The Limits of Institutional Reform in Development: a big new book by Matt Andrews

May 3, 2013

     By Duncan Green     

There’s nothing like an impending meeting with the author to make you dig out your scrounged review copy of his book. So I spent my flight to Boston08D_C_andrews-bk last week reading Limits (sorry the full title is just too clunky).  And luckily for the dinner conversation, I loved it.

Limits is about why change doesn’t happen, and how it could. It synthesizes the ‘groundswell’ of disquiet about the failure of the governance and institutional reforms that have been promoted for many years now by aid agencies like the World Bank. And it’s not just a whinge – there are plenty of ideas for how aid agencies can do better. The book is particularly useful for those working on fragile states – lots of the positive examples (as well as some failures) come from Afghanistan, Ivory Coast and elsewhere, although there is a bit of ‘why can’t everywhere be more like Rwanda?’ in there too.

Overall, the approach reminded me of Dani Rodrik’s great book, In Search of Prosperity, and Matt says Rodrik (a fellow Harvard prof) was influential in pushing him to nail down the always-elusive ‘so whats’.

Limits summarizes research and thinking from disparate disciplines, with lots of fascinating case studies (he’s put in the legwork to build a serious empirical basis for his conclusions). His big idea is captured in a new acronym, PDIA (Problem-Driven Iterative Adaptation), which, as he pointed out, is similar to the Participatory Institutional Appraisal idea I raised in a recent blog. I’m not sure if PDIA will catch on – it could have done with a snappier title, as could the book – but the content is really important if you are interested in aid, institutions or governance.

So what does it say? Firstly, that we have a big failure on our hands. The spate of projects and programmes around institutional reform has at best a mixed record of success; in many countries institutions have actually deteriorated in terms of effectiveness, corruption etc.

Limits argues that governments’ real motive for committing to reforms is often not about improving performance, but is actually about ‘signalling’ a willingness to ‘modernize’ (which usually means move power from state to market, deregulation and privatization, increase budget controls and  accountability and reduce debt). It often involves ‘isomorphic mimicry’ – if poor countries mimic the institutions of rich ones, then – voila! – they too will become rich. The trouble is that the current aid system rewards such signalling. When the reform fails, a new government typically introduces a new round of signalling and off we go again.

Uganda is the Daniel Day Lewis of isomorphic mimicry: according to the think tank Global Integrity, it has the best anti-corruption laws in the world, (it scores 99/100), but came 126th in the 2008 Transparency International Corruption Perceptions Index. Oops. More generally ‘developing countries are now more likely than developed countries to boast systems that resemble international best practice.’ So if laws and best practice were decisive, Uganda would rapidly be overtaking Norway.

Such reforms as do take place happen on the fringes of real power ‘in areas that are externally visible and where reform is influenced by concentrated sets of reform champions.’ Eg the ‘ceremonial’ world of Poverty Reduction Strategy Papers (PRSPs). Or perhaps (at the risk of sounding like a bad loser) the MDGs…..

Aid agencies often focus on identifying and supporting a small number of champions, but Limits debunks such ‘decent chap-ism’ as an ‘illusory promise’. He quotes Brecht’s ‘Life of Galileo’: ‘Unhappy is the land that has no heroes….. No. Unhappy is the land that needs heroes.’

just follow the blueprint and you'll be fine

just follow the blueprint and you'll be fine

If not single heroes, then what kind of leadership is needed for genuine reform? ‘Institutional entrepreneurs’ are essential, but there’s a paradox – those in power benefit from the status quo, so are unlikely to support change. That can change ‘when something creates a bridge between these highly embedded agents with power and low embedded agents with new ideas.’ And they often need convenors and brokers to help them overcome barriers of distrust and status.

But there’s a further group – the ‘distributed agents’ that are required to implement what the entrepreneurs come up with. And for ownership and relevance, they need to be engaged from the outset, not as ‘adopters’.

Otherwise, ‘reforms often progress well when under the control of champions in concentrated agencies directly involved in designing change, but falter when deconcentrated agencies must implement what these agencies design.’

The book examines the broader contexts for institutional reform, pointing out that there are always ‘multiple logics’ that govern how people think and act. Sometimes one logic is dominant, at other times there are strong competing alternative logics. The job of change agents, whether internal or external, is to back the good guys when there is genuine competition, but otherwise incubate alternative logics to challenge a damaging status quo. Either approach needs a deep understanding of what is there, rather than an imported blueprint for best practice.

Matt recognizes that shocks are important drivers of change, but the argument goes into much more interesting terrain than the standard spiel. Shocks disrupt, weakening the dominant logic and testing the viability of alternatives. That creates the conditions for change, but the change process itself needs to be broad and incremental – how do discontinuity and gradualism fit together? I think the idea is that shocks create the conditions for reform, but reform itself can’t be sudden.

