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Author Topic: Conversation with Matt Andrews on limits to externally influenced PFM reform  (Read 9502 times)

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Martin Johnson

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Dear PFM Boarders,

For our third fire-side conversation online we have the honour to have with us Matthew Andrews. He is an  Associate Professor of Public Policy at Harvard's Kennedy School, and commentator on governance in development. He manages his blog on Governance reform in international development at http://matthewandrews.typepad.com/.

If you are a registered member of the Board, you have the possibility to pose a question to Matthew online. The focus of the conversation with him is 'limits to externally influenced PFM reform and options for overcoming these'. As practitioners in transition and developing countries we all have our success and sorrow stories to share. We now have an opportunity to ask Matthew what his views are on externally influenced PFM reform, limits to the successful implementation of such reform and him possible ways to make our work more effective and sustainable.

The time allotted for questions is  Monday 16th to Wednesday 25th January 2012. After this period the interview will be closed and remain in the archive for future reference.

Martin Johnson

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To get the ball rolling, I would like to ask Matt the following simple question:

Question 1:
What is it that you mean by "limits to externally influenced PFM reform"?
« Last Edit: January 16, 2012, 10:50:02 GMT by Napodano »

Governwell

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Hi Martin, Mauro and PFM Board readers. First, let me say thanks for inviting me to share. It is great to be here.

Answer to question 1

I would like to start by saying that my work differentiates between endogenous reform and what I call 'externally influenced' reform. I think it is an important differentiation.
 
Most of the research on institutional change in developed countries looks at reforms that emerge within countries, and are defined, funded, implemented and evaluated from within the context itself. These are endogenous reforms. Most reforms in developing and transitional countries are not so endogenous. (This is also the case in some developed countries, especially given the role of the European Union and in the current crisis in places like Greece). These reforms are motivated and/or financed and/or defined and/or implemented and/or evaluated by outsiders. They are thus 'externally influenced'.

I assume many readers on the PFM board are external agents working on these externally influenced reforms.

I argue that externally influenced reforms are different. They (typically) do not emerge as responses to shared responses as most endogenous reforms do. Solutions are not found through internal 'muddling through' as is the case with most endogenous reform solutions. They are not hatched through ever-expanding networks of internal actors as most endogenous reforms are. Instead, externally influenced reforms are often (but not always) introduced--at least in part--as 'signals' for external agents. They are often introduced as off-the-shelf solutions (typically best practices, to provide the best signal), through very narrow sets of champions who have direct engagement with the oustiders bringing the reforms in. Think of the Budget Director, Head of Treaury, etc.

Now, in my work I have found that these reforms are quite limited--because of these characteristics. I look at the limits in PFM in particular, through case studies and through the PEFA data--which provides a nuanced perspective that is unusual for indicators. With both of these sources of data, and working over a number of years, I find that countries with PFM reforms tend to all have limited results in the same areas:
- First, they make budgets better than they implement them.
- Second, they look better from a legislative perspective than they are, in terms of actual implementation.
- Third, they look great when one views the work of concentrated groups in central departments (like budget, treasury) but all falls apart when we move to the users in line ministries, districts, provinces, etc.

I call these three limits the downstream, de facto, and distributed or deconcentrated agent problems. After externally influenced reforms, upstream dimensions of PFM systems (in budget preparation) typically do better than downstream dimensions. After reforms, de jure dimensions of PFM systems typically look much better than de facto dimensions. After reforms, concentrated agents do great, but deconcentrated or distributed agents don't.

I would guess that many readers have seen exactly these results in places where they have worked. While these reforms deliver some gains, and in some places enough to act as meaningful 'signals' for 4 to 6 years, the reform also face routine limits--which are stubborn and repeat themselves over multiple reform experiences.

I could carry on discussing this all day, and provide some ideas on why these limits are peculiar to externally influenced reforms, exactly why the limits prove so stubborn, and how they might be overcome. But let me hand this back to you for the time being to see how others respond.

