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Making Development Work: the Quality of Government Approach 07 2015 MAKING DEVELOPMENT WORK: THE QUALITY OF GOVERNMENT APPROACH Bo Rothstein, Marcus Tannenberg Making Development Work: The Quality of Government Approach Bo Rothstein and Marcus Tannenberg University of Gothenburg Rapport 2015:07 till Expertgruppen fr biståndsanalys (EBA) Bo Rothstein holds the August Rhss Chair in Political Science at the University of Gothenburg and is co-founder of the Quality of Government Institute. As of January 2016, he will serve as Professor in Government and Public Policy at the Blavatnik School of Government at Oxford University and as Professorial Fellow at Nuffield College. Marcus Tannenberg is a PhD student at the Department of Political Science at the University of Gothenburg. He has been responsible for the implementation of the “Poznan declaration” established by the Compostela Group of Universities for promoting ethics, anti- corruption and social trust in higher education. Acknowledgements We would like to thank the members of the EBA reference group – David Booth, Rachel Gisselquist, Sten Heckscher, Lars Heikensten and Molly Lien for very valuable comments and suggestions. We would also like to thank Sren Holmberg and Paul M. Heywood for very helpful advice and comments. This report can be downloaded free of charge at www.eba.se This work is licensed under the Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/. ISBN 978-91-88143-09-9 Printed by Elanders Sverige AB Stockholm 2014 Cover design by Julia Demchenko Table of content Preface............................................................................... 1 Sammanfattning .................................................................. 3 Mål och forskningsresultat ................................................................. 3 Sveriges biståndspolicy och kvalitet i samhällsstyrningen ................ 6 Slutsatser och rekommendationer ...................................................... 6 Summary ............................................................................ 8 Purpose and findings ........................................................................... 8 Swedish aid policy and Quality of Government ............................. 11 Conclusions and recommendations................................................. 11 1. Introduction .................................................................. 13 2. Democracy and Quality of Government ............................. 17 Democracy: some unfulfilled expectations ..................................... 17 Does democracy produce Quality of Government? ....................... 22 3. Development Theory - Institutions and Development.......... 29 Alternative theories ........................................................................... 30 Formal and informal institutions ..................................................... 33 4. Development Practice – Good Governance and Development Policy .................................................... 36 Rise of the good governance agenda................................................ 36 Ideological gatekeepers ..................................................................... 36 What is good governance? ................................................................ 39 Critique and problems with the good governance agenda ............. 42 Good governance and corruption.................................................... 44 The problem with “governance”...................................................... 46 5. The Quality of Government Approach ............................... 50 Conceptualizing the Quality of Government ................................. 50 Uni- or multidimensional?............................................................... 51 Normative or empirical .................................................................... 53 Policy substance or political procedures ......................................... 55 Universal vs. relativistic.................................................................... 57 Quality of Government as impartiality ........................................... 61 6. Understanding Institutional Change .................................68 The principal-agent theory............................................................... 68 Public ethics theory .......................................................................... 72 The theory of collective action ........................................................ 73 7. Swedish Development Assistance and QoG .......................78 Good (Democratic) governance and corruption............................ 80 Indirect approaches to institutional change .................................... 84 Gender equality ................................................................................. 86 8. QoG – how to get it.........................................................87 Taxation............................................................................................. 88 Meritocracy ....................................................................................... 89 Universal education .......................................................................... 91 Gender equality ................................................................................. 92 Good auditing .................................................................................... 94 Can donor organizations induce change in Quality of Government?............................................................................ 95 9. Conclusions ................................................................... 97 References ...................................................................... 102 Preface How to address the challenge of eradicating poverty and promoting development and what donors should prioritize in order to be effective are fundamental questions for international development cooperation. Over time, focus in development cooperation has continuously changed in the search for practical answers to these questions. Measures considered to be promising have been applied for some time, later to be abandoned in favour of other initiatives and possibly more promising solutions. In this report, Professor Bo Rothstein and Marcus Tannenberg from the University of Gothenburg, synthesize the current knowledge on why some countries have developed into prosperous societies while others have not, and put forward conclusions for development policy. They show that so called quality of government factors, i.e. factors such as control of corruption, the rule of law, and administrative competence, have a strong positive impact on most standard measures of human well-being (e.g., infant mortality, life expectancy and child poverty) and that good quality of government is central for development. Hence, if the aim is to improve human well-being, it is key to promote high quality of government and control of corruption. The importance of well-functioning institutions and the need to address corruption is indeed well-known by policy makers. Since the late 1980s, governance has been a major concern for both donors and their partners in developing countries and good governance has been highlighted by several world leaders. In a well-cited quote, former UN Secretary-General Kofi Annan noted that “good governance is perhaps the single most important factor in eradicating poverty and promoting development”. Recently, the importance of governance has been reiterated in the global agenda 2030, where building effective, accountable and inclusive institutions is highlighted. Hence, there is obviously a broad understanding on this issue. How come then, that in spite of numerous measures to promote institutional development and to combat corruption, there has been relatively little progress? In the report, the authors address the question of why the development agenda has failed, and what donors should do to get it right. They argue that there is a need for a better understanding of the nature of the problem. “Good governance” is a term that has been widely used in the donor community at large but there is no clear agreement on what it entails. In Sweden, on the other hand the term 1 “democratic governance” has been frequently used. But as the authors point out, all good things do not necessarily go together, and democratization is not necessarily the road forward to eradicate poverty and promote development. Of course, democracy has an intrinsic value in itself, as is underlined by Rothstein and Tannenberg, but in order to promote development it might be more important to improve the exercise of power than promoting the access of power. Swedish development cooperation has a relatively long history of institutional capacity building. In the 1990s Sweden was one of the first donors to start projects in recipient countries which had the stated objective of making government work. Over time, new perspectives and initiatives have been added to the Swedish agenda. The authors show that Swedish support for public administration constitutes a relatively small part of the Sida portfolio today, and that it has declined over the past ten years. Rothstein and Tannenberg recommend increased resources to strengthen the quality of government and the capacity of the public administration. However, increased quality of government is not only achieved by broadly targeting the public administration per se. The authors outline five distinct institutional factors which have been shown to
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