But there may be trade-offs, as the appetite for reform may fall away soon after a shock, so the question (which the book doesn’t answer) is what do reformers need to put in place before the window of opportunity closes, to pave the way for that longer, more inclusive process? I’ve got a horrible feeling the rise of Thatcherism may provide the perfect case study here…..

What happens after shocks is a five stage process (this is new to me, from the literature on institutional change):

  • Deinstitutionalization: encourage the growing discussion on the problems of the current model
  • Preinstitutionalization: groups begin innovating in search of alternative logics, involving ‘distributive agents’ (eg low ranking civil servants) to demonstrate feasibility
  • Theorization: proposed new institutions are explained to the broader community, needing a ‘compelling message about change.’
  • Diffusion: as more ‘distributive agents’ pick it up, a new consensus emerges
  • Reinstitutionalization: legitimacy (hegemony) is achieved. We all go off to the pub.

As to what outsiders can do, again he has some sensible recommendations, while desperately trying to avoid creating a new blueprint of his own:

  • Focus on identifying, highlighting and exploring problems, but leave solutions to local players. Accept that this process may take time
  • Provide opportunities for local actors to reflect on problems – convening and brokering
  • Focus on clearing out the obstacles to new approaches (deinstitutionalization)
  • Fund flexible learning-by-doing approaches to finding solutionsKPK_Logo.svg

Specific suggestions include Cash on Delivery Aid, stringent tests for all ‘manifestations of good, better or best practice’ and creating institutional reform trust funds that can disburse smaller grants fast in response to evolving local processes.

At those happy moments when governments buy in to the need for reform (he cites Rwanda’s decentralization and Indonesia’s Corruption Eradication Commission (right) as examples), Andrews proposes ‘purposive muddling’ – slow, experimental and incremental approaches. Outsiders can contribute by exposing decision makers to experiences elsewhere, helping them develop hybrids best-suited to local contexts, and then test them. They can also capture and publicise successes to build momentum and buy-in.

Outsiders should also look beyond champions in positions of authority, and try and cultivate ‘mobilizers’ who connect different constituencies and spread ideas. An interesting survey of those involved in 12 different reform processes showed that leadership was far more dispersed than is customarily assumed – multiple leaders, often non-usual suspects (no-one in Afghanistan cited the president), such as those behind the scenes who brought people together and acted as catalysts.

The survey did identify external agents like aid agencies as important leaders, but only their locally-based staff, who are embedded in national contexts; no-one cares about visitors from HQ. Outsiders are more important at the start of reform processes (their influence tends to diminish after that). Not surprisingly, providing funding is their key role, with the key proviso that the funding is open ended and flexible, not tied to the ‘roll out’ of ‘best practice’. Overall however, outsiders are bit parts in the reform drama.

Discussing all this over dinner, Matt thinks we have arrived at a ‘moment’ – a coming together of dissidents from numerous disciplines to reject the logframe/best practice culture and push for something more rooted in reality. Political science, complexity theorists, aid veterans, Cash on Delivery proponents, the Development Leadership Program, the Africa Power and Politics Programme and many more are all challenging linear/blueprint thinking and proposing new and (hopefully) better alternatives.

In a nice twist, he applies PDIA to the task of persuading the aid agencies to adopt, erm, PDIA. He thinks the level of disruption to the signalling model is high, driven by growing evidence of failure. I’m not so sure. To steal from Robert Chambers ‘whose reality counts?’, for many aid donors right now, reality feels like political and financial siege, and that is fuelling the pursuit of a divisive emphasis on ‘results’. I’m not sure there will be much appetite for a movement, however well grounded in evidence, which says that the way to achieve change is to make it up as we go along (a sceptic’s version of PDIA) rather than to pursue short term, attributable results.

And (and this gets politically tricky for me), both the volume of aid and its management may also be obstacles to realigning it. Matt cites the World Bank’s ‘Learning and Innovation Loans’, which have been largely ignored, mainly because they are too small – an average of $5m, compared to $150m for other investment projects. As long as Bank staff are promoted on the basis of banking-style rules that reward the volume of aid they move, who is going to waste their time on LiLs? Then of course there is the ‘pre-programming’ model epitomised by detailed logframes and other project documents that require a pretence of predictability and linearity – all of it toxic to a PDIA approach. The increasing influence of governance indicators like the

complexity sign

CPIA that themselves enshrine ‘best practice’ at the heart of what we measure closes the conceptual circle and makes it even harder to conceive of new approaches.

As you may have realized from the quotes, the book’s language is pretty dense and technical. That, plus being published as an academic hardback, could easily reduce the book’s audience and impact. Any publishers willing to back a more popular version should beat a path to Matt’s door.

Finally, there is lots of overlap with my own work on power and change – the importance of power analysis/understanding local context, seizing critical junctures, convening and brokering rather than trying to go it alone, evolutionary learning-by-doing rather than single grand plans. Over dinner, we kicked around some exciting plans for working together in future – watch this space.

Matt is launching the book in the UK (London – ODI and CGD – and Manchester) from 20-22 May. Details here.

May 3, 2013
Duncan Green