Useful links:
1. http://matthewandrews.typepad.com/mattandrews/2011/06/where-is-the-gap-between-form-and-function-greates-and-why-some-ideas.html
2. http://www.cipfa.org.uk/pfmconference/video.cfm  (go to Day 2)
« Last Edit: January 16, 2012, 15:08:20 GMT by Napodano »

Martin Johnson

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Matt, thanks for this very interesting introduction to your ideas in this area. Given the experience that I have had in a number of countries and that I have shared with some of my fellow Board members in some of those countries, one of the first questions that comes to my mind is

Question 2

what can we, as external agents, do differently to help in creating demand for reform and to help in widening the constituency for reform, both of which would be required for a determination to 'muddle through' and/or 'do what it takes' to be established? Some of us saw reform move far and (after a lengthy gestation period) fast in Albania, for example, but only when senior managers actively drove the reform and demanded that management per se worked. For a while there was a determination to achieve. The demand was created but the constituency was not as wide as we would have liked. I am not quite sure how much of what was achieved continues to stick although I understand there has been some weakening of what was institutionalised during that period. I am sure you and others have many similar examples ... but what can we do, in effect, to facilitate the creation of the conditions for 'endogenous' reforms through our role as external agents?
« Last Edit: January 16, 2012, 18:41:33 GMT by Napodano »

Napodano

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Hi, Matt;

My question (Question 3) is:

who really are these external agents? I believe that donor representatives in countries are the external agents in the first instance.

When I am called into the country with defined ToRs, especially on a short term mission, I have very little scope to 'muddle through'. Indeed I try whatever it takes to involve as many counterparts as possible and instill a sense of 'mission' and a 'drive to results' but these are phases that, in my opinion, should be dealth with early on through dialogue between donors and Government. 

In longer missions, as mentioned by Martin, I agree that the TA team may have a chance to influence directions. So am I advocating long-term missions over short-term ones (shooting myself in the foot?). I am not sure because long term missions can become a real waste of money, if they choose to play safe and not 'muddle through'.

Final note: Once I tried to stop short a contract because the local counterpart was not interested at all in the work, but the donor representative was just not prepared to take the bureaucratic hassle.
 
« Last Edit: January 16, 2012, 20:12:51 GMT by Napodano »

John Short

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Q4

Matt

"Good governance can only come from inside; it cannot be imposed from outside” President Zenawi of Ethiopia quoted in "Comrades or Culprits? Donor Engagement and Budget Transparency" by Paolo de Renzio, International Budget Partnership and University of Oxford, and Diego Angemi (http://internationalbudget.org/what-we-do/major-ibp-initiatives/open-budget-initiative/obi-research/working-papers/).  In Isomorphism and the Limits to African Public Financial Management Reform you presented an in-depth analysis of PFM reforms using the cross country PEFA indicator scores as the basis for the analysis.

Two questions (1) would you agree with President Zenawi or would you modify the quote; and (2) are you confident in the PEFA scoring – methodology and actual application – to be able to use them in cross country analysis?  (The paper had me searching for my dictionary quite a few times and was challenging and thought provoking – in a very positive sense!)

regards,

John
« Last Edit: January 17, 2012, 13:27:52 GMT by John Short »

harnett

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Question 5

Are we really looking at what stage of development a country is at before we can countenance worthwhile PFM reform?  You mention endogenous reforms really only occur in developed countries.  Certainly it appears to me in my work that there is often little incentive for politicians to embrace a fully transparent PFM system - less so whilst the aggrandising of wealth in the country is as a result of corrupt or semi-illegal practices.  Once a ruling class has captured wealth then we see the move towards greater rule of law, transparency (including PFM) etc. as actors transform their wealth into hotels, gas stations, airlines etc which all need protection under rule of law.
« Last Edit: January 17, 2012, 13:49:49 GMT by Napodano »

Frans

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Question #6

Hi Matt,

This is really a great topic and one we at the PEFA Secretariat are very interested in, not least because of the use of the PEFA data set for the analysis. Your pioneering work in that respect has been very inspiring.

My question is how you come to the conclusion that progress on endogenous reforms is more successful than progress on externally influenced reforms. This may be divided into some sub-questions.

Firstly, is there actually hard evidence to support that conclusion? (PEFA data does not cover the developed/OECD countries to an extent that allows comparison with developing countries).

