Innovations for Successful Societies

1. Innovations for Successful Societies Analytical Focus Key Concepts Innovations for Successful Societies, Princeton University 2010

2. Agenda • The challenge • Three focal points • What lies outside the focus Innovations for Successful Societies, Princeton University 2010

3. I. The Challenge • Reformers sometimes start to make a difference in tough settings—post-conflict situations, remote areas in insecure borderlands or neighborhoods, areas poorly served by infrastructure services. • But many cannot sustain their efforts or cannot find a way to move ideas from paper to reality. • Puts fragile state turnarounds at risk. Innovations for Successful Societies, Princeton University 2010

4. I-A. By itself, political will is not enough • Reformers may have an incentive to act. • They may build on strong public demand. • They may believe fervently in serving diverse communities • But… Innovations for Successful Societies, Princeton University 2010

5. I-B. The supply side matters too • Reform is not a technical exercise. • It is about • Timing, identification of ripe moments, opportunity • Identifying people with the talents to move a process forward • Managing expectations, providing narratives • Building support—both coalitions and constituencies • Acquiring information, escaping the yes men, tapping sources of ideas appropriate to the context • Problem solving • Personal aptitudes Innovations for Successful Societies, Princeton University 2010

6. II. Three ISS focal points Strategies reform leaders use to address: • Service delivery in tough places, where it is hard to exercise control over agents • Traps that often subvert turnarounds • High politics of reform (traps plus…)/implementation game Innovations for Successful Societies, Princeton University 2010

7. III. Service delivery challenges • A universal problem: People everywhere try to do what they think suits their individual interest or family interest • Crane inspectors in New York • Teachers in DC • Farmers in Italy • …except in Scandinavia? (well, maybe norms matter…or a long tradition of trustworthy institutions) Innovations for Successful Societies, Princeton University 2010

8. III-A. Typical service problems • High absenteeism among providers—teachers, doctors, nurses, land registry officials • Shortages in critical supplies (paper, medicines, etc.) • Poor service or wrong service delivered • Many visits required—partial performance, many steps • “Extra payments” required: Corruption or diversion of funds for other purposes Innovations for Successful Societies, Princeton University 2010

9. III-B. Principal-agent problem • The people who decide and manage (principals) • The people who execute parts of the task (agents) • Examples: • Manager (principal) and person on the assembly line (agent) • Leaders (principals) or publics (principals) and civil servants (agents) Innovations for Successful Societies, Princeton University 2010

10. III-C. Difficulty greater when? • Discretion/judgment required • Lots of transactions or a few? • It is hard to attribute outcomes to the way the service is provided (as opposed to other influences) • It is hard to attribute outcomes to a single service provider Innovations for Successful Societies, Princeton University 2010

11. III-D. Difficulty greater when… • Information is limited or flows poorly • …Resources to support supervision are limited (not only money but capacity; managers are scarce) • …Limited infrastructure makes supervision very costly Innovations for Successful Societies, Princeton University 2010

12. III-E. Some of the solutions commonly used: • Bonuses or commissions • Pay-for-performance (from piece work to appraisal-linked pay) • Prizes or sharing in patents • Social pressures (work groups) • Screening devices (to attract the people most likely to pay attention to the interests of the principal) Innovations for Successful Societies, Princeton University 2010

13. III-F Some other options • Give the community control (Bamako Initiative) • Contract with community user groups • Provide community members with a lot of information to compare what they are getting to what others receive (Uganda example; report cards) • Give people more choice among service providers (make the providers compete) Innovations for Successful Societies, Princeton University 2010

14. III-G. Some cautions • It is hard to “get organizational incentives right” • “Promoting to centers of inefficiency” when labor laws are tough • Can cause people to focus on the wrong thing (equivalent of teaching to the test…the cows’ ears problem) • Managerial quality and leadership continue to matter a lot Innovations for Successful Societies, Princeton University 2010

15. IV. Traps • Class of problems • Common theme: getting stuck in a bad equilibrium • Reformers find they can’t move changes forward because of one or more of these problems Innovations for Successful Societies, Princeton University 2010

