Social Ins+tu+ons and Economic Development

Transcription

1 Social Ins+tu+ons and Economic Development Michael Woolcock, PhD Development Research Group World Bank, Malaysia Malaysian Ins*tute of Economic Research December 7, 2016

2 Overview 1. Becoming a developed na8on (not just a high-income economy) The necessity but insufficiency of growth when everything depends on everything else Development as a four-fold transformakon 2. What are social ins8tu8ons? Why do they ma@er for development? Defining social insktukons Why orthodox approaches struggle to accommodate them (in rich and poor countries alike) Why an alternakve is needed 3. Social ins8tu8ons and policy implementa8on A central feature of context, and where tasks are inherently, permanently complex Most consequenkal for expanding/improving educakon, health, juskce This is where major challenges for Malaysia reside Ø Sustained economic growth itself creates more, and complex, social insktukonal challenges; these expose and exacerbate societal fault-lines Ø LeV unaddressed, they can compromise durability of hard-won gains

3 1. Becoming a Developed Na+on (not just a high-income economy) Rising GDP/c very necessary but very insufficient for sustaining nakonal development Very necessary Primary driver of poverty reduckon Primary source of revenue for public goods provision Building/maintaining quality roads, energy, schools, hospitals, clean air, safe water is very expensive Very insufficient An expanding economy is a more complex and integrated economy and society, which requires increasingly capable organizakons Growth itself alters the social and polikcal foundakons on which it rests Capitalism as a punctuated series of relentless revolukons (Appleby 2013)

4 Development as a Four-Fold Transforma+on ECONOMY Enhanced productivity growth Inclusive POLITY Accurate, legitimate preference aggregation Rules Systems SOCIETY Equal social rights, opportunities ADMINISTRATION Rational, professional organizations Social ins*tu*ons infuse all four domains

5 2. What are social ins+tu+ons? Why do they majer for development? Social insktukons are our kinship systems, community organizakons, religions, norms, languages, and networks For most of history, they have been humanity s primary instrumental resource for survival ( ge^ng by ) and mobility ( ge^ng ahead ) They are also intrinsically central to our idenkkes, to shaping our values, aspirakons and preferences, and to how we make sense of the world. Development changes all these Consider farmers Consider migrants

6 Social ins+tu+ons are key to sustaining progress in all four dimensions of development Why? Ensuring effeckve procedures for proteckng basic rights and ensuring responsibilikes Building complementarity between informal (customary) and formal (state) mechanisms CraVing sound policies and programs, faithfully and imparkally implemented to all Upheld by broadly legikmate social contract between cikzens, firms, state Especially as perceived by those who, as a result of change Lose livelihoods, jobs, eleckons, idenkty, dignity, opportunity, hope Threats Inequality (real and perceived), injuskce Rising temptakons / pressures to violate norms, laws Widening mismatch between expectakons and experience Disjuncture between informal and formal mechanisms Systems overwhelmed (from within or without) No universal template or permanent solu8on Each generakon everywhere must nurture, sustain what is a delicate polikcal achievement

7 Why gemng social ins+tu+ons right majers Despite the headlines, the world has never been in beder shape, which is great hdp:// but now for the hard part. Thin and technocrakc development problems mostly solved (or solve-able) Infrastructure, logiskcs, Central Banks Looming challenges thick with thick Governance (regulakon, juskce, taxakon), gender Educa8on (learning) Health (aging, curakve care) Ø These are all social ins*tu*onal issues

8 Why orthodox development strategies struggle to accommodate social ins+tu+ons Because they were primarily designed to address concerns pertaining to macroeconomics, finance and infrastructure i.e., object gaps, not idea gaps (Romer 1993) Realms where theory, measurement is (relakvely) clear For the most part, we know how to address these problems Because social ins8tu8ons are truly complex High discrekon, numerous interackons, idiosyncrakc solukons We have never known, and will never know, how exactly to respond to them Consider: we have 18B experiments in how to raise children There is no E=MC 2 for ensuring peace, for effeckve leadership, social work, etc Because prevailing strategies can convey success even when they fail By measuring inputs delivered rather than outcomes obtained By presuming that funckon (achievements) follows form (what systems look like) So we emulate the design of effeckve systems rather than the struggles that produced them

9 3. Social ins+tu+ons and policy implementa+on A defining feature of development is the capability to implement a designated policy East Asia agenda Absolute but the global Improvement (Much of) evidence suggests Africa state capability is stagnant or declining How can things be both ge^ng beder and ge^ng worse? HaiK How to enhance state capability? 1960s 2010s Human Development Indicators (MDGs) GePng be@er InsKtuKonal Capability GePng worse

