African Bureaucracies

The context in many African countries (among others) is not conducive to successful bureaucracies. For example:

• Information and evaluation are scarce and expensive, which inhibits internal and external controls.

• Information-processing skills are weak at both the individual and institutional levels, due for example to low levels of education and few computers, as well as relatively few specialists such as accountants, auditors, statisticians, and so forth.

• Incentives are weak, in the sense that good performance goes relatively unrewarded and bad performance relatively unpunished.

• Political monopolies dominate, sometimes coupled with violence and intimidation.

• Countervailing institutions are weak, in part because of information and incentives problems but also because of hostile actions by the state.

• Some governments face a soft budget constraint, meaning that foreign aid will fill a good part of any deficiency due to inefficiency or corruption .

• Consequently, good economic reasons explain the failure of government institutions to perform. One need not cite cultural or political factors, and one need not immediately turn there for solutions.

Faced with this unfavorable environment, one has several options. One can try to remedy the enabling environment. Or one can experiment with alternatives to government agencies operating under the bureaucratic paradigm (for example, privatizing, using civil society, or experimenting with post-bureaucratic organizational forms.

The argument for institutional adjustment in brief: the success of economic reforms depends on a government policies and on limiting the state role, but it also depends in ways that economists can readily grasp on the quality of government management, and this in turn depends on economic concepts like information, incentives, competition, and budget constraints. For private sector adjustment to work, we need something akin to adjustment in the public sector. This includes, importantly, reducing corruption.

In the decade ahead we will come to conceptualize the substance of administrative adjustment in economic terms, based on information, incentives, and organizational structure. The principles of administrative adjustment will include:

• Enhance information and evaluation. Put it in the hands of clients, legislators, and those with official oversight (regulators, auditors, judges, etc.).

• Improve incentives. Link incentives to information about the attainment of agreed upon objectives. In a phrase, administrative adjustment must be incentive compatible.

• Promote competition and countervailing forces - including civil society, the media, the legislature and the courts, and political parties - and procedures that allow these different interests and voices to make a difference in policy and management.

• Harden the budget constraint. One possibility is to reduce foreign assistance. Another is to make aid contingent on progress in administrative adjustment.

This approach contrasts with approaches based on more: more training, more resources, more buildings, more coordination, more central planning, and more technical assistance. The logic is that without adjustment, more will not solve the problem of inefficient, corrupt public administration in contexts like those found in many African countries.

Development strategies are shifting from policy reform to institutional reform, including the control of corruption. As we learn that economic policy reforms are not enough for economic success, that democracy is not enough for political success, we focus on the institutions through which economic and political activity are carried out and mediated. Regarding institutions of the public sector, we do not yet have consensus on the labels. We encounter overlapping concepts such as governance, public administrative systems, institutional development, and administrative adjustment. Within five years there will be a more stable set of concepts and texts and a template to guide reforms in this domain.

Perhaps even more than in the case of policy reforms, institutional reforms take place in contexts that interact with advisable measures. Cultural, historical, and political variables probably matter a lot to the correct choice of mechanisms for fighting corruption. Every country will find its own solutions.

Moreover, in the emerging domain of institutional adjustment, data are scarce. We find few well-tested propositions about what happens when reforms are tried under such-and-such circumstances. We therefore proceed on the basis of success stories and analogies to the developed countries and to private business. Importantly, we also can build on new theoretical developments (agency theory, public choice, industrial organization, finance in economics; new bureaucratic theories in public and business administration). Is emphasized the agency theory (more broadly, the new theory of the firm) coupled with case studies of success. Substantively, is emphasized three generic reasons why public-sector institutions often fail: incentive myopia, corruption, and inappropriate administrative integration and centralization.

So, the problem of fighting corruption (and more generally of what might be called administrative adjustment) is difficult: unclear concepts, many interaction effects with local contexts, metaphors and models from many divergent areas of economics and elsewhere, few established estimates of "parameter values."

Despite these complexities, the argument for administrative adjustment is intuitively powerful and empirically plausible. Corruption is clearly one of the two or three major problems holding back economic and political advance in most developing countries.