Über die Autorin bzw. den Autor

Charles C. Griffin is senior adviser to the vice president for Europe and Central Asia at the World Bank and former senior fellow in Global Economy and Development at Brookings Institution, Washington, D.C., USA. David de Ferranti is president of the Results for Development Institute, Washington, D.C., USA, and a former World Bank vice president. Courtney Tolmie is a senior program officer for the Transparency and Accountability Program, a project of the Results for Development Institute. Justin Jacinto , Graeme Ramshaw , and Chinyere Bun all have conducted research for Brookings.

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Lives in the Balance

Brookings Institution Press

Chapter One

In a study of the effectiveness of education spending programs, the National Center for Economic Research (CIEN) in Guatemala looked at why increased school spending was not being converted into improved education results. Only half of school-age Guatemalan children complete primary school, and reading and math skills are at dismally low levels. Several problems immediately became clear as researchers surveyed parents and primary school students and teachers. Some 62 percent of head teachers reported that textbooks had not arrived in time for the start of the 2008 school year, disrupting student learning. And 73 percent of school boards surveyed reported that the school meals program did not provide enough food for students who needed it.

Rather than simply write a report, CIEN researchers decided to use their results to promote changes that would make school spending more effective. Armed with policy recommendations based on their interviews and findings, the team worked with leaders from the Ministry of Education, convincing them to shift the start of the school year from January to February so that it no longer coincided with the start of the fiscal year, a major cause of the delays in the delivery of resources. CIEN also worked with students, teachers, and parents to encourage them to monitor government performance using CIEN's findings as a baseline. While the full impact of the policy shift and community monitoring efforts will not become clear for several more years, the changes encouraged by CIEN are important steps toward improving the effectiveness of school spending-and ultimately education achievement-in Guatemala.

* * *

This book addresses the challenge of achieving efficient and equitable use of public resources in developing countries in such sectors as education and health. The way stakeholders in the international arena think about economic and social development has changed considerably in recent years. Multilateral organizations and donors now have an array of tools for evaluating problems and introducing potential solutions in public expenditures. Improved transparency and understanding of public spending have accompanied the global trend toward democratization, which has also created space for traditionally voiceless groups-poor people, excluded ethnic and religious groups, women, and others-to become more involved in development. Civil society organizations have sprung up nearly everywhere to watch government and press for change.

Chapter 2 examines what we know about government expenditures and budget execution in a broad sample of low- and middle-income countries. Donors and multilateral organizations have encouraged governments to make their public spending programs more effective. Sometimes this support has yielded improvements. All too often the results have proved disappointing.

In asking why such efforts have frequently had limited impact, and what can be done to improve results, this book takes the view that the fundamental challenge is less technocratic than political: holding political officials and public employees accountable to the wider public (who pay the taxes and use the services) for the use they make of the public resources entrusted to them.

To explore the relationship between those who run the government and the people, the book uses the "principal-agent" model, as developed in chapter 3. In its original application the model was developed to analyze the conflicts of interest that can arise when the owner of a private firm engages a professional manager to run the firm. How can the owner feel confident that the manager is making decisions for the owner's benefit rather than the manager's? How can the owner monitor the manager's actions and develop incentives that align the manager's incentives with the owner's?

When considering government accountability, it can be helpful to think of politicians and public officials as the "agents" of the general public and then to ask how effectively the public, as "principals," use a country's political system to align the agents' actions with the public's interest. Does a cabinet minister, for example, feel effective pressure and demands from (or on behalf of) the public-from an expected opponent in the next election, say, or from an active media with access to budget data, or from a parliamentary scrutiny committee-to allocate education spending fairly and effectively to primary schools across the country? Alternatively, does the minister feel motivated-and at liberty-to concentrate resources on schools in certain politically favored districts or to divert funds into private pockets, because pressures for transparency and public accountability are weakly developed?

For the pathways of accountability described in chapter 3 to work requires that information on government budgets and financial management be readily available to citizens. Chapter 4 uses data from the Open Budget Initiative of the International Budget Partnership to show how to make budgets clear and transparent and how countries are falling short.