Secondly, would one not expect the same patterns of reform progress to emerge in developed countries? (after all, most reforms require that legislation is in place before it can be implemented, so 'de jure' will typically be ahead of 'de facto' anywhere; and 'actor deconcentration' must be a constraint to progress in any country compared to reforms needing a few reform actors only), or could it be that externally influenced reform programs in developing countries are simply overambitious - especially compared to implementation capacity - whilst they may actually be driving reforms forward as fast as - or even faster than - endogenous reforms in countries at the same stage of development (or even as fast as reforms in developed countries). 

And finally a comment. We have at the PEFA Secretariat tried to build on you methodology of analyzing PEFA data during 2011 but using dynamic data from repeat PEFA assessments. This led to the Monitoring Report MR10 which is on our website, as well as a preliminary analysis of trends in PFM systems in LICs and MICs, presented at the ABFM Annual Conference in October 2011 (attached). This analysis indicated e.g. that progress in upstream and downstream PFM system elements appears to be at the same level even if downstream starts from a lower rating level, whereas the difference between actor concentration and deconcentration becomes even clearer when dynamic data is used. As the Secretariat is not a research institution, we posed in the paper a number of questions for researchers to dig into and hope that someone (like yourself) will be interested in taking over the torch and lead us into new knowledge on the basis of dynamic data.
« Last Edit: January 17, 2012, 20:05:59 GMT by Napodano »

Governwell

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You guys don't wait with the tough questions. Let me get a start with some answers, though I hope others weigh in as well.

Answer to Question 3: Who are the external agents?

Mauro asks, "Who really are these external agents?" Great question. In my opinion more penetrating than it looks at first glance. Also more humbling--at least that's what I find. I ask this question routinely in class and it spawns some really uncomfortable conversations. So let me try an answer from a perspective I find useful to draw on--network theory and its applications to institutional entrepreneurship.
 
This theory suggests that we all occupy multiple social networks, and are embedded in each to differing degrees. In some we are located at the center of the network: Think of being at the center of a circle of agents like  ‘A’ is in the dark circle below, or ‘B’ in the red circle [NB: Click twice on the picture below to enlarge it; you need to register to the Board to see it]. Here we are deeply internal, invested in the network, having power in that network, with all its resources, influence, etc. In others we are at the periphery: Think of being at the edges of the same circle of agents, like ‘B’ is in the dark circle.  There are some networks that we do not inhabit at all: like ‘A’ is not engaged in the red circle to any degree. ‘D’ is not engaged in the black circle at all.
 
What does all this have to do with PFM reform? Well, think of the large dark circle as the PFM Board network—the international PFM reform network, where everything PFM is discussed, enjoyed, devoured, etc. And think of the red circle as the PFM politic and practice community in a given country. Maybe Georgia, or Zambia, Honduras, Cambodia or Jordan.  There are some PFM Board members who are totally external to the country’s PFM community (think of agent ‘A’).  Some members of good standing in the PFM Board network (like ‘C’) are also members in the country’s PFM community. They are peripheral agents in this network, however, maybe outside consultants or IMF or World Bank PFM specialists working on the country. Then there are central agents in the country (like ‘B’) who are peripheral agents in the PFM Board—part of the network but this is not where they get their power and influence and identity. Think the long-time, all powerful Budget Director, or the politically powerful Minister of Finance.
It is easy to see that ‘A’ is external to the country’s PFM network. She does not engage directly in this network at all. But I would say that ‘C’ is a borderline external agent in the country PFM community as well; the kind of agent many readers of this blog find themselves being. These are the types of agents that I would call ‘external’—and you could draw a straight line between them to see the degrees of externalization agents could also enjoy.

So, there is not one type of external agent but rather various types. Some are consultant outsiders who are really on the border of the network or even outside the network (the ‘A’ agents). Maybe this would be the short-term expert coming to take a look at some really technical issue. Then you have the external agents who are partially overlapping (maybe the World Bank team leaders who write the TORs for ‘A’ agents). They are there to build the relationships, get a sense of the network, lay the groundwork, and connect with useful outsiders.  Long term consultants could also be in this category (but they could be ‘A’ agents too—given that many long term consultants I see seem to try hard not to assimilate into local networks).
« Last Edit: January 18, 2012, 06:02:35 GMT by Napodano »

Governwell

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Answer to Question 2: What do these agents do? And what could they do to help limit reform limits?

