A new World Bank policy report published recently made a strong case for developing countries and international development agencies to rethink their approach to governance, as a key to overcoming the many challenges being faced in today’s society, more particularly those relating to economic growth, and security.
“The 2017 World Development Report: Governance and the Law” explores how unequal distribution of power in a society interferes with policies’ effectiveness. According to the report’s summary, power asymmetries help explain, for example, why model anti-corruption laws and agencies often fail to curb corruption, why decentralisation does not always improve municipal services; or why well-crafted fiscal policies may not reduce volatility and generate long-term savings.
The report suggests that countries and donors need to think more broadly to improve governance so that policies succeed. It defines better governance as the process through which State and non-state groups interact to design and implement policies, working within a set of formal and informal rules that are shaped by power.
As stated by World Bank Group President Jim Yong Kim; as demand for effective service delivery, good infrastructure, and fair institutions continues to rise, it is vital that Governments use scarce resources as efficiently and transparently as possible. This, according to Kim, means harnessing Private Sector expertise, working closely with civil society, and redoubling efforts in the fight against corruption.
According to the report, unequal distribution of power can exclude groups and people from the rewards and gains of policy engagement. Yet meaningful change is possible with the engagement and interaction of citizens, through coalitions to change the incentives of those who make decisions; elites, through agreements among decision makers to restrict their own power; and the international community, through indirect influence to change the relative power of domestic reformers.
The report finds that good policies are often difficult to introduce and implement because certain groups in society who gain from the status quo may be powerful enough to resist the reforms that are needed to break the political equilibrium.
The report notes successful reforms are not just about “best practice”. They require adapting and adjusting institutions in ways that build more effectively on local dynamics and address specific problems that continue to stand in the way of development that serves all citizens.
The report identifies three winning ingredients of effective policies: commitment, coordination, and cooperation. It also recommends the following three core functions to produce better governance outcomes:
Bolster commitment to policies in the face of changing circumstances. This would help, for example, in cases where decision makers spend windfall revenues instead of saving them for the future, or when leaders renege on peace-building agreements in the absence of binding enforcement.
Enhance coordination to change expectations and elicit social desirable actions by all. Challenges occur in many contexts, from finance to industrial clusters and urban planning. Financial stability, for example, relies on beliefs about credibility. Just consider how despite the rationale for leaving their money in the bank during times of distress, the public may rush to withdraw their deposits if they believe that others will too – ultimately causing the banks to lose liquidity and crash.
Encourage cooperation: Effective policies help promote cooperation by limiting opportunistic behaviour such as tax evasion – often through credible mechanisms of rewards or penalties. Individuals may have incentives to behave opportunistically. Not paying taxes does not prevent them from enjoying public services that others are funding. Similarly, when groups fail to benefit from policies or feel short-changed (for example, by low-quality public services), it can further weaken compliance.
The findings and recommendations in this most recent report can lead the way for more focused discussions and debates among Governments, policy-makers and international development partners about how countries can work to ensure better governance at all levels, which in turn would have lasting positive impacts on the quality of life they provide for citizens.