Because enforcing accountability on the government sector is a massive task, citizens cannot generally address it effectively as individuals. Interest has therefore grown in the role of intermediary civil society organizations that can act on behalf of the population to make governments more accountable. That role is a major focus of this book and is developed primarily in chapters 5 and 6. The focus is on independent monitoring organizations-civil society organizations whose mission is to monitor government policies and services and to demand more transparent and accountable performance in public expenditure management.

A critical focus-public expenditure management

Public spending in most low- and middle-income countries falls far short of being as effective or as equitably allocated as it needs to be. In the past donors and activists have focused on increasing the quantity of resources, including aid, for development-oriented programs. In recent years they have come to understand that improving the quality of public resource use can be at least as important.

World Bank research has found that the correlation between increased spending on public services and improved outcomes is often weak. Increased spending on education has not always resulted in higher primary school completion rates, and increased spending on health is only weakly associated with lower mortality rates in children under age 5. This suggests that increased public spending needs to be accompanied by more attention to the effective and efficient use of funds to achieve significant development impact.

It is often observed that politicians can claim to be following almost any strategy to appease stakeholders such as international donors, other government leaders, and the public. But a government or ministry's true strategy and priorities are revealed by how it actually spends public money. In this spirit, and without diminishing the importance of other aspects of good governance such as respect for individual rights, this book focuses on "following the money."

Day to day, no area of government activity more directly affects development than public spending and service delivery. The public sector is often the primary provider of health and education services and the leading investor in infrastructure. The allocation of public spending may also be the key mechanism for income redistribution (whether progressive or regressive) across groups. Accordingly, budgets can determine how well or poorly scarce resources contribute to development goals. This book looks closely at how-and how far-the demand side, defined as pressures and demands coming from or on behalf of the public, can contribute to better public resource use and, ultimately, better development outcomes.

A growing literature explores the empirical relationship between government transparency and accountability for performance and the effectiveness of public expenditure management. These studies work from the hypothesis that increasing public knowledge of government processes and expanding opportunities for civil society to hold government accountable for its actions will increase administrators' incentives to allocate money and effort toward effective, propoor human and economic development programs. Box 1.1 highlights some of the most influential research in this area. While the research supports the notion that transparency can have a positive impact, more work is needed to define the mechanisms at play, including how demand-side agents, such as independent monitoring organizations, can improve development outcomes. The book focuses on independent monitoring organizations as a special breed of civil society organizations focused on public expenditures and service delivery performance.

Evolution of thinking on development and accountability

During the last 60 years mainstream thinking on the channels for achieving progress in economic and social development has evolved. The early post-World War II decades saw an emphasis on capital accumulation through increased savings and foreign aid, designed to move poor countries away from subsistence agriculture to more economically productive market-focused agriculture and manufacturing. By the 1980s emphasis was shifting to reforms in macroeconomic policies expected to improve economic performance, including fiscal stabilization, privatization, and trade liberalization. At the same time investment in people (through health, education, nutrition, and other programs) was being pursued more vigorously. By the late 20th century internationally supported programs for debt relief were adopting an explicit poverty-alleviation focus, conditioning debt relief on the development and implementation of national poverty reduction strategies.

Governance and the quality of public institutions

In parallel, a greater appreciation developed for the importance to successful development of country-level governance and the quality of public institutions-and the damage that can be done by widespread corruption. Improving governance has become increasingly prominent in international development discourse. In March 2007, for example, following extensive consultation, the World Bank approved a new strategy for promoting good governance. In 2006 the United Kingdom's Department for International Development released a new antipoverty strategy that placed governance at the center of the organization's work program. The U.S. Agency for International Development, the Inter-American Development Bank, and other leading development institutions have taken similar initiatives.

Meanwhile, the increasing availability of comparable data on country-level governance standards has made it possible to study the empirical relationship between good governance and better development outcomes. The World Bank's Worldwide Governance Indicator, one of the most comprehensive governance indicators, accounts for six aspects of governance quality (voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption). The index covers the recent period of governance reform (1996-2006). The latest analysis of the Worldwide Governance Indicator shows that while some improvements in governance have occurred in the past decade, they have been inconsistent across countries and dimensions of governance quality. While indicators of integrity and corruption constructed by Global Integrity and Transparency International are not as telling on trends in governance, both provide additional evidence that governance quality varies greatly across regions and that poor governance continues to be an obstacle to poverty reduction and social development in many countries.

