Transcript Latest Findings on Development Effectiveness: Lessons Learned Presentation by Ajay Chhibber, Director and Patrick G.

Latest Findings on Development
Effectiveness: Lessons Learned
Presentation by Ajay Chhibber, Director and
Patrick G. Grasso, Adviser, Independent Evaluation Group, World Bank
DCF-Vienna High Level Symposium
April 19-20, 2007
Vienna, Austria
Three Core Questions on Development
Effectiveness and Poverty Reduction
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I.
How effectively has economic growth translated into
poverty reduction? What factors have affected these
results?
II.
What factors have led to high-quality results in sectors
that deliver services to the poor?
III.
What measures have helped raise the accountability of
public institutions responsible for delivering and
sustaining results?
IV.
What is happening to Aid Flows and Aid Coordination?
Convergence: Narrowing gap between
OECD and developing countries
2001/6
6
1960s
Average annual per capita income growth
3
2
OECD average
1980-2006 1
1980s
1990s
4
1970s
5
0
-1
-2
Middle-income
Source: World Bank
3
Low-income
Sub-Saharan Africa
But There Is Strong Cross-country Variability
In Growth Performance
Average annual growth
rate of GDP per capita
Growth has improved in most Bank borrowing countries
over the past five years, but achieving sustained growth
remains a challenge.
more than 6%
4%-6%
2.5-4%
1-2.5%
0% to 1%
less than 0%
0
10
20
30
Number of Countries
1995-2000
Source: ARDE 2006
4
2000-2005
40
50
9
40
7
30
5
20
3
10
1
0
E. Asia & Pacific
-10
S. Asia
M. East & N.
Africa
Latin Am erica & Europe & C. Asia
-1
the Caribbean
-20
-3
Population Living on Less Than $1 a Day (1990)
Population Living on Less Than $1 a Day (2003)
Real Per Capita GDP Growth (1990-2003)
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Growth (% Per Annum)
Poverty (% of Population)
Growth is a Major Factor in Poverty
Reduction
There Are Still Over 1 Billion People Living
In Extreme Poverty
Number of People Living on Less Than $1/Day
1600
1200
1990
800
2003
400
0
East Asia China
and
Pacific
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Europe
Latin
Middle
and
America East and
Central
and
North
Asia Caribbean Africa
South
Asia
SubSaharan
Africa
World
World
Excluding
China
Poverty Reduction Remains A Significant
Challenge Even In Countries With Positive Growth
Rates
Positive Per Capita Income Growth between the mid-1990s and early-2000s
did not always lead to Poverty Reduction in 25 countries reviewed by IEG
10
9
9
Number of countries
8
7
7
6
5
4
4
4
3
2
1
1
0
High growth
Moderate growth
Poverty stagnated or increased
Low growth
Poverty reduced
Note: High growth=average annual per capita GDP growth rate of >2.5%, moderate growth=average annual per capita GDP growth of 0%-2.5%, low growth= average annual per capita
GDP growth <0% between household survey years in the mid-1990s and 2001-05.
Country group includes all countries for which IEG carried out a CAE or CASCRR in FY03-06 and for which comparable poverty data is available in DECRG’s Povcal database for mid1990s and 2001-05
Source: ARDE 2006
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Income Distribution Has Affected Poverty
Reduction (1)
Growth was an important driver of poverty reduction, but even small
changes in income distribution either dampened or reinforced growth’s
effects on poverty in 25 countries reviewed by IEG.
Negative growth effect reinforced by
worsening distribution
-2
-4
-6
-8
12
10
8
6
4
2
-16
-18
change in poverty due to change in household income/consumption
Madagascar
-14
Georgia
-12
Bolivia
0
-10
-20
8
14
Honduras
change in poverty headcount
0
change in poverty headcount
Nigeria
Armenia
Ukraine
16
Burkina
Faso
Cameroon
Moldova
Positive growth effect reinforced by improvements
in distribution
change in poverty due to change in distribution
Income Distribution Has Affected Poverty
Reduction (2)
Negative growth effect mitigated by
improvements in distribution
12
10
8
6
4
2
0
-2
-4
-6
-8
-10
change in poverty due to change in household income/consumption
9
8
6
4
2
0
-2
-4
Pakistan
Uruguay
Zambia
-6
Brazil
change in poverty due to change in household income/consumption
change in poverty headcount
Turkey
Dominican Republic
Romania
Jordan
Lithuania
Sri Lanka
Peru
Albania
China-Rural
China-Urban
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Senegal
change in poverty headcount
Positive growth effect dampened by worsening
distribution
change in poverty due to change in distribution
Poverty reduction requires attention to both
growth and opportunities for the poor
► Growth is necessary but not sufficient for poverty reduction. Extent to
which the poor participate in growth depends upon
• literacy
• health
•
•
job creation
access to credit
• infrastructure, environment
• initial income inequality
• Burkina Faso: Modest annual growth delivered impressive poverty
reduction based mainly on increases in farm production
► Strategies need to take account of:
• where the poor live and how they earn their income
• what constrains growth in those areas and sectors
• constraints to inter-sectoral mobility such as low skills or lack of access to
capital, infrastructure or markets
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Rural Poverty Reduction Requires More
Attention
Rural poverty remains more pervasive than urban poverty in
many countries.