In my opinion many reforms are hatched by interactions between the agents I described in my answer to question 3, and the internal actors who overlap with the external PFM community (like B). The different agents play different roles, as above, and all are needed to make reform happen.
 
Theory on institutional entrepreneurship argues that institutional change requires having (at minimum) someone who is aware that the status quo is not working, someone who has some idea why it is not working, someone who has some idea of alternatives to try as reform, and someone with enough power and influence to get the community to adopt change. Some like to think this is one person. The proverbial champion. Unfortunately, network theory suggests we should expect that those with power (at the center of a network) do not have the awareness of problems. Agents at the periphery enjoy such awareness, but seldom have power.

So, change requires a combined and connected interaction of multiple players across—and between—networks. In the area of PFM, this would be having some power players in countries working with agents who are in the international community, given bridging agents between both worlds. All this to say that we should know what roles we can play as agents on the periphery…or beyond…and we should first of all be pretty humble as a result. As external agents
we cannot really do the change on our own (or even be the main role players).

To answer Martin, then, let me think about what we can do, which is to try and foster endogenous change in the contexts we are working in.
First, this would involve helping build awareness around problems in the context, such that we foster constituencies of internal restless agents, who are aware of the inconsistencies and deficiencies of incumbent structures. There are many issues that we as outsiders see in any country we visit, but we should be aware that issues are not problems and problems are the things that gain attention, cause internal people to examine their situations, and motivate change. So, as outsiders we can help to turn issues into problems. This would involve (a la John Kingdon’s work) using focal events to draw attention to problems, using data to construct stories about problems, and using past experiences to draw attention to problems.

This is best done with groups of internal agents and takes time. But it is the way to ‘hook’ people in. My sense is that this is what you finally got to in Albania, Martin: a place where the inside agents finally saw what their problems were after years of tinkering and ‘got it’. I read about a similar experience in a recent paper about an HMIS reform in Tajikistan’s health sector. External consultants ran into walls of opposition because—they realized at the end—the internal folks did not ‘see’ the same problems they did. The end result was that the internal group was starting a dialog of reflection, where they were questioning incumbent structures that had been in place for 70 years and were in the way of progress (http://sprouts.aisnet.org/495/1/Institutional_logics_and_HMIS.pdf).

I would argue strongly against external agents defining problems or—what we usually do—introducing solutions into contexts where internal groups do not see the problems themselves. Where this is the case, I think the chance of getting political buy in to reform is really low.
As Mauro hinted, international organizations don’t hire consultants to go through this kind of ‘problem guiding’ process. If you work on a project preparation team you have a couple of weeks to come up with a set of activities and an end goal for four years out. I argue that this almost always guarantees limits (unless the country is already at a place of problem awareness).

Second, I would recommend that external agents focus less on bringing in specific solutions—MTEF, program budgeting, FMIS (yes, even IPSAS). These things are good, but we all know that they may not fit into contexts and we don’t really know what makes a good fit. Given my work in this area I think external agents are better located to help with broad-based scanning for solutions—given the problems that have attracted attention. This scanning would involve external and internal activities: Looking for a range of good ideas that address the class of problems being addressed, building a theoretical story about each (where they emerged, where they did not, what seemed to make them work, etc). This would then be the basis of a menu and an education campaign for insiders. They must ultimately choose, and I think we all believe that choices are better when there is a well designed menu to choose from. External folks can really help in this process.

For example, I see some great external support for Rwanda’s matching grant program for decentralization. The government got advice on doing matching grants from a variety of players, based on a variety of similar—but different—experiences. The advice was broken down into ideas about laws, supporting activities, etc. Some of the ideas came from inside Rwanda—Imihigo performance contracts, for instance. Ultimately, the country seems to have built a workable system around this assortment of ideas.
This brings me to the difficult part of my second recommendation. The literature on institutional change suggests that viable solutions are almost always hybrids; they are created from elements of different ideas that are both internal and external. In a sense, then, you should never be able to develop an MTEF or program budget that does not have some weird and wonderful element that someone will criticize.

