Governance and development – new progress in the search for middle ground

2021 holds the promise of  many new beginnings, including  for work at the interface of governance and development. But how to avoid this moment becoming yet another in an endless cycle of pendulum swings  between alternating ideas?   

In the 1980s structural adjustment was thought to be the panacea which would solve development’s problems. In the 1990s the panacea was ‘good governance’.  Both  worked out badly. Much has subsequently been learned about better ways forward. This time round, perhaps we can heed the dictum that the way to avoid endlessly repeating history is to learn from it.

AA Milne, in a classic story, tells of Winnie the Pooh and Piglet’s quest to find the mythical heffalump. For development  scholar-practitioners working at the governance-development interface, the heffalump quest has been to try and give structure, without being simplistic, to the range of messy realities out of which development might arise –  and thereby to help make practical  the exhortation that policymaking and implementation should be based on ‘good fit’ not ‘best practice’.  

As a pair of important new books spell out (see here for a complementary post), the development heffalump has been sighted. The heffalump has a name, ‘political settlements’. It is well-grounded  in a coherent theoretical literature. A solid body of work fleshes it out empirically. What follows are some explorer’s notes – a personal account of part of the quest that has led to the heffalump sighting, plus some reflections on a new frontier which the quest has brought into view.  

Phase I: 1986-1997 –   pre-history.   A year spent doing research in Korea and Taiwan in the mid-1980s crystallized for me the importance of looking beyond conventional Washington Consensus development prescriptions.  Between 1990 and 1994 (having joined the World Bank),   I co-led with Pablo Spiller a research project which aimed to distil practical insights from the new institutional economics (NIE) for the regulation of utilities; the research culminated in a widely cited co-authored article, and our co-edited book, Regulations, Institutions and Commitment(Cambridge U Press, 1994).  A central conclusion:

Utility performance turns out to be best when countries have achieved a good fit between their institutions and regulatory design, and worst when regulatory design proceeds without attention to institutional realities.”

The World Bank’s 1997 World Development Report, The State in a Changing World (for which I was part of the core team), provided an opportunity to further refine, synthesize and apply the emerging ideas about ‘good fit’. Thus, as per the 1997  WDR:

Matching role to capability is not a simple message of dismantling the state….It involves choosing how to do things – how to deliver basic services, provide infrastructure, regulate the economy-and not just whether to do them at all. The choices here are many, and must be tailored to the circumstance of each country…. There is no one-size-fits-all formula….There are institution-intensive and institution-light approaches to regulation and industrial policy. The choice of approach might appropriately vary with a country’s institutional capability. (pp.3-4; 75)

The challenge was to turn these fine-sounding nostrums into practice.

Phase II: 1998-2008 – a search for practical entry points for governance change. The 1997 WDR helped spur a major expansion of the World Bank’s work on governance and public sector reform, including expanded programs in each of the Bank’s regional vice presidencies; I became manager of a 20+ person team providing support to governments across Africa.

The rich diversity of African countries made it crucial to find a way of thinking more systematically about ‘good fit’ options for making governance and developmental gains.  In a 2002 Working Paper, “Patterns of Governance in Africa”,  using the responses to a survey conducted for the 1997 WDR, I  constructed a typology of 22 African countries, distinguishing between political dimensions of governance (the extent of formal rule-bound-governance, and the ‘credibility’ of political authority)  and administrative dimensions (the quality of bureaucracy). A 2004 book, (co-edited with Sahr Kpundeh), Building State Capacity in Africa, World Bank Institute Development Studies (2004) sought to derive lessons for improving governance from  a variety of World Bank supported public sector reform and capacity building initiatives. Rather than begin with normative prescriptions of what  ‘should’ be done, the book focused on ‘what happened, and why’ vis-à-vis specific efforts to strengthen governance – and suggested what  might be feasible entry points across different contexts.

