Good Governance for Development in Arab Countries: Fourth Regional Working Group on Civil Service and Integrity

1. 1 Robert P. Beschel Jr. Lead Public Sector Specialist World Bank MENA Vice Presidency Rabat, April 2008 Good Governance for Development in Arab Countries:Fourth Regional Working Group on Civil Service and Integrity This is a book on: the state of governance in the Middle East and North Africa, the costs and consequences of poor governance, and steps that countries can take to move toward better governance for development. � The research and publication is part of a World Bank MENA Development Series, which includes major work on trade and investment, employment and gender. The messages in this book on governance have direct implications for how to achieve progress in the other areas. � This book was prepared with the close involvement of several Arab scholars and opinion leaders, whose ideas and research have helped shape the content and messages in this report. The twelve country and regional reports they have prepared as background for this book will be published subsequently. It builds on UNDP�s Arab Human Development Report, which broke the taboo which did so much to open the debate on governance in the region��Builds on it in 3 ways: By quantitatively benchmarking the region against the rest of the work, using standard empirical measures By analyzing the costs and consequences of weak governance in the region, showing what it matters By proposing a comprehensive framework to improve governance, even if specific paths are tailored to country situations. The World Bank offers this publication as a contribution to the debate on public governance that is already occurring within the region, a debate that must be carried out by and for the people in the region. It represents a deepening commitment on the part of the Bank to work with countries in their efforts to improve governance. � Chapter 1 reviews the status of governance in the region. Chapters 2 and 3 examine the costs and impact of poor governance, both macroeconomically and in terms of delivering public services. Chapter 4 suggests pathways to improve governance.This is a book on: the state of governance in the Middle East and North Africa, the costs and consequences of poor governance, and steps that countries can take to move toward better governance for development. � The research and publication is part of a World Bank MENA Development Series, which includes major work on trade and investment, employment and gender. The messages in this book on governance have direct implications for how to achieve progress in the other areas. � This book was prepared with the close involvement of several Arab scholars and opinion leaders, whose ideas and research have helped shape the content and messages in this report. The twelve country and regional reports they have prepared as background for this book will be published subsequently. It builds on UNDP�s Arab Human Development Report, which broke the taboo which did so much to open the debate on governance in the region��Builds on it in 3 ways: By quantitatively benchmarking the region against the rest of the work, using standard empirical measures By analyzing the costs and consequences of weak governance in the region, showing what it matters By proposing a comprehensive framework to improve governance, even if specific paths are tailored to country situations. The World Bank offers this publication as a contribution to the debate on public governance that is already occurring within the region, a debate that must be carried out by and for the people in the region. It represents a deepening commitment on the part of the Bank to work with countries in their efforts to improve governance. � Chapter 1 reviews the status of governance in the region. Chapters 2 and 3 examine the costs and impact of poor governance, both macroeconomically and in terms of delivering public services. Chapter 4 suggests pathways to improve governance.

2. 2 The Need Critical need for the �next generation� of more detailed, actionable indicators. Early generation indicators (TI and KKM) were valuable in starting the debate, but had a number of limitations: Conceptual limitations (Melissa Thomas) Empirical complications (OECD Paper) Not actionable or based on objective standards (TI) Occasionally produced quirky results (KKM: Hassan II vs. Mohammad VI) Legitimate concerns about lags (Yemen CPIA)

3. 3 HRM Actionable Governance Indicators (AGI) Modeled after PEFA indicators for PFM Still in early stages Lots of unresolved issues� Scope can be daunting Absence of �good practice� in many areas Lack of available empirical data In Light of the Above, What Should We Do?

4. 4 Priority 1: Accurate, Up to Date Information on Public Pay and Employment in MENA Largest General Government Employment in the Developing World Largest Central Government Employment (3% of population) Smallest Sub-National government (in terms of number of personnel) Largest Military (not counting other security personnel)

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6. 6 Which Employees Are Being Measured?

7. 7 General Civilian Government as % of Total Employment

8. 8 Government Employment as % of Total Population

9. 9 Central Civilian Government Wages as % of GDP

10. 10 Government Wage Evolution for MENA Countries, as % of GDP, 2000-2004

11. 11 Public-Private Wage Ratios

12. 12 Global Reduction in the Role and Size of the State (Privatization Proceeds through 1996)

13. 13 Priority 2: Decentralization Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.

14. 14 �with Limited Impact in MENA Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.

15. 15 Priority 3: E-Governance Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.

