What historical lessons in state building can be transferred from developed to developing countries? Can there be a general theory of capacity building that can provide a basis for policy guidance in development? This paper for the Department for International Development (UK) explores these questions, concluding that capacity development is difficult but not impossible to achieve. Donors need to be aware of which areas they can contribute to effectively, avoid actions which push in the wrong direction, and be realistic about timeframes.
Building the capacity and accountability of developing country governments is vital in order to meet the Millennium Development Goals. The overall capacity of the state is determined by the capacities of organisations that constitute it, and by the extent to which the wider institutional and political context encourage a focus on quality, delivery, and performance. However, there is no agreed definition of ‘capacity building’. This lack of conceptual clarity leads to confusion between institutional and organisational development and often a limited focus on training or technical assistance (TA). There are four key institutional features of the state: organisational design and management, political systems, basis of legitimacy, and cultural structural factors. It is relatively easy to build capacity within state organisations, but without more difficult reform of political and structural factors changes are not sustainable. State building is therefore a governance (rather than an organisational) capacity challenge. Experience shows that:
- Capacity has been built where modest, incremental reforms have been pursued in politically supportive environments
- Capacity development is not always a long-term venture. If an organisation has few, specific, easily monitorable tasks, results can be achieved in the short-medium term
- Sectors in which there has been greatest success in capacity building are banking, public financial management, and urban utilities
- Results have been disappointing in roads, public sector reform, and primary health and education provision
Donors need to match the role of the state with its overall capacity, and understand what really drives decision-making systems rather than what formally expressed rules say. State capacity will be built through both organisational and institutional change. Donors can contribute to organisational development, but institutional aspects are more complicated, less understood, and longer term. Successful interventions require choosing a ‘best fit’ rather than ‘best practice’ approach by setting goals that are politically feasible rather than technically optimum. This entails careful sequencing. The design stage of any capacity development initiative is vital. The challenges and capacity task should be precisely defined, the target organisation chosen carefully, and there needs to be an understanding of the wider political economy. In addition:
- Incremental approaches are more likely to work than wholesale reform
While technical solutions alone are unlikely to work, getting it technically correct is still vital
- Strengthening specific organisations can have positive impacts on wider institutional capacity by changing values and attitudes that shape individual and collective behaviour
- Policy makers should focus on accountability because the greater the demand for responsive, effective organisations, the greater the chances of sustainability
- Capacity development should be prioritised above all else, including service delivery. Otherwise the wrong set of incentives and skills within the local bureaucracy will be developed.