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II.
What factors have led to better service
delivery to the poor
1. Improve the policy environment
2. Integrate complementary actions from different
sectors
3. Adapt to political and capacity realities
4. Combine short- and long-term objectives
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1. Good policies and successful projects
go together
Percent satisfactory outcome 2000-2005
90%
18 IDA countries
34 IDA countries
80%
70%
23 IDA countries
60%
50%
40%
30%
20%
10%
0%
Above 3.5
Between 3 & 3.5
Below 3
2000 CPIA Rating
► The 18 countries with the best overall policies had 82% of projects rated
satisfactory
► Sector policies matter, as well as the overall policy framework.
Individual projects have more impact if anchored in an appropriate and
country-owned sector strategy.
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2. Integrate complementary actions
► Achieving the MDGs requires multiple actions aimed at the targeted
outcomes
► Improvements in one sector often require removing constraints in
another sector
• Bangladesh: girls’ secondary schooling and rural electrification
contributed to reductions in child mortality
• Vietnam: trade liberalization and infrastructure investments helped
fuel agricultural growth that reduced rural poverty
► Poverty Reduction Strategies are designed to integrate actions for both
physical and human capital. As implemented they need to put more
emphasis on infrastructure and rural development.
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3. Adapt to political and capacity realities
► Reforming public sector institutions requires broad political support.
• Bolivia and Yemen: ‘Technocratic’ civil service reforms couldn’t
overcome traditions of political patronage
► If broad support is lacking, an incremental approach can get results.
• Senegal: Successful reforms in telecoms and water built on politically
acceptable intermediate solutions. But planned reforms in power and
urban transport were too all-encompassing, and failed
► Modernization and reform efforts must match implementation capacity.
• Malawi: a health service pilot operation with modest objectives has
achieved more than an ambitious public sector overhaul program
► Some countries’ health systems have been overstretched by the demands
of global disease control programs.
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Making global programs More Effective
►Most have been donor-driven; the voice of
developing countries in their establishment and
governance has so far been limited
►Most are advocacy/technical assistance programs
supporting national public goods – although global
public goods programs still command the major share
of expenditures
►Global-country linkages have been weak; incentives
to foster such linkages are insufficient
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Donors need to develop a stronger approach
to support of regional programs
 Regional programs are few in number…yet equally successful (above
80%) in meeting their objectives as single-country programs
• A regional hydropower project in the Senegal River Basin has succeeded in
providing efficiently produced electricity for Mali, Mauritania, and Senegal
 Donors and countries have overlooked opportunities for regional
cooperation in country development strategies
• They need greater peripheral vision to address such issues as water
management, power, transport, and disease control.
 Successful support of regional programs requires attention to three key
issues
• The achievement of equitably apportioned costs and benefits among all
countries
• Reliance for program coordination on broad regional institutions vs
customized arrangements for specific topics
• Accommodation of the need for performance-based aid allocations and
financial incentives for countries to participate
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4. Combine short- and long-term objectives
► Need long term engagement to get results
• Cambodia: IDA projects helped build the Health Ministry from
‘weak bystander’ to effective implementer of AIDS control
programs.
► Reform requires consensus-building. Combining short-term
outputs with a long-term reform program helps deliver
results
• Ghana: IDA Support for education combined policy reforms
with funding for school buildings and teaching materials over
15 years. Physical improvements helped build support for
difficult systemic reforms.
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III. Strengthening Public Sector Accountability
Efforts to strengthen the accountability of public sector
institutions have led to better government processes in some
countries, but they have not yet resulted in improvements in the
perceived quality of governance.
