actual, heterodox trade policies that helped underpin East Asia’s development successes, and now increasingly reflected in the renewed interest (including within the World Bank) in industrial policy

• While we have long understood that privatization is not a panacea, we have taken comfort that, in a messy world, even when imperfectly implemented, its benefits exceed the costs of inaction. Yet, when (in an African country that will go unnamed here) a private investor purchases a mine for $25 million cash down, gets  favorable tax arrangements that yield $1 billion of pure profit (and almost no tax revenue) within seven years, and then successfully reverses the (already too late) promulgation of a windfall profits tax, one wonders if there might be a case for retaining a minority state equity share to obviate the risk of a give-away (with who knows what backroom dealing) fire-sale of the crown jewels?

• In many settings, the confident solutions of the 1990s to infrastructural gaps – rebalance prices, unbundle upstream provision of the resource (energy or water for example) from downstream distribution, and privatize the disparate parts – have proved to be politically infeasible, and hence not bankable, even in what are in retrospect recklessly risk-loving financial markets.  In electricity and water, privatization panaceas have given way in many countries to the hard slog of working to achieve incremental improvements in parastatal governance. In road construction, donors and governments continue an uphill struggle – in the face of collusion between private semi-cartels and opportunistic public officials – to manage and mitigate the corruption risks associated with large resources transfers and associated procurement contracts.

• Finally, contrary to the view that additional wealth is an unmitigated blessing for low-income countries, we have long understood the hazards of natural resource abundance for institutional development – and development performance more broadly. Yet, despite decades of prescription and effort, there has been little progress in instituting arrangements capable of assuring that the associated rents support poverty reduction.

To be clear, the above is not a resigned concession that we know too little to be helpful, that ‘anything goes’. There is a structure to the interaction between governance and development – a few dominant (stylized) trajectories, each with distinctive opportunities, constraints, and risks. In future blog posts, I shall explore each of these.

But for now I invite comment on the following: That the policy certainties that many of us have long brought to our development work – the illustrative examples above, plus others that any of you wish to share – reflect more our professional, institutional and personal interests than they do a wise understanding of the dynamics of the development process. A willingness to let go of these false certainties can set us free to both learn and partner more effectively. And that, for us as development practitioners is the crucial first step in the process to ‘wear our prescriptions more lightly’, and commit to better understand and align our support with a country’s (and sector’s and project’s) governance and political realities as they actually are.

 

Comments

Submitted by Christian Schuster on
Brian, I thoroughly enjoyed this blog, in particular its powerful conclusion that governance and political realities need to be accounted for and understood as they actually are when tailoring interventions. In this regard, I was wondering whether you see leeway for a more pro-active political and governance approach for interventions, in particular whether one should or could beyond seeking to adapt technical solutions to political realities ('beginning with things as they actually are' as you put it), also seek to align political realities with technically more optimal solutions (a la 'bringing things to where we would like them to be'). Several of the newer approaches to governance reform, such as multi-stakeholder initiatives, seem to at least implicitly follow this pro-active path by aiming to create a more favorable governance and political environment of a sector to increase the odds of subsequently or in parallel achieving a technically more optimal reform. As such, perhaps one may complement the menu of technical reform choices with a menu of empirically-grounded political reform strategies (perhaps subsumed under your development strategy trajectories?) both to be adapted to country contexts?

Submitted by Brian Levy on
Though Christian is too polite to say so, he perhaps is concerned that 'beginning with things as they are' is a recipe for timidity. Indeed, in part it is!! A concern that arose at a recent workshop to discuss progress in implementing the World Bank's governance agenda is that perhaps we are taking humility too far. A discussant from outside the Bank commented that this struck him as an unlikely risk!!! Indeed, I've not often heard 'an excess of humility' identified as an operational hazard for Bank staff.... On a more serious note, beginning with things as they are is an invitation to consider a menu of alternative ways forward -- ranging from second-best (or n-th best) technical solutions all the way to much more pro-active political reform strategies. The key challenge is to reflect on which makes sense -- balancing benefits, risks, and likelihood of success -- in a particular country setting, not leaping directly to some cookie cutter solution. In an earlier blog post, I laid out one way of thinking about this "spectrum of reform space". Here's the link: http://blogs.worldbank.org/governance/moving-the-governance-agenda-forward-a-new-blog-on-development But, again in the spirit of humility, I wonder whether our tendency is to overestimate the likelihood of being able to be successfully pro-active -- and whether working at the boldest end of this spectrum is a challenge best left to a country's own citizens, the ones who have to live with the consequences.....

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