16. 16 Priority 4: Service DeliveryFor the Quality of Administration, MENA�s �Governance Gap� is Small Index of quality of administration (based on 10 indicators)� includes bureaucratic corruption, enforcement of property rights and regulations, budgetary processes and revenue collection, civil service This graph plots the global relationship between incomes and IQA � all countries shown, with MENA countries in gold Quality of administration rises with incomes (black line) Same pattern is true in MENA, but less strong (gold line) There is a gap between MENA and Rest of the World, both on average, and for most of the MENA countries For a given level of income, MENA countries have a poorer quality of administration than would be predicted � Most countries lie below the average for the rest of the world (black line) At least half MENA countries also lie below the world median for administrative quality The vertical black bar shows the gap between the average MENA country and the level of administrative quality that would have been predicted based on the worldwide relationship between IQA and incomesIndex of quality of administration (based on 10 indicators)� includes bureaucratic corruption, enforcement of property rights and regulations, budgetary processes and revenue collection, civil service This graph plots the global relationship between incomes and IQA � all countries shown, with MENA countries in gold Quality of administration rises with incomes (black line) Same pattern is true in MENA, but less strong (gold line) There is a gap between MENA and Rest of the World, both on average, and for most of the MENA countries For a given level of income, MENA countries have a poorer quality of administration than would be predicted � Most countries lie below the average for the rest of the world (black line) At least half MENA countries also lie below the world median for administrative quality The vertical black bar shows the gap between the average MENA country and the level of administrative quality that would have been predicted based on the worldwide relationship between IQA and incomes

17. 17 But for Public Accountability, the �Governance Gap� is Wider Index of public accountability � based on 12 indicators � covers openness of political institutions, free, fair, competitive political participation, respect of civil liberties, freedom of speech and the media, transparency and responsiveness of government Two striking aspects of this graph: The gap between MENA and rest of the world is significant, reflecting the fact that every single country is below the worldwide average There is no relationship between IPA and income in MENA, in contrast to the rest of the world � richest MENA countries have levels of public accountability found in poorest countries of the worldIndex of public accountability � based on 12 indicators � covers openness of political institutions, free, fair, competitive political participation, respect of civil liberties, freedom of speech and the media, transparency and responsiveness of government Two striking aspects of this graph: The gap between MENA and rest of the world is significant, reflecting the fact that every single country is below the worldwide average There is no relationship between IPA and income in MENA, in contrast to the rest of the world � richest MENA countries have levels of public accountability found in poorest countries of the world

18. 18 The Paradox of Corruption in MENA

19. 19 On Paper, the Region Should Fair Poorly� Strong executive branch vis-�-vis legislature and judiciary Lack of independent accountability institutions Limited service orientation throughout the civil service (public official vs. civil servant) Underdeveloped civil society Low transparency, with limited press freedom Hydrocarbon revenues and co-mingling of state and ruler funds

20. 20 Yet Surprisingly, the Region Fairs Better than One Would Expect� Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.

21. 21 Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.Why is the Bank publishing this book on governance now It is our sense that the need for action on governance is urgent because of unavoidable pressures: Growing aspirations due to the free flow of information � about economic opportunities, about political rights, about relative standards of living. Thus, the bar for what governments need to do has been raised. MNA governments are also now unable to meet these aspirations effectively, because of growing economic pressures Before turning to an appraisal, a quick definition of governance.

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23. 23 Priority 5: Anticorruption Indicators Strengthen regional comparative work (Global Integrity Indicators) Basic Data Collection (legislative framework & enforcement) Country specific surveys UNCAC Implementation Risk profile confronting civil servants

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26. 26 Why the Difference? Much lower rates of reporting in the Philippines ICAC invests heavily in public relations On a per capita basis, Hong Kong citizens are over 5 times more likely to report allegations

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29. 29 Why the Difference? ICAC practices more robust triage up front, moves forward selectively and wins ICAC investigates only about 50% of the allegations it receives Moves forward with sanctions in about 10% of the cases Wins 4 out of 5 cases it prosecutes

30. 30 Why the Difference? Ombudsman practices limited triage up front, moves forward broadly and loses Recently implemented initial screening procedures Moves forward with sanctions in about 28% of the cases At best wins about 12% of cases it prosecutes, significant numbers overturned on appeal

31. 31 Resources are Often a Problem

32. 32 Priority 6: Case Studies of Successful Reforms Egypt One Stop Shops for Business registration Morocco VRP Jordan reforms in policy coordination PFM reforms in Palestine

33. 33 In Conclusion� Accurate, up to date information on pay and employment Decentralization E-governance (link w/ transparency) Basic service delivery Anticorruption Case studies of successful reforms