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What is “policy” and what can be done about it?

What is “policy” and what can be done about it?. Lant Pritchett LEP Sept. 13 th , 2010. Outline of the presentation. New empirical results globally from comparing Doing Business and Enterprise Survey (including “changes”)

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What is “policy” and what can be done about it?

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  1. What is “policy” and what can be done about it? Lant Pritchett LEP Sept. 13th, 2010

  2. Outline of the presentation • New empirical results globally from comparing Doing Business and Enterprise Survey (including “changes”) • New empirical results on the pace of the expansion of “capability” (the ability to implement policy?) • W.A. Speculation on the implications for high bandwidth policy making and promoting entrepreneurship

  3. Building off “Deals versus Rules” • In Africa used empirical data to argue for importance for firm’s decisions of “policy implementation uncertainty” with rules and types of deals (ordered versus unordered, open versus closed). • Use three indicators from the Doing Business survey, days to (a) “clear customs”, (b) get an operating license, and (C) get a construction permit • Compared to the days reported of the firms reporting having engaged in those activities

  4. DB versus ES, with various non-linear functional forms

  5. DB versus ES, average, with various non-linear functional forms

  6. DB versus ES, average, with various non-linear functional forms

  7. Three Common Features (using quartic specification, but robust) Slope Falls as DB rises Slope Falls as DB rises Slope Falls as DB rises Slope less than one for one (ex. Op Lic) even at low levels Almost no association at all

  8. All the increase at low levels of DB Very little increase among the low percentile firms Big Differences across countries among High percentile Firms

  9. Capacity for policy implementation(including both “service delivery” and “imposition of obligations” • Failing/Flailing service delivery • Education • Health • Corruption in contracting • Imposition of obligations • Taxation • Licensing (e.g. driver’s licenses in Delhi) • Corruption in evading obligations

  10. The Overall Accountability Triangle: Four Relationships of Accountability(each red arrow) The state Politicians Policymakers Compact Politics Long route of accountability Flow of Services (in transaction intensive service provision) Short route Citizens/Clients Providers Direct Citizen Power Non poor Poor Frontline organizations Coalition/Inclusion Management

  11. Five Elements of a Relationship of Accountability-four design elements, performance endogenous • Finance: A flow of resources from principal to agent • Delegation: A specification of what is wanted • Performance: The agent chooses their performance based on their capacity and motivation • Information: The performance by the agent creates some flow of information back to the principal • Enforceability: Based on the information the principal takes actions that affect the agent

  12. Classification of tasks? (with Ajay Shah)

  13. Average or Median annual Progress in ICRG ratings of “bureaucratic quality” or “corruption”

  14. Pace of progress in ratings of “bureaucratic quality” or “corruption” from the ICRG

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