Institutions are in flux. That’s both a challenge and an opportunity

Building or strengthening institutions is critical for development, enabling sustained growth, and poverty reduction.   

However, we have entered an era of institutional flux. Across the globe, institutions have become less settled and more fluid in positive as well as problematic ways. At the same time, performance challenges are expanding and growing. As a consequence, traditional templates for supporting institutional development have to be rethought.

Starting with the performance challenges, new institutional capabilities need to be developed or redeveloped to buffer citizens and businesses through acute crises and longer-term transitions.  These include effective public health systems, enhanced disaster, energy and environmental management, and rules and organizations for cyber-security. Moreover, these institutions need to be significantly more agile and adaptive as new challenges arise at a faster pace and with a larger scale of risks compared to many traditional public sector tasks; they also require an intensified capacity to assess different technical and costing options.

In terms of threats, political misuse and corruption pose growing threats to institutional integrity and performance.  As noted by a 2020 World Bank report, “the scale, magnitude, and sophistication of [corrupt] operations has increasingly risen to levels that many had not considered possible before”. Political polarization, fragmentation and populism undermine institutional coherence through policy shifts combined with frequent changes in public sector staffing and organizational structures. Governments that take an authoritarian turn often deliberately weaken accountability institutions such as independent judiciaries or audit offices. Corruption and state capture remain fundamental threats to institutional integrity and effectiveness. Beyond the immediate negative impacts of wasted resources, misusing public offices can have highly negative spillovers for addressing pressing policy challenges, triggering a loss of trust by citizens, and increasing inequality.

Regarding opportunities, the new challenges and new technical possibilities have given rise to experimentation with reforms. A number of countries have started changing and updating institutions, seeking fundamental reforms in how their governments and civil services function. IT and related technologies are deployed for doing things in new ways -- from recruiting staff to digitizing and simplifying processes, and from using IT and big data in providing various services to monitoring policy impacts closer to ‘real time’. GovTech initiatives and related innovations are growing globally – and the World Bank has provided support and peer learning opportunities. In parallel, technology is used by some to make the business of government more transparent, balancing some of the increased risks of corruption and misuse.

This new state of institutional flux – combining new challenges, threats and opportunities -- has (at least) four implications for international development. 

First, recommendations about institutional reform need to continuously become more evidence-based and monitored in real time to figure out what works, including ways of how best to deploy and use new technologies. The practical functioning of institutions still needs greater attention, especially given that both many of the challenges as well as the institutions being created to respond to them are novel and evolving – notably for addressing climate change and making social and economic changes happen on a far-reaching scale in the coming years. How best to deploy new technologies is another key area for evidence-based learning across countries.

Second, institutions must be built with the risks of misuse in mind, and advice and support to strengthen institutions should consistently consider this risk. Selected experimentation with modern versions of old ideas may help – for example, choosing people for certain offices through lotteries among qualified candidates to reduce opportunities for clientelist networks, or bringing more effective distribution of power into and around institutions. International norms for expected levels of public sector transparency can help to nudge more countries towards greater openness and enable a wider range of stakeholders to check whether public power and resources are used in the public interest. Transparency is also critical for ensuring that tools such as results based approaches actually deliver. 

Third, the scale of threat means that deeper links between different disciplines and approaches are needed – to tackle corruption, growth, inclusion, environmental sustainability in more integrated ways – especially but not only in fragile and conflict affected countries.  

Fourth, giving citizens more opportunities to be directly involved matters – to strengthen accountability and barriers against misuse, as well as to create a greater sense of joined ownership, a greater understanding of institutions and to crowd-source ideas and knowledge. Ownership and involvement in decision-making enables more active citizens with hands-on involvement in governance, contributing to greater trustworthiness as well as opening up opportunities for innovation.