35 Countries with Bank Assistance for Public Sector Reform
Government Process Quality
Governance Perception
19
35
15
13
10
8
6
5
32
31
30
29
30
25
20
15
Notes: Quality of Government Process Indicators: CPIA for budget and financial management, and for public administration 1999-2005.
10
Governance Indicators
are Kaufmann, Kraay, Mastruzzi Indicators for 1996-2004.
3
Sample includes all countries for which IEG carried out a CAE or CASCRR2in FY03-06, where the Bank provided support for public sector and governance reforms and for which CPIA and KKM indicators were available.
Source: ARDE 2006
2
5
1
1
1
Government
Effectiveness
Control of
Corruption
3
2
2
1
0
0
19
Number of Countries
Number of Countries
20
Quality of Budgetary and Financial
Management
Deterioration
Quality of Public Adminstration
Improvement
No Change
Deterioration
Regulatory Quality
Improvement
Rule of law
No Change
Governance Reforms Need Political
Backing To Deliver Results
Three factors attenuated the effectiveness of
governance reforms through large-scale administrative
reforms:
1. Reform initiatives have not always been aligned with
political realities:
– Civil service reform in Bulgaria delivered results because
it had strong political backing (prospects of EU
accession), but civil service reforms in Yemen and Bolivia
achieved limited results, because political support to end a
system of patronage appointments was absent.
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Three Factors Attenuated Effectiveness Of
Governance Reforms
2. The focus has been on adoption of legislation
and establishment of institutions, but
enforcement capacity has received insufficient
attention.
– Anticorruption agencies, for example, have only
limited impact when they and their staff are not fully
independent of those whose behavior they monitor.
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Three Factors Attenuated Effectiveness Of
Governance Reforms
3. Governance reforms have tended to insufficiently
address the intersection between the public sector
and private sector, even though regulatory reforms
have often been effective against corruption.
– Establishment of an independent regulator for electricity
in Turkey enabled direct contracting between buyers and
sellers of electricity and sharply limited opportunities for
kick-backs to officials.
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There Is Improvement In The Transparency
Of Government Processes
• Budget transparency:
– Turkey brought extra-budgetary funds that undermined fiscal discipline into
the budget, subjecting them to budget and parliamentary scrutiny.
– Public expenditure tracking surveys in Uganda drastically increased the
share of spending that actually reaches schools.
• Public procurement:
– Civil society representatives observe public tendering in the Philippines.
– Uganda posts results of procurement audits, contract awards etc. on the web.
• Customs administration:
– The South East European Trade and Transport Facilitation Project
introduced standard electronic forms showing duties due, thus helping to
reduced room for corruption.
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Implications: Basing Governance Reforms On A
Realistic Assessment Of The Political Economy
►Reforms to improve the accountability of public
sector institutions require broad-based political
support.
►When such support is absent, an incremental
approach that allows momentum for reforms to
build can help achieve results.
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Governance Reforms Need A Realistic
Assessment Of The Political Economy
►Thorough exploitation of sector-specific
opportunities to improve governance brings results,
even when anti-corruption is not the primary
objective.
►Reforms can be enhanced with efforts to foster
local demand for accountability through increased
transparency of government processes and resource
utilization.
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IV.
Aid flows are not reaching scaling
up commitments
Real ODA, 1990-2006
(Adjusted for inflation and exchange rate changes)
0.40
0.35
100
0.30
80
0.25
60
0.20
0.15
40
0.10
20
0.05
0
0.00
1990
1992
Africa, exc. debt relief
1994
1996
1998
2000
Other regions, exc. debt relief
Source: OECD/DAC – Database on Aid Activities
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% of GNI
Billion US$ (Constant 2005)
120
2002
2004
Debt relief
2006*
ODA / GNI
Note: * Regional breakdown not yet available for 2006.
Aid flows are not reaching scaling up
commitments
Number of Donors per Recipient Country
% of Recipient Countries
100%
80%
60%
Over 20
40%
10 to 20
Less than 10
20%
0%
1960s
1970s
1980s
Decade
Source: OECD/DAC – Database on Aid Activities
Source: OECD/DAC – Database on Aid Activities
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1990s
2000s
Summing up
► Independent Evaluation finds that development
effectiveness improves when it:
• Focuses on the nature of growth
• Integrates activities across sectors and sustains them
over time
• Supports and fosters a good policy framework in each
country
• Recognizes each country’s political and capacity realities
and builds on deep country knowledge
• Aid volumes and fragmentation: source of concern
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ARDE 2006 Website
http://www.worldbank.org/ieg/arde2006
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