Squaring the circle?

Development Policy07 Aug 2013Alina Menocal

The recent High-level Panel (HLP) report is a thoughtful document that builds on the lessons from the MDGs to take a holistic approach to development. While governance was a blind spot of the MDGs, institutions have moved front and centre in the Panel’s analysis of what is needed to eliminate extreme poverty by 2030.

Yet, there is a curious irony in the report that deserves closer reflection. The HLP stresses that “goals and targets should reflect what people want, without dictating how they should get there”. The intention behind the emphasis on the what, rather than the how, is understandable: there is a conscious desire not to impose blueprints. But of course, this was the formula behind the MDGs, and if one is to take governance seriously, as the HLP wants to, then we need to focus on the how.

This is the paradox that lies at the core of the question of how governance should be incorporated into the post-2015 framework, and the HLP report does not entirely resolve it. Despite good intentions, the discussion on good governance and legitimate institutions tends to become prescriptive and normative.

Effective and legitimate institutions (including the rule of law, property rights, freedom of speech and the media, open political choice, access to justice, and accountability) are surely an integral part of most successful countries and sustainable economies these days. What remains unclear is how they got there.

In fact, there is increasing evidence of a weak causal relationship between the indicators captured in the good governance agenda (in particular the World Bank’s Worldwide Governance Indicators) and development in countries across the developing world – ranging from Botswana and Brazil to Indonesia to China and Vietnam – that have been able to sustain periods of economic growth over 20+ years and make progress in the fight against poverty.

This does not imply that institutions do not matter – just that the international community may not be focusing on the most relevant ones. Corruption, for example, the favourite bête noire of the development world, may not always be as bad as is generally assumed. According to research, strategic allocation of rents seems to be important in maintaining stability and facilitating development. Other factors that seem to matter from historical experience are political settlements which can enhance a sense of national identity, internally coherent states that can develop essential coordination capacities and build needed confidence in the absence of concrete rules, committed political leadership, well-organized political parties (in both democratic systems and hegemonic party-states), and accountability mechanisms that move beyond supply and demand and focus on engagement among actors in state and society.

Processes of transformation are complex and messy, and squaring the circle between normative ideals and how change actually happens remains the fundamental challenge of development.

It may not be coincidental that the Panel’s targets for ensuring good governance and effective institutions need to be further specified. One target with broad consensus, which also appears to be the most technical, is the one on the right to information and access to government data. However, while transparency and availability of information are highly desirable, research suggests they do not exist in a vacuum. Their significance and impact depend on contextual factors, including the organizational capacity and relative power of those seeking to hold their governments to account.

The most promising target on governance is the one on the provision of free and individual legal identity. It does not specify any particular institutional form, but captures the way states use their authority to increase interaction with society: whether a state provides legal identity to its people reveals much about its effectiveness and its vision of a collective future. The issue of tax regimes (at the domestic and international level), which is mentioned in the report and was a big focus of the latest G8 Summit, might also be promising in this respect – not necessarily in terms of numbers (e.g. collection rates), but rather of how progressive or regressive the tax system is, and how it elicits compliance.

Overall, much remains to be done. The HLP has done a commendable job of laying the groundwork to take governance seriously, but the difficult task now is to build on that momentum and think more creatively about targets for goal 10, in ways that are not only technically sound but also politically feasible and realistic – and focus on function, rather than simply on form.