Transcript Document 7209297

A Political Economy Approach
to the PRSP Process.
Constraints and
Opportunities
Rosa Alonso I Terme
The World Bank Institute
Joint Donor Staff Training on
Partnership for PovertyReduction
June 17-19, 2002
Overview of Presentation
Introduction
The Origins of the PRSP process.
How did we get here?
A Political Economy Approach to:
Data Production and Data Usage
Participation and Civil Society
Pro-Poor Policies
Donor Coordination
The PRSP process: Overview
World Bank/IMF Annual Meetings, 1996 ⇒
approves the HIPC initiative for comprehensive
debt relief.
Cologne Summit, 1999 ⇒ G-8 declares support for
deeper debt relief within a framework of poverty
reduction
World Bank/IMF Annual Meetings, 1999 ⇒
agreement to link debt relief to the establishment
of nationally-owned participatory poverty
reduction strategies that will provide the basis of
all their concessional lending and for debt relief
under the HIPC Initiative.
The PRSP process: Overview II
Core Principles of the PRSP based on the
Comprehensive Development Framework:
Country-driven
Results-oriented
Comprehensive in scope
Partnership-oriented
Long-term in perspective
Participatory
The PRSP process: Overview III
In April 2002:
60 PRSP countries (34 Africa, 7 East Asia, 10
ECA, 2 MENA, 3 South Asia, 4 LAC)
42 I-PRSPs completed
9 PRSPs completed
3 PRSP Progress Report
A PRSP, I-PRSP, or PRSP progress report
supported by both the Bank and Fund Board within
the preceding 12 months is a condition for:
HIPCs to reach a decision or completion point
Approval of the IMF’s PRGF arrangements or
reviews
IDA (World Bank) concessional lending.
Introduction
From a political economy and a
historical perspective, the PRSP
process is a radical endeavor
The only dramatic shifts in economic
policy-making have historically come
through:
Revolution from below
External forces
Introduction (continues)
The PRSP process tries to combine
both
Can that work and how long will it
take?
Key to combine ambition with realism
Taking account of political economy
constraints and a sense of history is
helpful
How did we get here?
Intellectual Origins
Experiences on the Ground (in the
South)
Experiences in the Street (in the
North)
Institutional Dynamics (in the donor
community)
Intellectual Origins
Increasingly-broad conception of
welfare and what constitutes
development—A. Sen
Neo-positivist quantification
Anti-government neo-liberalism of
the 1980s and 1990s
Post-Modern psychological
approaches to social sciences
Experiences on the Ground
(in the South)
Governments that were neither
representative of the population and, in
particular, the poor, implementing policies
that were neither good for growth nor for
poverty-reduction
The traditional approach to development
aid did not seem to be “working”—need to
look for a new approach
Experiences in the Street
(in the North)
Pressure for debt-relief--HIPC
Criticism of conditionality
Criticism that structural adjustment
policies are not pro-poor
Criticism of lack of effectiveness of
foreign aid
Institutional Dynamics
HIPC—Ensuring that resources freed by
debt relief are used to benefit the poor
Mission creep—increasingly broad
functions of development aid institutions
Learning Process—fungibility of aid
Institutional allies—the initiative could
find ready allies within the development
community
The Political Economy of Data
Gathering and Data Usage
The quantity, quality, and coverage of the
data a country collects says a lot about its
priorities
Key to look at
Decision-making process on what data to collect
and track
Actual data production
Publicity, and
Usage (feed-back into policy-making)
Participation and the Role of
Civil Society
Participation and good governance are
not purely “instrumental”…
“…political liberty and civil freedoms
are directly important on their own and
do not have to be justified indirectly in
terms of their effects on the economy.”
(Amartya Sen, Development as Freedom)
Participation and Civil Society
(Continued)
But….We should not expect civil
society to be necessarily any more
“representative” or representative of
the interests of the poor than
governments
Participation and Civil Society
M. Olson, The Logic of Collective
Action:
The smaller and more homogeneous the
group, the more likely it is to organize
The larger the group and the greater
the barriers to communication among its
members, the less likely it is to organize
Participation and Civil Society
If the poor are geographically disperse,
with bad roads and other communications,
speak a variety of languages with no
common language and constitute the
largest group…
And the non-poor are geographicallyconcentrated, with better communications
and a common language…
Participation and Civil Society
The best organized among civil
society will be civil servants, unions,
the business sector, and other nonpoor groups…
And civil society (just like the
government) will be heavily biased
toward representing the non-poor
Participation and Civil Society
Thus, an unfettered aggregation of
existing social interest groups will almost
certainly not automatically yield a pro-poor
coalition…therefore…
Debatable Issues. How do we ensure that
participatory processes provide equal
access to poor groups? How
representative have PRSP participatory
processes really been?