Getting back to Mauro, I worry that international organizations do not provide the time or resources—or have the patience—to allow this kind of scanning. The emphasis is on finding solutions quickly and cost-effectively. Even worse, I think that international organizations—and governments in developing countries—are attracted to pure-form best practice reforms that are like limiting straitjackets. These best practice reforms are the best option when reforms are intended as signals. Consultants are likely to get agreement for their recommendation to develop a program budget, but will struggle if they say ‘we advise a process where Cambodia finds its own approach to strategic budgeting.’ A World Bank project leader will struggle getting a ‘Scan for hybrid’ project through the Board. If she recommends a best practice it will steer through much clearer. And everyone—including governments—will accept best practices over undefined hybrids that need to be found (that sounds like a lot of work). I
Limits to reform result where such external incentives and processes have us bypassing the process of finding and fitting reforms.

Third, external agents can help to build reform communities. We could play the role of convener, or connector. The literature on institutional change finds this kind of role vital. Think about the one who brings disparate groups together for meetings to talk about common problems, or who introduce new parties so that new ideas can diffuse. The idea of groups of institutional entrepreneurs being the facilitators of change is well established, and the idea that change even requires connections beyond these groups—to distributed agents—is also gaining headway.

Limits to reform emerge where these kind of connections are not created, either because time is limited or because the belief in individual ‘champions’ crowds out initiatives to build constituencies beyond such. This is, I believe, one of the main reasons why externally influenced reforms are often limited to change in concentrated groups. No one is connecting more broadly.
« Last Edit: January 18, 2012, 14:38:44 GMT by Napodano »

Governwell

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Answer to Question 4

Hi John. Long time!

Thanks for the great questions.

First, I would tend to agree with President Zenawi, though you would probably guess from my responses to Martin and Mauro that I do believe external agents have an important role to play in any social change. This is partly because 'good' or 'poor' governance is a relative concept that is defined differently, depending on where one stands in the social network or field being governed. Those who are deeply embedded in any system often do not see the aspects of that system that others may call 'poor governance'. These central agents enjoy power and influence from the system, and have worked out how to govern in the context. The ones who see the need for change are frequently those on the periphery of the field or network, who overlap with other fields. These agents are also often the ones who learn about alternative ways of governing that can become the basis of reforms. The ones showing these various options are often external agents--consultants,  suppliers, etc. Ultimately, I would argue that the story behind any really well governed country involves the interaction of internal and external agents as a result. They just need to be playing their roles appropriately.

Probably my favorite story here is Singapore. Everyone says Lee Kuan Yew was the 'champion' responsible for the island-state's development. I can't argue, but if you read Lee Kuan Yew's autobiography you also learn about the many people who helped this process. Including Albert Winsemius, a Dutch economist who worked for the UNDP and became a llong-time advisor to the government. Winsemius played a great external role to complement the internal reform process. Result = change.

Second, on the PEFA data and my paper on isomorphism. So, I think one needs to be careful with the PEFA data--largely because of reasons Frans and the Secretariat are clear about. I won't get into questions about whether PEFA measures the right things. Beyond this, there are questions about the quality and comparability in assessments across time and countries. There are also questions about whether you can use ordinal data to do statistical analysis. You will see that I try to deal with these questions in the paper on isomorphism (and the earlier piece on African PFM...and a forthcoming Public Administration and Development article).

First, I work with a sample of 31 countries in these papers, even though there are many more assessments in place now. I do this because I worked with three grad studes to go through every single dimension score in all 31 assessments, examining the evidence behind the score and the way the score and evidence related to the PEFA criteria. I found a number of problems through this, which were corrected with the help of my assistants. I would say that the number of problems were higher for earlier PEFA assessments, and were concentrated in specific areas (internal and external audit attracted some attention, for instance, especially in Francophone countries). So: You need to clean the data a lot before using it.

As regards the statistical analysis of ordinal data: You will note that I use a specific statistical technique to deal with this. The technique does not assume equal distances between the different symbols on PEFA dimensions, which normal statistical methods do. In this way, I think it controls for some of the concerns Frans and others rightfully have about using ordinal data. I know he and others have other concerns and I am working on them. It should be noted that ordinal data like that emerging in PEFA assessments are used all the time in research, and can be very valuable.

