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Strategies & Sequencing in Public Sector Reform

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This page is offered as an encouragement to dialogue and sharing views on this topic. It does not represent the views of the World Bank, or its Executive Directors, or those of the Public Management Service of the OECD, SIGMA, the International Institute of Administrative Sciences or the Commonwealth Association for Public Administration and Management. If you would like to share comments on this page or have suggestions additional websites or recommended readings that you consider should be added, please provide us with feedback.

Summary                                                      

A lot more is known about what does not work than what does. A recent review of World Bank supported civil service reform programs found that, in broad terms, they were responding to three sets of concerns. Some reforms, particularly those pursued in the 1980s, were primarily concerned to address the fiscal concerns arising from overstaffing and unsustainable wage bills. Other, more recent, reforms were intended to facilitate policy agility in government and to ensure that legitimate policies could in fact be implemented. Most recently, reforms have tended to focus on improving operational efficiency and service quality.

On average, only about one third of reforms achieved satisfactory outcomes. Even when desirable, outcomes were often not sustainable. Downsizing and capacity building initiatives often failed to produce permanent reductions in civil service size and to overcome capacity constraints in economic management and service delivery. In later reform programs, there is little evidence that civil servants began to "own" and adhere to formal rules such as codes of ethics.

Four factors are associated with this poor reform track record. First, the quality of data on civil service performance in all three areas has been poor and inconsistent. Standardized indicators were neither fully developed nor operationalized for monitoring and evaluation. Second, capacity building efforts were overly based on wage enhancements. They did not look sufficiently at the incentives provided in other arrangements, including the significance of job security and pension prospects. Third, reforms were technocratic in that they assumed that the introduction of formal rules would be sufficient to change behavior, without looking at how, for example, the political imperatives to award patronage appointments could be satisfied differently. Participatory processes to nurture reform constituencies in government, the private sector, and civil society were largely absent. Finally, reforms did not balance fiscal choices with labor market realities – focusing for example on budget scenarios without also looking at how salary levels could affect projected demand for civil service jobs.

The key sequencing message is that comprehensive civil service reforms, and other "whole of government approaches", seem to work in middle income and transitional countries where governments are motivated by arrangements that enable citizens, particularly the poor, to express their preferences and to hold public officials accountable for translating these preferences into results. These arrangements include a fair and transparent electoral process (with power-sharing arrangements to protect minority groups), as well as mechanisms to incorporate civil society and local governments within the policymaking process. For motivated governments, the core state institutions that provide the motivation have not been "captured" to any significant degree which means that individuals, groups or firms both in the public and private sectors have few opportunities through bribing or otherwise providing incentives to public officials to influence the formation of laws, regulations, decrees and other government policies to their own advantage.

In other settings particularly with high levels of state capture and comprehensively weak governance there are limitations of "whole of government" reforms. There is an emerging although as yet unconfirmed argument that a new approach to civil service reform is needed for these cases building on strengthening local voice and local government.

Two schools of thought                                    

Put broadly, there are two perspectives concerning change in the public sector: "whole of government" reform and "locally-initiated change" (see  Accountability and Participation for further details).

The design of "whole of government" reforms focuses on civil service restructuring and budget reforms, emphasizing that it is the vertical integration of public bureaucracies (with central controls and the over-arching discipline of a unified budget) that guard against some distinctive risks. These risks include the possibility that powerful local constituencies will capture policy, forcing governments to maintain or develop policies that serve the interests of local elite, and that other interests might encourage patronage or public salaries in excess of the market rate. The "whole of government" school is also concerned with the risk that public bodies will start quasi-fiscal activities (e.g., fee-based services, special concessions to certain groups) that serve the same role as taxes and subsidies, and exceed the original policy intention of the national government. This school argues that   coherence of the budget is crucial and that most (or preferably all) government expenditures should be covered by it if the strategic ability of government to shift funds to emerging priorities is to be protected. Similarly, the jurisdiction of the Supreme Audit Institution should cover most of the government’s fiscal operations.

The "locally-initiated change" school argues that participation at the local community level can be a powerful point of entry to broader reforms. It acknowledges the risks highlighted by the "whole of government" school, but argues that without some purposeful destabilization of existing dysfunctional public sector equilibria (for example, by providing local communities with greater voice in the production of local public services) there will be no change.

The "locally-initiated change" school also contends that whatever the theory, practice indicates that "whole of government"-style reforms have been strikingly unsuccessful in many countries. (See Girishankar 2000 for comments on the Africa region and the World Bank’s Anticorruption in Transition for a description of unpromising conditions in many countries of the former Soviet Union. See also Evaluation of Donor-Supported Reform Projects.) Indeed, the limited impact of    New Public Management  supports the proposition that "whole of government" reforms, while theoretically attractive, have had relatively little impact.