The framework for distinguishing among divergent governance trajectories subsequently was incorporated in the joint World Bank-IMF publication  Global Monitoring Report 2006  in a special section (for which I was lead author) on “Governance as Part of Global Monitoring”. The framework distinguished heuristically between those contexts with early gains in bureaucratic capability, and (hopefully) later gains in the quality of checks and balances institutions, and those where checks and balances led, and bureaucratic capability (hopefully) followed.  Some of these lessons were incorporated into the World Bank Group’s 2007 Governance and Anti-Corruption strategy.

Phase III: 2006-2014 – engaging with  gurus. Two sustained  encounters helped strengthen the academic underpinnings of an emerging, inductive, bootstrapped approach to ‘good fit’.In 2005, I began co-teaching a course on ‘development strategies’ at Johns Hopkins School of Advanced International Studies with Frank Fukuyama (a course I continue teaching to this day). In 2008, after three years of co-teaching , we co-authored a  paper, “Development Strategies: Integrating Governance and Growth”, World Bank Policy Research Working Paper Number 5196, January 2010”.  As per its abstract, the paper “takes a broad view of the interactions between economic, political and social constraints. It lays out four distinctive sequences via which the different dimensions might interact and evolve over time, and provides country-specific illustrations of each.” The working paper provided a useful platform both for Frank’s subsequent work, and  for mine.  

In parallel,  Douglass North, John Wallis, Barry Weingast and others had begun a research project which aimed  to explore the relevance for developing countries of the analytic framework laid out their landmark 2009  book, Violence and Social Orders, The results were published in the 2013 book, In the Shadow of Violence.  (Part of the project team, I contributed a chapter on Zambia and Mozambique; the book also includes a chapter on Bangladesh by Mushtaq Khan, one of the pioneers of ‘political settlements’ analysis.)  Though their 2009 book focused principally on a transition from ‘limited’ to ‘open access orders’ (OAOs), the 2013 book had as its point of departure the understanding that:

“… the principal development problem is making improvements within the LAO framework…..The first development problem focuses on the movement of LAOs from fragile to basic, from basic to mature, and from mature into the doorstep conditions. Attempting to skip these steps and focus instead on the transition from an LAO to an OAO is more likely to fail than succeed”. (p.346)

Working with the Grain, published in 2014, two years after I left the World Bank, built directly on the work with Fukuyama, and with North, Khan and colleagues. Organized around a typology for distinguishing among contexts,  one of its principal goals was to provide an orienting framework for practitioners, “…capable of filling the gap between ‘best practices’ hubris on the one hand, and, on the other, the despair disguised as humility [that follows from] the notion that every country is unique and that there is little to be learned in one setting that can be helpful in another”.  (p.8) 

At least on the surface, there was strong momentum within the World Bank to put into practice the ideas which had been incubating over the previous decade: over 300 staff signed up to participate in  an in-house ‘political economy community of practice’; ample funds were made available for country and sector teams to incorporate political diagnostics into their operational work. In practice, though, for reasons explored in depth by Carothers and Gramont (2013), there continued to be sharp limits on the part of most in the Bank to embrace political economy work, beyond generality and lip service.

Phase IV: 2012-2020 – refining. 2012 saw the commencement of the Effective States and Inclusive Development research program, a 26-country  partnership, funded by DfiD, and based at the University of Manchester;  I worked closely with ESID throughout the subsequent eight years.  The ESID team was committed to working at the interface of theory and practice, adding value to each; ‘political settlements’ analysis provided the organizing conceptual framework.

Within a few years of start-up it became evident that the ESID research team’s shared enthusiasm for a ‘political settlements’ perspective translated into neither a shared, precise definition of such settlements nor a shared, consistent typology.  After a few years of collective angst, the  team settled on a new definition of a ‘political settlement’ as:

an ongoing agreement (or acquiescence) among a society’s most powerful groups over a set of political and economic institutions expected to generate for them a minimally acceptable level of benefits, and which thereby ends or prevents generalized civil war and/or political and economic disorder”.

