A Missing Link in Federalism Reforms: The Culture of Governance Why are developing and transition economies (DTE) decentralizing? Decision to decentralize primarily guided by politics Decentralization: progress so far A citizen’s perspective on the unfinished agenda for public governance reforms How it can be done? ..missing piece: bureaucratic culture and incentives Why governments do not deliver? The bottomline One solution- fiscal transparency An approach that always works A Road Map for ROME ROME in a nutshell… Key Elements of Citizen Centered Governance Reforms Making the Dog Wag Its Tail: Blueprint for a citizen-centered civil service (cccs) An Example: Education grant to Encourage Competition and Innovation PROMISES MADE, PROMISES KEPT Governance Structure: 20th Versus 21st Century ROME: towards a better tomorrow? ROME – Road Map to Wrecks and Ruins ? A Missing Link in Federalism Reforms: The Culture of GovernanceAnwarShahFiscal Federalism in MercosurPorto Alegre, Brazil26-27 June 2002Why are developing and transition economies (DTE) decentralizing?Serving citizens better ? NODecision to decentralize primarily guided by politics MotivationCountries/RegionsMotivationCountries/RegionPolitical & economic transformationCentral and Eastern Europe, Russia Improving service delivery Chile, Uganda, Cote D’Ivoire Political crisis due to ethnic conflictBosnia-Herzegovina, Ethiopia, Yugoslavia, Nigeria, Sri Lanka, South Africa, Philippines To centralize China, Turkey, European Union Political crisis due to regional conflictsIndonesia, Madagascar, Mali, Senegal, Uganda, Mexico, PhilippinesShifting deficits downwards Eastern and Central Europe, Russia Enhancing participationArgentina,Brazil, Bolivia, Colombia, India,Pakistan,PhilippinesShifting responsibility for unpopular adjustment programs Africa Interest in EU Accession Czech Republic, Slovakia, Hungary, Poland Prevent return to autocracy Latin America Political maneuvering Peru, Pakistan Preservation of Communist rule China Fiscal crisis Russia, Indonesia,Pakistan Globalization and information revolution Most countries Decentralization: progress so far•Political decentralization: Good progress but citizen empowerment issues remain.•Fiscal decentralization: Modest progress but incomplete tax decentralization, and manna from heaven fiscal transfers encourage leviathan, institutional void•Administrative decentralization: Poor progress especially in re-orienting political and bureaucratic culture of governance to service delivery performance and citizen satisfaction A citizen’s perspective on the unfinished agenda for public governance reforms•Being Responsive or Doing the right things–Matching public services with citizens’preferences–Improving the quality, quantity and access of local public services•Being Responsible or Doing it right–Earning trust–Working better and costing less•Being Accountable–Citizens charter–Social norms and trust, consensus on limits to govt. interventionHow it can be done?•Greater reliance on own benefit taxes and charges•Credit market access and private sector participation in infrastructure provision •Avoiding self-defeating investment promotion and fiscal wars•Re-orienting the political and bureaucratic culture of governance to service delivery performance and citizen satisfaction..missing piece: bureaucratic culture and incentives•“Government is the coldest of all cold monsters –whatever it says it lies –and whatever it has -it has stolen.”»NietzeWhy governments do not deliver?Outputs, reach, outcomesThe bottomline•It is the culture of local governance and not the operational capacity that is critical.One solution-fiscal transparency•“…to protect the Treasury from being defrauded, let all money be issued openly in front of the whole city, and let copies of the accounts be deposited in various wards…”—–Aristotle, The PoliticsAn approach that always worksAthenian Oath: “We will strive increasingly to quicken the public sense of public duty; That thus…we will transmit this city not only not less, but greater, better and more beautiful than it was transmitted to us”.A Road Map for ROME•Program/project=> inputs =>activities=>outputs=>reach=>outcome=>impact=>citizen feedback and evaluations=> Program design => Program/projectROME in a nutshell…Extends results movement beyond concern for capacity, internal structure…1. Results-Oriented Management alone does not lead to results…2. Citizen voice and choice is central to achieving results3. ROME incorporates citizens voice and choice.4. Results-Oriented Management + Results-Oriented Evaluation = ROME=RESULTSKey Elements of Citizen Centered Governance Reforms•Citizens charter–Service standards–Requirements for citizens voice and choice•Subsidiarity•Citizen oriented output budgeting–Service delivery outputs and costs–Citizens report card on service delivery performance for the previous year•Public sector as a purchaser but not necessarily provider of services through performance contracts•Alternate Service Delivery Framework•BenchmarkingMaking the Dog Wag Its Tail: Blueprint for a citizen-centered civil service (cccs) An Example: Education grant to Encourage Competition and InnovationAllocation basis among local governments: School age population (ages 5-17)Secondary distribution to providers: Equal per pupil to both public and private schoolsConditions: Universal access to primary and secondary education regardless of parents’income, improvement in educational outcomes. No conditions on the use of grant funds.Penalties: Public censure, reduction of grants fundsIncentives:RetentionofsavingsPROMISES MADE, PROMISES KEPT•An example from the Town of Papakura, New ZealandGovernance Structure: 20th Versus 21st Century•Unitary•Centralized•Center manages•Bureaucratic•Command and control•Internally dependent•Closed and slow•Intolerance of risk•Federal / confederal•Globalized & localized•Center leads•Participatory•Responsive and Accountable•Competitive•Open and quick•Freedom to fail/ succeedROME: towards a better tomorrow?•Improved norms of conduct (Malaysia, UK)•Cultural shift from input controls to output and accountability (New Zealand)•Encouragement of partnership, competition and risk taking (Canada Alternative Service Delivery Framework, Malaysia) •Greater bottom-up accountability•Design of incentives critical•In LDCsstrong potential for improving public sector performance •Moral: Leapfrog or meet a slow deathROME -Road Map to Wrecks and Ruins ?•Dilbert’s perspectives -This fad will also pass away.