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For the people…

14 March 2012

Bad governance comes at a cost

Today’s post is from  Brian Atwood, chair of the OECD Development Assistance Committee.

At this year’s Global Forum on Development, I was invited to contribute some remarks on “governance”, a convenient shorthand for referring to the mechanics by which our societies are run, our institutions function, and our public administrations exercise fairness.

In today’s complex and globalized societies, governing implies understanding and applying a multiplicity of complex  rules, standards and agreements. Often these are quite technical, and even incomprehensible for non-experts who are unfamiliar, for instance, with the vocabulary of genetics databanks or nuclear energy. Others hide extremely difficult tasks of interpretation and application behind expressions we’re all familiar with, such as due diligence or bribery. And then there are those, such as transfer pricing, that are founded on concepts that are both technically demanding and arduous to understand and implement.

This is why we need bureaucracies: we need people trained to understand and apply the complex sets of rules that allow our ever-more diversified yet interconnected societies to function. Critics often point out that the great empires of Greece, Rome, China, Persia, or Britain managed to govern vast territories with fewer pen pushers than an average government department today. That may be true, but life is much simpler for an administrator who makes the rules, decides how (and if) to apply them, and can exile, imprison or execute anyone who disagrees. Fortunately today, it is the rule rather than the exception for legislation to hold governments and their administrations to account for how things are done.

At a meeting like the Global Forum, we are all constantly checking our smart-phones for emails or appointments, but we couldn’t have done this without a whole set of international rules and agreements covering everything from access to radio frequencies to taxes on calls from abroad.

Administering such matters is a vital task, like so many that our bureaucrats carry out. A quarter of a century before he published his Inquiry into the Nature and Causes of the Wealth of Nations in 1776, Adam Smith said: “Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.” Such a view might appeal to members of America’s Tea Party, but it doesn’t work in a world of complexities.

Nonetheless, we shouldn’t forget Max Weber’s warning issued over a century ago: bureaucracies, for all their benefits, can threaten democracy if they become an end in themselves rather than a means for the rest of us to carry out our business in the most practical, efficient way.

In Weber’s day bureaucracies were still essentially national, but even in his lifetime that began to change with the founding of the International Telecommunication Union in 1868, the Universal Postal Union in 1874, and the Intergovernmental Organization for International Carriage by Rail in 1893. When Weber died in 1920, there were 200 international diplomats and civil servants in Geneva; today there are some 40,000 and many more tens of thousands are to be found the world over, including in Paris where the OECD – one of the many organisations that oversees complex global standards – has its headquarters. These organisations exist because today we know that a modern society needs well-functioning public institutions to work well and fairly.

Yet if this is the case, why have our efforts to promote these lessons among developing states shown a low success rate? What is missing?

There is strong evidence that institutional reform, a core factor in development, has not succeeded when it is imposed from outside. In The Globalization Paradox, Dani Rodrik asks how young developing democracies can survive given all the obstacles built-in to global trade and financial regimes. He argues that when the social arrangements of democracies clash with the international demands of globalisation, as they inevitably must, national priorities should take precedence.

Yet our development agencies and international organisations, including OECD members, constantly fall short on an essential ingredient of the development recipe: local “ownership” by developing countries of their own processes and priorities, as well as of participation and accountability.

We invested in the transition from colonialism and were heavily engaged in the transition from communism, yet the wave of revolt that swept over the Middle East and North Africa saw us taking only baby steps. The arrest of NGO officials in Egypt threatens to scare us away. It should not. These organisations were in the country because Egyptians wanted them there. The National Democratic Institute, an organisation I once led, held seminars with 15,000 Egyptian participants, including the Muslim Brotherhood. They worked with Egyptians and it was Egyptians who ended up in court when the government cracked down, not the Americans who got all the media attention.

The December 2011 Busan Partnership for Effective Development emphasises that “promoting human rights, democracy and good governance are an integral part of development efforts.” This declaration was not just another agreement among governments. Civil society played a central role, with over 1700 CSOs represented at the High Level Forum that shaped the partnership, engaging fully in the agreements about how to make development more effective. They worked side by side with developing countries, parliamentarians, the private sector, foundations and non-OECD donors, all of whom today are helping to create a truly open, inclusive space for moving forward.

It wasn’t easy to get so many different groups to agree on shared principles; but debate is obligatory if we want to generate the broad commitment that is the foundation for building budget systems, tax systems and efficient public administrations under the control of democratic institutions with engaged citizens. This reflects one of the key aspects set out in the Framework for an OECD Strategy on Development adopted by OECD ministers in May 2011:  “Integrate, where appropriate, the diverse perspectives, views, and realities of developing countries in OECD analyses and policy advice to deepen shared understanding of the alternative impacts of different policy options”.

Timothy Besley and Torsten Persson’s Pillars of Prosperity: The Political Economics of Development Clusters suggests what this means in practice. They show that countries combine effective state institutions, absence of political violence, and high per-capita incomes when they have cohesive political institutions that promote common interests, guaranteeing the provision of public goods. The absence of common interests and cohesive political institutions can explain why fragile states are plagued by poverty, violence, and weak state capacity.

To become part of the solution, and not part of the problem, the OECD’s development strategy must embrace this self-evident truth. Only in this way can it prove Kafka wrong when he said to Gustav Janouch: “Every revolution evaporates and leaves behind only the slime of a new bureaucracy. The chains of tormented mankind are made out of red tape.”

I am confident that we can learn the lessons of both our successes and our failures.

Useful links

OECD work on governance and development

Key OECD publications and documents on capacity development

2 Responses leave one →
  1. Nicolas SERGE permalink
    March 14, 2012

    Thanks Brian Atwood for your article.
    I’m happy and thankful as well for the framework for an OECD strategy on development.
    I totally agree with you when you said that bureaucracy will always be needed. Meanwhile, it needs to take into account the spatio-temporal evolution of the urbanization, technology,demography, society and competencies life cycle.
    It will be relevant as well to analyze the impact of the development clusters on the spatial distribution of the economic activity.
    Regards,
    Nicolas SERGE

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