- To be effective, reform processes need to work within the political logic of the context
- Informal institutions are pervasive, and can undermine reforms unless they are taken into account.
The international development community has until recently tended to presume that the ‘right’ institutions can be imported into a country, and that this will incentivise behaviour to fit those institutions (Brinkerhoff & Goldsmith, 2005, p. 204). This idea has been reinforced by generic global institutional indicators that imply there are ‘right rules’ of government (Andrews, 2013, p. 12). However, as discussed below, evidence indicates that public sector reform efforts have failed because they have tended to be organisational change strategies based on blueprints and best practices.
The conceptual and empirical literature reviewed here points to an alternative approach to public sector institutional reform. The lessons can be organised around four sets of issues: a) working with political and social institutions; b) starting with existing contexts and focussing on processes as much as outcomes; c) approaches to designing PSIR; and d) donor roles, challenges and modalities.
Politically smart aid
A growing body of scholarship is viewing development as a political process, and development cooperation as an inherently political activity (Hyden, 1992; DFID, 2011b). Carothers and de Gramont (2013, pp. 10-11) suggest that adopting politically smart methods requires donors to engage with state and non-state actors, and use aid to facilitate local processes of change.
Recent research by ODI on the politics of service delivery attempts to operationalise this perspective, identifying six explanatory factors for how politics and governance can constrain or enable equitable and efficient service delivery in developing countries (Wild et al., 2012). The study reviews evidence on interactions at regional, district and community level among local government officials, service providers and users and finds that the same constraints appear across different sectors and contexts. Foresti et al. (2013, p.2) summarise these as: credibility of political commitments; strength of oversight systems; coherence of policies and processes for implementation; capacity for local problem-solving and collective action; presence/absence and severity of moral hazard and of rent-seeking.
Politically smart aid has serious implications for the role of donors and the current aid and development model. There is a growing consensus that donors are limited to the extent to which, as external agents, they can promote and support countries’ domestic reforms (Andrews, 2013, p. 209; North et al., 2008; Scott, 2011). Moreover, aid risks changing the domestic political economy, which could dilute incentives for institutional change (Booth, 2011, p. S11).
Delivering politically smart aid is not easy because it involves ‘changing the rules of development itself’ (Andrews, 2013, p. 17). It requires development agencies to invest in understanding local political dynamics, make (often uncomfortable) changes to their own organisations, values, practices and behaviour (Unsworth, 2010), and take risks. The way that donor staff performance is measured can also create barriers to change. Donors might embrace politically smart methods while avoiding political goals. However, Carothers and de Gramont (2013a, 2013b) note that institutional reform always affects power relations and involves political choices and values.
Some experts point out that broader global governance issues (e.g. ineffective financial regulation, the drugs and arms trade) can also incentivise non-developmental governance and lead to state breakdown (Unsworth, 2010). These issues are arguably easier for donor states to influence (Booth, 2011).
Working with informal institutions
The best practice approach has failed to understand and address informal institutions (Boesen, 2006). It has implied that these are unimportant or problematic and not only need to, but can, be replaced with neutral and technical formal devices (Andrews, 2013, pp. 7-10, 81).
In-depth qualitative research has identified experiences where informal non-state institutions (such as local decision-making structures) have been or could have been part of the governance solution (DFID, 2011b; Unsworth, 2010). However, maximising the opportunities provided by such institutions has sometimes been challenging for donors. Some feel this is compounded by donors being ‘increasingly geared to minimising domestic reputational and fiduciary risk rather than supporting ‘best-fit’ institutional solutions that match political realities on the ground’ (World Bank, 2011a, p. 180).
Moreover, there are complexities in dealing with social norms that cut across both state and society and shape discrimination, inequalities and access. Institutional reform needs to respond to this and incorporate appropriate strategies. (See also the Inclusive Institutions Topic Guide.)
- Andrews, M. (2013). The limits of institutional reform in development. New York: Cambridge University Press. See document online
- Boesen, N. (2006). Governance and accountability – how do the formal and informal interplay and change? OECD DAC. See document online
- Booth, D. (2011). Aid, institutions and governance: What have we learned? Development Policy Review, 29, s5–s26. See document online
- Brinkerhoff, D. (2007). Where there’s a will, there is a way? Untangling ownership and political will in post conflict stability and reconstruction operations. The Whitehead Journal of Diplomacy and International Relations, 8(1), 111-120. See document online
- Carothers, T., & de Gramont, D. (2013). Development aid confronts politics. The almost revolution. Washington D.C.: Carnegie Endowment for International Peace. See document online
- DFID. (2011b). The politics of poverty: Elites, citizens and states. Findings from ten years of DFID-funded research on governance and fragile states 2001-2010 (A Synthesis Paper). London: Department for International Development. See document online
- Foresti, M., O’Neil, T., & Wild, L. (2013). The politics of delivery: Our findings so far. London: Overseas Development Institute. See document online
- Hyden, G. (1992). Governance and the study of politics. In G. Hyden & M. Bratton (Eds.), Governance and politics in Africa (pp. 1-26). Boulder, CO: Lynne Rienner. More information
- North, D., Acemoglu, D., Fukuyama, F., & Rodrik, D. (2008). Governance, growth, and development decision-making. Washington D.C.: World Bank. See document online
- Scott, Z. (2011). Evaluation of public sector governance reforms 2001-2011. Literature Review. Oxford: Oxford Policy Management. See document online
- Unsworth, S. (2010). An upside-down view of governance. Brighton: Institute of Development Studies. See document online
- Wild, L., Chambers, V., King, M., & Harris, D. (2012). Common constraints and incentive problems in service delivery (Working Paper 351). London: Overseas Development Institute. See document online
- World Bank. (2011a). World development report. Conflict, security and development. Washington, DC: World Bank. See document online