Democratization and a new political landscape

As international development actors began focusing on improving governance and accountability, the political landscape in developing countries was shifting as well. There has been an unprecedented movement toward democratization since the 1980s, accelerated by the collapse of communism in Central and Eastern Europe and the discrediting of military rule in Latin America. The Polity Project of the University of Maryland defined 92 countries as democracies in 2007 and 30 as autocracies.

Accompanying the trend toward political democracy has been a more general push for greater openness in society, greater adherence to the rule of law, more public participation in governance, and more emphasis on human rights. The Freedom in the World Index published annually by Freedom House seeks to capture these complementary trends. Its subcategories include electoral process, political pluralism, government functioning, freedom of expression, rule of law, and individual rights. According to its annual survey of political rights and civil liberties, the number of countries classified as "free" has risen from 43 to 89 in the past 30 years, while countries rated as "not free" have dropped by a third (from 39 percent of the total in 1981 to 24 percent of 194 countries in 2009). The same survey indicates that the number of electoral democracies rose from 66 in 1987 to 118 in 1996, although the total dropped to 116 by 2009. About 4.6 billion people lived under fully or partially democratic conditions in 2009, and 2.3 billion lived under "not free" conditions, with China alone accounting for about half that total. The trend toward democracy has been global, with every continent participating in the push for greater freedom and openness, although there have been setbacks and improvements year by year (with several serious setbacks just in the last few years).

As this book argues, the potential for independent monitoring organizations to affect public spending varies, depending in large part on how much political space is available in which to operate. In newly democratic societies civil society is potentially well placed to improve accountability and governance. The stakes in holding governments accountable for their decisions are especially large in public expenditure management: public spending priorities and implementation affect daily life. The recent trend toward democratization means that civil society can develop the voice, power, and tools to influence government decisions and actions in developing countries, fundamentally altering the dynamic of policy reform by shifting the center of decisionmaking to domestic players.

The role of external agents

Not yet well understood is how outside organizations-donors, capacity-building organizations, and others-can contribute to greater domestic demand for good governance. The idea itself, at least on the surface, is somewhat paradoxical. Can outsiders really create domestic demand for good governance? Should they even try? For more than 50 years the democracy-building community-largely centered in the U.S. State Department but including organizations such as the National Democratic Institute, the International Republican Institute, and International IDEA-has worked on issues related to this goal. Their experience may provide some useful models and strategies for increasing and broadening citizen control of governments, but that experience also offers warnings about the difficulty of achieving success. This book investigates a range of strategies for outside organizations to support civil society's demand for greater accountability for results in public spending.

A simple model

Figure 1.1 offers a framework for thinking about the key relationships explored in this book. At the top the goal is to achieve better development outcomes. From the bottom a combination of supply-side improvements, such as enforcing anticorruption laws, and demand-side improvements, such as developing independent monitoring organizations, is probably necessary to create enduring improvements in government accountability, the next step up the chain. Greater accountability creates an environment where another supply-side intervention, reforming systems, is likely to have a tangible impact. For example, improving government accountability in procurement by making it transparent, standardizing and simplifying procedures, and creating an arbitration process to settle problems quickly gives citizens and bidders the ability to demand that the system perform better. The government may then begin forcefully prosecuting criminal behavior, upgrading information systems, and removing layers of bureaucrats built up over time whose job was to enforce accountability through processes. This combination leads to better public sector governance, with the result that public procurement becomes faster and more trustworthy. More trustworthy procurement opens possibilities to develop contracts and competitive processes for service delivery, thus leveraging market forces to make more effective use of resources. Now increased resource flows can be expected to actually have an impact. To the far right of the figure are some of the actions that independent monitoring organizations could take at each stage to improve accountability. (Continues...)

Excerpted from Lives in the Balanceby Charles C. Griffin David de Ferranti Courtney Tolmie Justin Jacinto Graeme Ramshaw Chinyere Bun Copyright © 2010 by Brookings Institution Press. Excerpted by permission.
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