To me, the PEFA data has actually turned out to be deeper and more valuable than I first assumd it would be. I always think that the quality of data is shown when results make sense in a practical way. In my opinion (and given responses) the analytical work I have done so far, using PEFA data, has yielded results that make sense and take some of our observations a step further than they were before. This, I think, suggests the data is capturing valuable information. Well done to Frans, the secretariat, and the group of people who developed the indicators. At the same time, I worry about the many people who use the data too instrumentally (in practice)...
« Last Edit: January 18, 2012, 06:00:14 GMT by Napodano »

Governwell

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Answer to Question 5

I think a country’s context is really important to think about when crafting reforms. You mention the idea of 'stage of development' and tie this to the argument that elites behave better when they capture enough of the wealth.

I am not sure what the contextual factors are that matter the most, but I believe there are many of them. I also believe they are commonly overlooked when reforms are designed. I wrote about the idea that good governance looks different in different contexts a while back (http://governancejournal.net/2010/01/12/andrews-good-government-means-different-things-in-different-countries/). I think there are many contextual factors that determine what countries are ready for: 1. I think the kind of problems countries are dealing with matter a great deal; 2. I think the general capacities matter a great deal; 3. I think the level of economic development and rate of economic growth matter a great deal; 4. I think heritage matters more than we like to admit (colonial, social, cultural, etc.). Add to the mix the structure, strength etc. of elites and there is a lot to consider when even considering motivating reform.

The questions I would ask are: 1. Given that we all know these contextual variables matter, why do we all (and others) routinely overlook them and go ahead in designing our best practice reforms anyway? 2. How would we be able to 'see' these contextual factors, understand their influence on reform possibilities, and shape reforms appropriately? I will weigh in on my own responses to these questions, but would love to hear other ideas as well (including whether others find these useful questions).
« Last Edit: January 18, 2012, 06:03:39 GMT by Napodano »

Governwell

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Answer to Question 6

Hi Frans. Thanks for the questions.

First, the issue of endogenous versus exogenous change. I don't think it is really possible to put endogenous and exogenous change processes head-to-head. Endogenous change tends to happen over much longer periods, in a much less  structured process ('muddling through' versus specified intervention) and often under the radar. It does not mean that endogenous change always works, and you are right to ask the question. Are the limits I identify simply the constraints to all change?

The empirical evidence I would say is relevant includes stories of successful change and reform in many developed countries. Stories of these reforms tend to tell of the kind of long-term processes I discuss above, where reforms emerge through problem-solving activities that lead to local actors finding and fitting reforms that are usually bricolaged combinations of ideas they see in other countries and their own ideas. I would argue that the path breaking reforms in New Zealand, Australia, Netherlands and others looked like this. I would also say that the more successful developing country reforms look like this too. South Africa's MTEF, Russia's FMIS. I would describe these as internally motivated reforms that drew on external help but were largely endogenous.

Beyond this kind of evidence, let me clarify what I am trying to do in talking about externally influenced reforms. I am not trying to say that these are less successful. Rather, I am trying to say that there are peculiar difficulties with doing this kind of reform that we should be aware of—and that most of the literature on change does not help think these through. The literature on change is mostly about endogenous change (motivated by insiders trying to address problems and make their organizations better). This work tells us that even these reforms face a lot of resistance unless groups of internal agents buy-into the idea of change. Externally motivated reforms face peculiar challenges of getting this buy-in, especially when the reforms are adopted because of some coercive external pressure that makes internal agents potentially more resistant to the initiative (crucial to the idea of isomorphism). This means we should probably expect resistance to be a greater issue with these reforms, and we should think up ways of doing something about it.
 
As another example, literature tells us that many successful change experiences emerge over long periods in an incremental manner--whereby insiders motivated by the need to address problems take a first step, learn from it, take a next step, learn from it, and ultimately end up with a hybrid that works. The incremental approach is considered important for a number of reasons: small steps take up less political capital and provide for quick wins, can offer a lot of lessons about what works, and allow capacity to develop incrementally in tandem with the change. Externally influenced reforms don't typically look like this. They are pre-designed, with externally defined best practices slated for adoption in rather short periods. So there is a question about how you manage the major political costs of these reforms, or how you do the 'fitting' of best practice that requires real mechanisms (and time) for learning, and how you build up the new capacities to do the new thing.

In short, the limits of externally influenced reforms may be the common in endogenous reforms as well, but I think the characteristics of externally influenced reforms make these limits particularly problematic. The limits of change are exacerbated by the ways of doing external reform.

