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State-Building: The Missing Dimensions of Stateness

State-Building: The Missing Dimensions of Stateness. Francis Fukuyama Johns Hopkins University School of Advanced International Studies. Functions of the State. Source: World Bank, World Development Report, 1997. The Scope of State Functions.

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State-Building: The Missing Dimensions of Stateness

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  1. State-Building:The Missing Dimensions of Stateness Francis Fukuyama Johns Hopkins University School of Advanced International Studies

  2. Functions of the State Source: World Bank, World Development Report, 1997

  3. The Scope of State Functions Addressing externalities Education, environmentRegulating MonopolyOvercoming imperfect education Insurance, financial regulationSocial Insurance Providing pure public goods Defense, Law and order Property rights Macroeconomic management Public healthImproving equity Protecting the poor Intermediate Functions Industrial policyWealth redistribution Minimal Functions Activist Functions X-axis

  4. Two Dimensions of Stateness Strength of State Institutions Scope of State Functions

  5. State Capacity

  6. Stateness and Efficiency Quadrant I Quadrant II Strength of State Institutions Quadrant III Quadrant IV Scope of State Functions

  7. The Stateness Matrix France Japan United States Strength of State Institutions USSR Turkey Brazil Sierra Leone Scope of State Functions

  8. Change over Time Japan 1980 New Zealand 1995 USSR 1980 Japan 2001 Strength of State Institutions New Zealand 1981 Russia 2000 Scope of State Functions

  9. Reform Paths Path I Path IV Strength of State Institutions Path III Path II Scope of State Functions

  10. Tax Extraction Rates v. Per Capita GDP

  11. Components of Institutional Capacity

  12. Weak States and the Black Hole of Public Administration • Central issue of all organizational theory is delegated discretion • Underlying issue in socialism debate (Hayek), corporate structure (Chandler), federalism • Contemporary approach brings this under a principal-agent framework

  13. Principal-Agent Theory • Coase, theory of the firm 1937 • Alchian and Demsetz, firms as nexus of contracts 1972 • Williamson, opportunism and bounded rationality • Jensen and Meckling, agency costs 1976 • Fama, markets for managers 1980

  14. Domains of Organizational Uncertainty • Ambiguity of goals • Impossibility of erecting formal system of monitoring and incentives • Inability to determine appropriate degree of delegation ex ante

  15. Public Sector Outputs Quadrant I Quadrant II Low Specificity High Quadrant III Quadrant IV Low Transaction volume High

  16. Monitorability of Public Sector Outputs Aircraft maintenance Telecoms Central banking Railroads Highway maintenance Low Specificity High Foreign affairs Court systems Primary school teaching University education Preventative medicine Guidance counseling Low Transaction volume High

  17. Consequences of Organizational Ambiguity • Need to understand better where different public sector activities fall in the matrix • Seek to fix problems that are actually solvable • New approaches to activities for which there are no “best practices” • Need to teach development differently

  18. What follows if public administration is not a science? • Need for metis (Scott) • Does not necessarily imply leaving local institutions in place • Requires rather contextual judgment about applicability of foreign models • Need to think about the structure of decision-making rather than content of decisions

  19. Applications • Japan: MacArthur’s decision to keep the Emperor • versus the clean break in Germany • Iraq: disbanding the Iraqi Army • Iraq: tribalism in the Sunni triangle

  20. Making Things Worse • IFIs and donor community complicit in destruction of institutional capacity • Contradiction between objectives of capacity-building and provision of services • Need to rethink aims and emphasis of Phase II nation-building

  21. Implications for Democracy Promotion • Need to rethink 1990s emphasis on civil society • Good theory but questionable allocation of resources • Need to deal first with problem of weak states • Party-building ahead of civil society promotion

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