An implication of the "locally initiated change" argument is that the long-discredited notion of enclaving might be worth a fresh look. Work in Guinea and other settings (see  Guinea Service Delivery World Bank Project Appraisal Document) under the rubric of "Community Driven Development" is revisiting how public expectations are created around the delivery of local services. The "locally initiated change" school proposes that the trick here will be to manage the gradual alignment between the enclave and the wider environment.

Capability and motivation                                        

Figure 1  portrays the limitations of "whole of government" reforms. It makes a stylized distinction between motivation and capability. Motivation arises from arrangements that enable citizens, particularly the poor, to express their preferences and to hold public officials accountable for translating these preferences into results. These arrangements include a fair and transparent electoral process (with power-sharing arrangements to protect minority groups), as well as mechanisms to incorporate civil society and local governments within the policymaking process. For motivated governments, the core state institutions that provide the motivation have not been "captured" to any significant degree (World Bank 2000b). This means that individuals, groups or firms both in the public and private sectors have few opportunities through bribing or otherwise providing incentives to public officials to influence the formation of laws, regulations, decrees and other government policies to their own advantage.

Click HERE to see Figure 1 – capability and motivation - [produced from Girishankar (2000) and the World Bank (2000a; 2000b)]

Capable governments have core public management elements in place (Girishankar 2000). Administrative systems governing policymaking and budgeting, basic service provision, and economic regulation might be inefficient, but are essentially present. They face only modest administrative corruption so there are relatively few intentional distortions in the implementation of existing laws, rules, and regulations in order to provide advantages either to state or non-state actors. Bribes to inspectors who will otherwise find infractions of existing regulations, "grease payments" to gain licenses, smooth customs procedures, win public procurement contracts, or receive priority in the provision of a variety of other government services, are moderate (World Bank 2000b).

When these traditional public disciplines prevail, the regulation of the public sector is such that formal rules are not disconnected from practical realities. The budget on paper is to be taken seriously, and staffs are constrained within some clear standards of behavior.

If the immediate goal is to move towards the bottom right cell in which government has both motive and opportunity to improve services and policies for the poor, then experience suggests that "whole of government" approaches are highly relevant. But their impact has been most constructive on governments that might be termed "incapable but motivated" or "capable but unmotivated."

For "incapable but motivated" governments, "whole of government" concerns with the budget and with national government policy can be leveraged. Some promising movement can perhaps be generated by increasingly sophisticated mechanisms for providing a watchful public with information on the government budget. Innovative work in  South Africa and India is showing that where there is potentially a large group of concerned citizens, then analysis of government's policy intentions and actual behavior, as evidenced through the budget, can be a powerful point of entry. The recent flurry of work on meaningful indicators of government effectiveness also holds promise for movement out of this cell. A series of eye-catching measures that matter to the public, to NGOs and the media, and to other stakeholders (donors in the case of many developing countries) might provide some traction in building public expectations, moving from the top right to the bottom right.

For "capable but unmotivated" governments (such as some in the former Soviet Union with high levels of state capture), significant restructuring of monopolistic economic interests will be necessary in order to convince citizens that government holds a meaningful concern for their welfare. The "whole of government" capacities of a coherent civil service will be crucial to implementing these economic strategies.

As for the hardest cases – namely "incapable and unmotivated" governments with high levels of state capture, comprehensively weak governance, and poor administrations – the "locally-initiated change" school argues that traditional administrative reforms are unsuitable. There is an emerging argument a new approach is needed for these cases. Some combination of strengthening local voice and local government is not necessarily in conflict with a "whole of government" approach, but does not naturally flow from it.

Recommended readings:                                                 

  • Common, Richard K. 2001. "Public Management and Policy Transfer in Southeast Asia." Aldershot: Ashgate.
  • Girishankar, Navin. 2000. "Approaches to Sequencing Public Sector Reform." World Bank, Washinton, D.C., mimeo.
  • Levy, Brian. 1999. "Patterns of Governance in Africa." World Bank, Washington, D.C., mimeo.
  • World Bank. 2000a. "Reforming Public Institutions and Strengthening Governance: A World Bank Strategy." World Bank, Washington, D.C.
  • World Bank. 2000b. Anticorruption in Transition, Washington D.C.: World Bank.

 

This page was developed by Navin Girishankar and Nick Manning of the World Bank. It was submitted on 10/12/00.