Do governance indicators matter? Empirics of Governance Seminar Washington 1-2 May 2008 Nils Boesen

2 The point of departure o Governance reforms are painstakingly difficult o Donor support to governance reform has been ineffective Donor driven reforms Politically uninformed Overloaded reform agendas Ridiculous time horizons Poor attention to change management & process issues o Can governance indicators help?

3 A superfluous sticker? If you think there are problems with the data, try without it… - That has worked quite well for governance development for several hundred years –so what is the new offer?

4 A solution looking for a problem? Governance functions as umbrella concept, focusing on factors which are associated with present-day OECD countries. OECD: Survey of Donor Approaches to Governance Assessment, February 2008

5 Through a looking glass darkly? - Voigt: Internally vs. externally sanctioned institutions - Political institutions determine economic institutions - Kaufmann: What To Measure: Rules or Outcomes? - Kray: some areas of governance have particularly clear and unambiguous definitions: Corruption is the use of public office for private gain - Etc: Rule of law, elections, transparency – assuming citizenship rather than sovereign- subject-relationships?

6 Understanding…nothing?? Current reality Desired reality Measuring the difference…?..or understanding reality…?

7 Realist alternatives 1: other data! PatrimonialHierarchiesMarketsNetworks Basis of relationships LoyaltyEmployment relationship Contracts and property rights Resource exchange Degree of dependence DependenceDependentIndependentInterdependent Type of Accountability Informal between patron and client Formal financial and administrative accountability Horizontal through market mechanism Complex and blurred accountability Medium of exchange PatronageAuthorityPricesTrust Means of conflict resolution & coordination Submission or Exit Rules & commands Haggling, courtsDiplomacy CultureCustomSubordinationCompetitionReciprocity Limitations of governance Bound only by other persons; arbitrariness Bound by institutions, predictability Bound by efficiency Bound by degree of consensus achieved

8 Realist alternatives 2: Benchmarks within reach Current reality Desired reality Attainable, attractive vision …matching power behind reform, current governance configuration and domestic capacity to change

9 Example: PEFA o 31 potential PEFA compliance gaps – where to start? Indicators give no answer – but may add to overload risk o Still risk of solution-driven standards: PI 12 - Multi-year perspective in fiscal planning, expenditure policy and budgeting o Legitimacy risk: Mainly donor- developed, donor executed

10 Ways forward – action & research o Specific benchmarks, co-developed with partner countries and the professions (Example: JV Procurement) o Combine good enough practices (benchmarks) with good enough fit (political economy, sequencing) o Temper beliefs in magic of evidence based and indicator-driven policy approaches – it sells, but not yet much evidence (sic!) that it works.