Later in 2021, Oxford University Press will publish ESID’s capstone book, Tim Kelsall et al Understanding Development: the Promise of Political Settlements. (In the  interim, Kelsall’s co-authored  working papers –one on the conceptual framework, with Matthias vom Hau;  the other on the empirical methodology, with Nicolai Schulz – provide an overview.)  William Ferguson’s 2020 book, The Political Economy of Collective Action, Inequality and Development is an ambitious effort to integrate political settlements and the analysis of collective action. (See here for my summary overview of that book’s core ideas.) In my view, the above definition, its elaboration and empirical application together  comprise a landmark in the maturation of political settlements analysis – a sighting of the Heffalump.

Lessons and new frontiers. Over the past half-dozen years, my thinking has evolved vis-à-vis both the ‘static’ and ‘dynamic’ aspects of the typology laid in  Working with the Grain.  Considered from a static perspective, the WWG typology can be viewed as a way to categorize  country types, with “distinctive incentives, constraints and frontier challenges and thus distinctive ‘good fit’ policy actions that are both worthwhile and feasible, given country-specific realities”.  The WWG typology is best viewed as an example of ‘ideal-type’ thinking – a  simplifying device which is not intended to be comprehensive. There is, however, one key distinction – between power and institutions – which is blurred in WWG, and on which (spurred in large part by the ESID program)  my thinking has evolved substantially.  

As a complementary post (linked here) details, the insights which Bill Ferguson brought into the ESID program were key to clarifying the power-institutions nexus. As per Ferguson:

  • development challenges can usefully be framed in terms of collective action challenges;
  • whether and how these challenges are resolved is shaped by power;
  • institutions provide the mechanism for resolving  collective action challenges;
  • strong pre-existing institutions can support resolution; and
  • pressure on institutions can result from misalignment between the structure of power, and the distribution of outcomes supported by the prevailing institutions, the institutions

The last of these  has important implications for how development trajectories unfold over time.

WWG’s approach to the longer-run was optimistic; it focused “on how governance and growth interact…framed in terms of a virtuous circle:  initiating change, building momentum, sustaining momentum”.  Virtuous circles are nice, of course – indeed, a central purpose of an incremental, with-the-grain approach to policymaking and implementation is to sustain a positive trajectory.  But if imbalances between the allocation of power and the distribution of benefits become too large, the result will be crisis – and on this (and on ways out of crisis) WWG had little to say.

Spurred by the crises which many countries the world over have confronted in recent years (not least the two countries with which I am most intimately connected, South Africa and the USA), a central pre-occupation of my recent work has been on development’s “crisis-renewal” watersheds. This exploration has taken me beyond WWG’s focus on institutions,  and beyond ESID’s focus on the power-institutions nexus, to a quest to better understand the ‘independent’ role of ideas. Depending on the context, ideas can be  glue holding a political settlement together, a source of rigidity blocking change, a solvent unlocking change, and an effervescent inspiration bringing renewal.

This hardly is virgin terrain: Keynes, Hirschman, North and Rodrik all have made important contributions (summarized here).  The role of ideas in political settlements analysis has been explored within the ESID family,  by both Ferguson and by Tom Lavers. Insofar as I might have anything to add, my intent, following the general pattern of my work, is to move back and forth between the general and the specific. For both South Africa and the USA:  How, in recent years, have ideas  interacted with institutions and power? What role have they played in fueling downward spirals? How (in the spirit of a bias for hope) might ideas provide fuel for renewal? The hunt beckons.

3 responses

  1. Pingback: “Collective Action, meet Political Settlements” « WORKING WITH THE GRAIN: Integrating governance and growth

  2. Excellent summary of the evolution of thinking about political settlements in the development context! Appreciate your posting and including links to other publications covering related issues.

  3. Gold would be a couple of examples where the typology (-ies) and the distinction (eg. capacity vs. power) led to a change that (a) wouldn’t have been done under the standard approach and (b) worked (succeeded, made a difference, was worth the candle).
    Otherwise, the risk is that we criticize things that didn’t work and blame them on (variously) overgeneralizing, working against the grain, etc. and reasonably arguing, “We have to take a different approach, and here’s one that’s plausible.” And as you describe at the Bank and ESID, translating that critique and the plausibility into action may … wane.
    So, success stories are crucial. And then, conveying them in a way that talks about how as well as what, with the goal not of copying but of inspiring.

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