16. IV-A. Thresholds • Critical thresholds: We must reach certain thresholds before the forces of standard competitive theory work “Critical thresholds may arise when ‘lumpy’ investments are required to increase productivity, or more generally when there are scale economies” • Market size /constituency size may be too limited to promote reform or innovation • Examples: • Demand for court reform • Collier in industrialization in Haiti & other places • Development of drugs for poor people’s diseases Innovations for Successful Societies, Princeton University 2010

17. Responses to thresholds • Attract multiple firms in the same industry (Collier on industrialization in Haiti) • Invest heavily to push people over the threshold (Sachs) • Create alternative sources of pressure if constituency is too small • Gates Foundation and research on diseases that strike Africans disproportionately—subsidize the cost Innovations for Successful Societies, Princeton University 2010

18. IV-B. Vicious Circles • Vicious circles: Feedback loops between a bad outcome and its causes increase the probability that the bad outcome will occur again • Examples: • Brain drain during civil war limits capacity to reform or rebuild after peace settlement. (Collier) • To settle a conflict, we accommodate an armed faction by granting a cabinet portfolio, but the faction performs poorly in office, making the government less effective, and it threatens to re-kindle conflict if moved out. Innovations for Successful Societies, Princeton University 2010

19. Responses to vicious circles • Break the feedback loop: Schevardnadze in the Republic of Georgia/Seretse Khama’s early days in Botswana • Eritrea’s skill shortage & policy toward diaspora v. El-Rufai proposal in Nigeria Innovations for Successful Societies, Princeton University 2010

20. IV-C. Coordination Traps • Returns depend on everyone else’s participation and without everyone’s participation there is no way to capture benefits that exceed the costs • In a coordination trap, everyone gains or everyone loses. • Examples: • Corruption: Norms require officials to pass opportunities or resources to kin groups or lose their standing. • Performance: No one believes there is such a thing as a stable government or consistent paycheck, so everyone moonlights and takes time away from the job, rendering it harder for a government to perform well. Innovations for Successful Societies, Princeton University 2010

21. Responses to Coordination Traps • Shock the system to shift norms (Machiavelli’s beheading in the village square…Githongo’s sights trained on ministers) • Twaweza experiment in Tanzania • Women traffic cops • Sesame Street , Search for Common Ground Innovations for Successful Societies, Princeton University 2010

22. IV-D. Institutional traps • There is another institutional arrangement that would yield higher returns or greater social gains but those who benefit from the status quo have the power to block reform. • In an institutional trap, reform creates both winners and losers. • Examples • Want to reform but government offices are for sale and the brokers don’t want merit to guide appointments and block change. • Everyone might benefit from stronger property rights but those at the top benefit from weak rights enforcement and block change. Innovations for Successful Societies, Princeton University 2010

23. Responses, institutional traps • “politician-friendly” strategies…give the people blocking reform a stake in the reform (constituency development funds) • build a very powerful, large public constituency to shame those blocking reform • Offer positive incentives to the beneficiaries to retire and retreat (easier in a growing economy) Innovations for Successful Societies, Princeton University 2010

24. IV-E. Neighborhood effects • Neighborhood effects -- peer group effects, role model effects and other things fall in this category. Array of influences from one’s membership in various groups. • Easterly’s “trouble with neighbors” and Collier’s observation that a civil war or weak state next door depresses growth at home. • Examples • Resource wars are hard to stop if arms can pass through a neighboring country’s customs offices without notice. Innovations for Successful Societies, Princeton University 2010

25. Responses, neighborhood effects • Create buffer zones • Flood population with alternative positive role models, images Innovations for Successful Societies, Princeton University 2010

26. V. Third focus: Implementation Game (“traps plus”) • Are there tactics that highly effective reformers use to build support or acceptance, within institutions and without? • Are these effective tactics common across fragile state contexts, or are there regionally-specific or other site-specific styles? • Which tactics more consonant with democratic values? Innovations for Successful Societies, Princeton University 2010