How can one foster the formation of propoor coalitions?
Participatory Processes and
Representative Democracy
The relationship of participatory
processes with representative
democratic institutions (or simply,
with the State) is difficult to
articulate because…
Civil society is not uniform and thus does
not have one voice, but several—Voices
of the Poor, plus other voices in
society—thus, aggregation problem
Participatory Processes and
Representative Democracy
Debatable Issues:
How does one deal with the
aggregation of voices in civil society?
And…
Once aggregated, how are they
integrated with government views?
Sustainability of PRSPs
Importance of involving not just
governments and civil society but also
Parliaments in the PRSP process
If Parliaments are not involved,
PRSPs are viewed as “government”
and not “state” documents and thus
subject to change with changes in
government
PRSPs as Economic Constitutions
PRSPs can be viewed as “Economic
Constitutions,” setting a country’s
basic development values, objectives,
strategies, and operational rules of
the game about which there is a
societal consensus
But, What Type of
Constitutions?
Three types of Constitutions:
“State” constitutions--lasting (US)
“Government” constitutions—changing
(19th century Spain)
“Semantic” constitutions—unchanging
because irrelevant (Latin America in
earlier part of 20th century)
Participation—Pro-Poor Policies
and Pro-Growth Policies
Participation—Pro-Poor Policies—ProGrowth Policies “triad.” We assume/hope
they go together…but what if…
Debatable Issue
A country implements growth-enhancing, propoor policies designed without adequate
participation? (East Asia model)
A country implements, following the PRSP
process, policies that are pro-poor but not progrowth (policies a la Kerala, Cuba)?
Pro-Poor Policies
With increased attention to data and
participation, less attention being
paid to policies…
But, ultimately, the key to povertyreduction are improved, more propoor policies…
And we know quite a bit about what
policies are pro-poor
Debatable Issue
So far, there has been more progress on
the data and participation fronts than on
changing policies…Why?
More and better data is collected that sits on
shelves and more voices are being heard and
then ignored
There is a lag. It takes less time to start
improving data and to initiate consultative
processes than it does to change policy-making
Until there are substantial changes on the
governance side, policies will not improve
Donor Coordination—The
Historical Background
Long history of:
Colonial ties
Cold War priorities
Bureaucratic dynamics leading to
competing projects and programs and
weak coordination
(Often) lack of poverty focus
The role of the donor community
Old approach
Donor-driven
Project-dominated
Non-coordinated
Often politicallymotivated
Weak
accountability
New approach
Country-driven
Program-dominated
Coordinated
Overriding
motivation—
poverty reduction
Enhanced
accountability
Incentives for Donors to Stick
to Project Financing--Projects
Appear to be easy to plan, design, control
and supervise
Have clear visibility
Accountability is easier to establish
Can easily tie to procurement from donor
goods and services
Allow by-passing national authorities and
pursuit of donor objectives
(A. Birgsten, S. Wangwe et al.)
Incentives for Recipient
Countries to Prefer Projects
Those employed in project implementation
units benefit
Projects allow bidding one donor against
another
A full move to budget support:
Can lose sectoral/institutional development
richness
Is risky--Makes the whole budget dependent on
donor financing
Incentives for Donors and
Recipient Countries to Move to
Program and Budget Financing
Build-up of national institutions
Increased ownership of government
policies
Allows focusing on overall quality and
pro-poor character of recipient
country policies
Increased effectiveness of aid
How can donor coordination
under PRSPs make foreign aid
more efficient and pro-poor?
Alignment of donor practices
Complementarity of donor action
Lightening of burden on recipient country
Joint financing mechanisms helping to
overcome:
Pressure from the local “development industry”
and
Bureaucratic impediments to budget support
within donor agency
How can donor coordination
under PRSPs make aid more
efficient and pro-poor?
Focus on recipient country priorities--joint
donor action makes it easier to focus on
recipient rather than donor country goals
Joint donor approaches encourage
collective risk-taking…
AND coordination among some donors may
have spill-over effects onto others through
peer pressure
The donor community and the
PRSP process what is expected?
Debatable issues:
Who assesses and how do we assess whether
policies are pro-poor?
What are the down sides and risks of country
“ownership” of PRSs for the donor community?
How do we weigh the quality of policies versus
institutional/political considerations in
evaluating poverty-reduction strategies?
Making donor coordination
happen
Debatable issues:
Focus on progressive donors committed
to the PRSP process—forget about
others?
How does one ensure coordination on the
side of the IFIs?
What role can governments in PRSP
countries play to push along donor
coordination?