Matt Andrews on Public Sector Reform

Interviewed on by Doug Gavel on May 5, 2011

Constructing more effective and responsive government structures is a challenge facing many countries, both developed and developing, around the world. Assistant Professor Matt Andrews researches public sector reform – particularly budgeting and financial management reform – and participatory governance in developing and transitional governments. Many of his recent articles focus on forging a theoretical understanding of the nontechnical factors influencing success in reform processes.

Please discuss how public sector reform efforts have changed in recent years, and how the thinking about such efforts has evolved.

Andrews: Public sector reform, specifically in developing countries, emerged in the 1980s; it didn’t really exist before then. For the first 10 to 15 years it was dominated by macro-economic stabilization programs: really getting government out of the way, making sure that government wasn’t spending too much money; controlling government debt. And this was because there were very significant problems with a lot of governments around the world in the late 70s and the early 80s. As things evolved between the 1990s and into the 2000s, you had a lot more reforms in OECD [Organization for Economic Co-operation and Development] countries that created models of best practice which a lot of countries have adopted because they think that they will work.

In the development domain, a lot of practitioners have actually gone way beyond that by creating indicators themselves that really embed these best practices as things that countries should do. Countries are assessed on what their public financial management systems look like and they’re assessed on how they engage with the private sector, so there’s really been an evolution of thinking that has come to a point where it creates a model of what a good government looks like, when in fact we don’t know if that’s what a good government looks like at all.

One of your recent papers, titled “Good Government Means Different Things in Different Countries,” poses a challenge to the so-called “good governance movement.” Please elaborate.

Andrews: There are actually a lot of indicators of what is called “good governance” or “effective government.” These are imposed on developing countries; they are often used by development organizations as the basis of lending. They are frequently used by firms to determine whether or not a developing country’s government is serious or not – “doing business” indicators. There are a whole myriad of these. In public financial management you have what are called the “public expenditure and financial accountability indicators” and these have got 73 dimensions that 130 developing countries are assessed on where they get an “A,” “B,” “C,” or “D” to determine whether or not they are legitimate. And this is really what the good government movement is about. There are obviously a lot of reforms that then tie to these indicators where countries are assessed as to whether they look a certain way. Then they are also helped to look that certain way as well.

How can and should good governance be measured?

Andrews: When you are thinking about what makes good government a lot of the practices that are embedded in indicators are not bad practices. So it becomes difficult to say, well, you shouldn’t ask how transparent a government is because transparency is a good thing. The problem, of course, is that transparency isn’t always a good thing, and that not all countries are open to the same degree of transparency at the same time, and that most countries became transparent in the way they govern over time.

So, the question is, how do you develop indicators that measure the things that we care about but that also allow for the journey of development that is often forgotten? I like to think that what we need to focus on more is the function of government and not just the form. What I mean by that is, when we are talking about a transparent government, or a government that has a good budget process, often it’s because we think that transparent governments with good budget processes produce services better, serve their citizens better. So what I would like to see is indicators that focus more on what governments do and how well they do those things.

I’ve been doing some work looking at infant mortality statistics, for example, to say, well, if we want to assess the way in which the government provides child health, let’s not look to see whether or not the government has got clinics that do this work, or let’s not look to see how many doctors or how many nurses they have. Because in some countries, they don’t have many doctors, they don’t have many nurses, they can’t build the capacity, it’s not going to be there for 20 years. But low and behold, they have cut deals with NGOs that are working in the countries, and children are staying alive like they never have before. They’ve solved the problem that is specific to their context.

What we need to do is measure whether or not governments are doing that. Indicators of success, effectiveness, or functionality.

You have argued that context matters in government reform efforts. Please discuss how this applies to current efforts in the United States to revamp the financial sector.

Andrews: Whether you’re talking about public finance or you’re talking about private finance in the U.S., in the past couple of years, after 2008, there has been a real discussion about how money is being managed in this country, for obvious reasons. One of the conclusions people came to after the financial crisis in 2008 was that there wasn’t enough standardization in the private sector accounting models and that America needs to adopt international accounting standards. But America has its own accounting standards that seemed to have worked for a long time, and some other people might suggest that adopting international accounting standards didn’t work so well for the U.K. as indicated by their own banking failures. And maybe the solution isn’t conformity to one model, but the solution is to make the existing U.S. system work better.

The same issue arises in terms of public finance. There is a discussion now about what to do with the debt. How do you bring American spending down? A lot of OECD countries in Western Europe have done this by creating central models in which you have a strong executive in finance who tells people not to spend and where fiscal rules constrain what ministries or agencies can spend.

But in the U.S. there is no strong minister of finance. The Treasury Secretary doesn’t really control the budget. It’s controlled by Congress. It’s a different system and requires a different answer. And it’s going to require an answer that develops over time as people negotiate within this context to solve this problem. Now some people are saying that the U.S. just needs a good fiscal rule. Well, America had a fiscal rule; people have kind of forgotten that it was there. And I think they’ve forgotten it was there because it didn’t fit the context. So it’s another example of a country that has to work out a solution in context that yields functional solutions for its problems.

Amidst political change in the Middle East and North Africa, what are the influences that will shape the formation of good governance?

Andrews: In many parts of North Africa and the Middle East, a lot of the work undertaken by the development community in terms of governance has not been very successful. So the experience shows that the styles of government that were there were not providing a good fit for the solutions that were being advised.

When we are looking at places like Libya and Egypt we need to accept that there is a huge amount of ambiguity as to what is really going on. New opportunities are arising, but we need to also think about what is being kept in place when so much else is being changed. What cultural dimensions or understandings about the role of government, about the role of representatives in government, are going to remain and what of that is going to change? There shouldn’t be any assumptions up front about what’s going to happen because I think you need to allow it to unfold.

If I was working in those contexts right now, the first thing that I would try to do is identify some functional problems about which there is consensus in the society and start tackling those in multiple ways. Start giving the people opportunities to explore different ways of structuring their government to solve their problems, rather than imposing one or two solutions. I would even venture to say that this should be the way in which the democratic process is handled. Rather than saying “this is what democracy is going to look like,” we should advocate experimenting with different options in different countries, in different local governments, in different regions of some of these countries, in order to determine which ones work and what lessons can be learned about why they work so that the solutions will function for these countries in the long run.

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