You asked also if I think the developed world has the same limits as we see in the PEFA data. The idea is that countries pass laws and take time to catch up to these laws, so therefore a de jure-de facto gap is always in place. I think this is an empirical question and would love to hear of folks who have evidence from the PFM world in this regard. But let me give some of my ideas on it, and the evidence I focus on.

First, it seems to me that many developed countries do not start reforms with laws. Laws often emerge in response to changes in the way people are thinking about their jobs, and to catch-up to the new capacities and problems that have already emerged in society. So, I suggest a counter-hypothesis that you may have de facto practice leading de jure laws in many developing countries (especially where laws are slow in changing, like Francophone countries).

The most recent evidence I will point to here is the Global Integrity data on anti-corruption policies. The data shows that developed and developing countries are not that different when it comes to the quality of laws. Most laws look good now. The difference is in the gap between laws and practice. A country like Uganda has laws rated at 99 out of 100, but practice at 47 (I believe)  with a gap of 52! Italy has laws somewhere in the 80s, and implementation in the 70s, for a gap less than 10... Yes, there is a gap, but it is much smaller in developed  countries. This is routinely the case (see my blog post on this http://matthewandrews.typepad.com/mattandrews/2011/06/measuring-the-gap-between-form-and-function-global-integrity-data-1.html).

So, I would argue that the gap between form and function is simply lower in developed  countries. And the large gaps in developing countries are a symptom of the incentives and approach to doing externally influenced reform. These reforms are often introduced as 'signals' which means an emphasis on the visible dimensions--like laws--and less emphasis on the unseen dimensions that are required to get things done. This can also happen in developed countries (I think we can see some of this in the recent revelations that countries signaled reform intentions to get into the EU without doing reform) but I would argue that the gap will be lower.

Finally, I really enjoyed the paper you guys did on the repeat PEFA assessments. I would agree that the upstream-downstream gap is the least interesting of the three I talk about. Actually, as your paper points out, one half of the upstream dimensions (related to the multi-year budget) are actually really weak. I think the real action is in the de jure-de facto gap and the concentrated-deconcentrated gap. These gaps turned out to be more important when all three were considered in multi-variate analysis, and I think most readers would agree that this is a real problem in the real world. It is great (at least to me) that the PEFA data helps us see and learn about things we see in the real world. Kudos to you and the secretariat.
« Last Edit: January 18, 2012, 06:10:04 GMT by Napodano »

FitzFord

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Matt,

Question 7

I would suggest a different approach to some of those proposed in previous comments. I suspect that the circumstances for success depart somewhat from earlier suggestions.  My hypothesis is that success is based on a genuine collaboration between external actors with experience in a variety of circumstances, preferably including in their own countries, as well as knowledge of the results of related studies; and, local interlocutors who understand their own systems and where external experience may be adapted to the specific circumstances of their own countries. This acknowledges that specific solutions are not likely to be directly transferable from other contexts, but there are lessions to be learned from these other experiences that may be adapted to other venues. It is often unlikely that someone outside of the specific complexities of a particular country would be an adequate designer of the details of the necessary systems and interventions that would work in that country's context, without a knowledgable collaborator in the country; on the other hand, someone living within the system may not immediately see the potential strategies and adaptations that would solve their country's particular problems without the interaction with ideas that have been in some form successful elsewhere. Is there anything in your research/analysis that would give credence to this hypothesis?

Fitz.
« Last Edit: January 18, 2012, 06:05:01 GMT by Napodano »

petagny

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Matt,

Question 8

On the issue of de jure vs. de facto reform, can we perhaps make a distinction between different legal traditions and the relative power of the finance ministry? My impression is that in countries like the UK, Australia and New Zealand reform can go a long way without any legislative backing and (serious) piloting of significant reform initiatives by the finance ministry is relatively easy (and can be done prior to legislative reform). France, however, passed its new organic budget law (the 'LOLF') supporting performance-based budgeting (among other things) in 2001 and then took until 2006 to implement it in full. In formerly centrally planned economies, we find a need for a strong legislative base prior to reform, which is partly a reflection of legal traditions, but may also indicate the relatively weak position of the finance ministries in these countries (which does not have the power to advance reforms without legal backing).

 

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