Matching Politics and Service Delivery Reform

1. Matching Politics and Service Delivery Reform Political Economy of Service Delivery June 2, 2005 Ariel Fiszbein and Yasuhiko Matsuda World Bank

2. Routes to better service delivery • Multiple institutional options for service delivery, each with its own pros and cons • “Long routes” • By central government bureaucracy • By sub-national governments • “Short routes” • By special agencies/enclaves • By nonstate providers (for-profit and non-profit) • With community participation • Successful service delivery reforms (esp. short routes) are plenty, but

3. Can they be sustained or scaled up? • The State matters • Short-route innovations are difficult to institutionalize and sustain • NGO health delivery in rural Guatemala? • Are difficult to replicate/scale up • EDUCO in El Salvador? • And are prone to capture • FONCODES in Peru? • Private sector delivery with its own pitfalls • Need for effective compensatory policies and strong regulation (e.g., regressive subsidies/tariffs) • Risk of capture/expropriation (e.g., utilities in Argentina) and political backlash (e.g., Bolivia)

4. Fitting intra-public sector compacts Rule-bound bureaucracy? Yes No Robust checks and balances? No Nature of political representation Yes Performance mgmt w/ social control Increasingly programmatic Predominantly patronage-driven Performance contracts Opportunistic enclaving (possibly w/ strong donor pressure + voice) Weberian reform (e.g., civil service reform, fiscal control through LRF, IFMS, etc.)

5. Fitting inter-governmental compacts Socioeconomic inequality? Low High Intra-public sector compacts, private participation, or other institutional options Weberian state at the center? Yes No Gradual, compact-based decentralization with strong central monitoring and control, or contracting out at the center Voice-based decentralization to maximize local innovations (risks of local capture)

6. Fitting non-state delivery options Point of Departure Tradition of diversified delivery modes Tradition of strong state presence Strong state (rule of law +Weberian bureaucracy)? Quality of the rule of law Weak Strong Yes No Capture by private providers? Delivery by non-profit organizations with performance contracts Donor-supported/monitored NGO delivery Extensive reliance on private provision of public services

7. Applying the fitting process: Chile • Strong formal state + robust rule of law + programmatic political parties • Performance-oriented public sector reforms promising • Persistent inequality calls for institutional innovations, but strong ideological divide limits options for redrawing state-nonstate boundaries • Status quo bias, but strong tradition of centralism limits options for redrawing intra-state boundaries

8. Chile: Education • Strong “Weberian” bureaucracy permits performance-pay system for teachers; • But ‘deeper experimentation’ may ‘hit’ the ideological divide (Eyzaguirre et al.2005): • Higher standars require stronger compact between state and schools (i.e. Autonomy with responsibility) • High socio-economic inequality requires stronger differentiation in service and pro-active (compensatory) state intervention

9. Applying the fitting process: Bolivia • Weak state (highly informal) + weak rule of law + generally patronage-driven parties • Performance orientation difficult to obtain from state bureaucracy -> enclaves could work but sustainability in doubt • Socioeconomic inequality/fragmentation • Uniform service standard difficult, but voice-based decentralization could work in some localities (and also lead to capture elsewhere)

10. Bolivia: Education • Decentralization -> more spending and more local innovations (esp., voice) • But politicized public administration precludes effective performance management • Political impossibility of fully decentralizing teacher management