How bad do you want it?

Addict in need of a fix (Trainspotting)

A passenger in need of a giving-fix on the governance reform train

Matt Andrews has questioned in a series of posts (culminating in this) the imposition of best practice in governance by blueprint. He suggests that many such reforms fail at the implementation stage because essentially they were not wanted here. This is an important argument to make, but itself is a simplified narrative of what I suspect is often a complex and contested policy making process.

For a start, I suppose many if not most governance experts well understand the need for contextualisation and local adaptation, but since most governance reforms will be resisted by local political elites (as the reforms are likely to undermine their grip on power), the outside experts are likely to face a dearth of suitable local interlocutors to advise them on how, practically, to achieve workable reforms.

Secondly, just because local political elites do not want to undertake a given reform, does not mean there are no local stakeholders who do not desire best practice in governance reforms. The growth of civil society in developing countries, often sponsored somewhat by external donors, has created a powerful constituency in favour of improved governance. Sometimes they may even be sufficiently powerful to ensure some kind of reform actually sticks. More often, and more likely, they will complain loudly enough to prevent dodgy legislation from passing, but be relatively powerless to push for its full implementation.

Ironically, such actors, in declaring the best the enemy of the at-least-slightly-better, may not always appreciate the harm they are potentially doing to their cause. If the proposed constitution which Zimbabweans rejected in 2000 after strong campaigning by MDC had been passed, then Robert Mugabe would have reached his term limit last year; instead the MDC are still stuck with him. Nonetheless, as with the democracy versus authoritarianism debate, it is hard to tell such activists that just because their country is poor they cannot enjoy high standards of governance. That’s about as insulting and patronising as it gets!

However, there is an even stronger argument to be made here. Andrews gives us the example of the introduction of International Accounting Standards (IAS) in Bangladesh as a potentially classic case of reform by blueprint over-reach*. One argument advanced in favour of IAS is that this is important to attract international investors. Well now, businessmen are pretty much accustomed to following the money, so I would suggest that either they’re not that desperate for that kind of investment, or there are enough alternative investors close at hand (from India?) who are ready enough to invest in Bangladeshi businesses without demanding IAS. Meanwhile, if the donors want IAS so that they can have greater confidence that their grants and loans are being properly spent, well then they just have to set firm enough conditions.

To give another example, a complaint much heard these days with regards to the European sovereign debt crisis, is that of the tyrannical grip of the markets over proper democratic rule over nation states. The simple retort is that if you do not want to be dictated to by the markets, then do not borrow from them (or at least do not borrow so much), and, in the end, it is likely that most if not all countries in crisis will sooner or later undertake a good part of the reforms that the markets are asking for – with or without default – simply because if they do not, then the cost of future borrowing will be ruinous.

In contrast, international aid donors are much more forgiving. For all the pesky conditions they put on their money, they primarily want to keep on giving, because that is their function in life. Moreover, even if some donors eventually run out of patience and withhold funds, another donor often quickly steps in. It is true that the rise of non traditional (i.e. non-OECD) donors such as China and Brazil has made this problem harder, but nonetheless the firepower of Western donors (and strongly Western influenced donors like the World Bank) is such that I suspect they could seriously incentivise reform if they wanted it enough, and were prepared to stick together much more on these issues.

Thus, whilst the question for a Bangladeshi business seeking further investment is how badly does the business itself need it compared with the costs of implementing IAS, for the case of implementing IAS within the Bangladesh government, the question donors need to ask themselves, is how badly do we want it? After all, it is their money that they are giving out; they don’t have to give it if they don’t want to!

* Disclaimer: Like Andrews, I have no direct experience of development processes in Bangladesh.

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2 responses to this post.

  1. […] week I blogged about the failure of donors to achieve the governance reforms they desire. This week Owen Barder […]

    Reply

  2. […] my previous posts on the lack of donor success in stimulating serious governance reform in developing countries […]

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