10 State capability for implementa+on is stagnant, declining in historically developing countries, whether assessed: Cross-naKonally Of cikzens in today s LICs, at current trends only 10% will have descendants who will live in a high capability country by the end of the 21 st C (Andrews, Pritched and Woolcock, 2017) Experimentally Sectorally EducaKon (but with notable excepkons: e.g., Vietnam, China) Strong isomorphic pressures to copy the form of success stories elsewhere

11 Only the 13 historically developing countries (in green) are on a plausible path to strong capability by the end of the 21 st century. Rapid negakve (g<-.05) NegaKve (-.05<g<0) Slow PosiKve (0<g<05) Rapid posikve (g>.05) Strong (SC>6.5) BHR, BHS, BRN CHL(0), SGP(0), KOR(0), QAT(0) ARE(0) Middle (4<SC<6.5) MDA, GUY, IRN, PHL, LKA, MNG, ZAF, MAR, THA, NAM, TTO, ARG, CRI PER, EGY, CHN, MEX, LBN, VNM, BRA, IND, JAM, SUR, PAN, CUB, TUN, JOR, OMN, MYS, KWT, ISR KAZ(10820), GHA(4632), UKR(1216), ARM(1062), RUS(231), BWA(102), IDN(68), COL(56), TUR(55), DZA(55), ALB(42), SAU(28), URY(10), HRV(1) Weak (2.5<SC<4) GIN, VEN, MDG, LBY, PNG, KEN, NIC, GTM, SYR, DOM, PRY, SEN, GMB, BLR MLI, CMR, MOZ, BFA, HND, ECU, BOL, PAK, MWI, GAB, AZE, SLV UGA(6001), AGO(2738), TZA(371), BGD(244), ETH(103), ZMB(96) Very weak (SC<2.5) YEM, ZWE, CIV SOM, HTI, PRK, NGA, COG, TGO, MMR SDN(7270), SLE(333), ZAR(230), IRQ(92) NER(66), GNB(61), LBR(33) Source: Authors calcula8ons of state capability from Quality of Government, Failed State Index, and World Governance indicators (Data Appendix 1.1).

12 Malaysia reflects these twin dynamics Spectacular successes High, sustained growth Widespread poverty reduckon Successful adainment of MDGs E.g., near universal primary enrollment Gender parity in school complekon Enviable resilience to shocks but enduring challenges Lingering sub-nakonal variakon E.g., Sabah poverty rate is 30% Underperforming on educakon Declining scores from ; 52 nd out of 72 countries in 2015 Modest declining trajectory in state capability score * Different problems require different kinds of solukons * Development creates new challenges; strategies that got you here might not get you there

13 Measured on inputs, Malaysian educa+on is excellent: high enrollments, comple+ons, funding, small classes Completion rates at primary level by gender, Completion rates at secondary level, by gender, Source: UNDP 2016

14 but measured on performance, Malaysian educa+on has considerable room for improvement 14

15 Too many Malaysian students complete lower secondary school ill-prepared for further educa+on and/or labor market entry Over half (52%) of Malaysian students failed Level 2 regarded as the minimum level for func+onal literacy adequate to managing daily living and employment tasks that require reading skills beyond a basic level But in lower-income Vietnam, a mere 8% of students failed to reach Level 2 Malaysia Vietnam Average score % 31% 33% 13% 2% Average score 508 1% 7% 23% 41% 27% Level 1b Level 1a Level 2 Level 3 Level 4 Level 1b Level 1a Level 2 Level 3 Level PISA reading score PISA reading score Source: PISA 2012

16 Educa+on: GeMng to Portugal (480) 60 points ~ 20 years? (but declining trajectory ) Portugal s GDP/c in 1995 roughly what Malaysia s is now Malaysia

17 Incorpora+ng social ins+tu+ons into development Success builds good ins8tu8ons (not the other way around) Learning from sub-nakonal variakon Mapping, explaining, showcasing why some combine so much beder than others Someone, somewhere, somehow has figured out a beder way Some areas beder than others; some programs beder than others (LINUS) ImplementaKon Units (e.g., PEMANDU, PADU etc) Great for technical, trackable problems, where KPIs etc are appropriate Perhaps not so great for adapkve problems (e.g., pedagogy) SKll room for policy improvement E.g., in educakon, large potenkal gains from consolidakng schools But any policy is only as good as its implementakon Supply of good policies requires effeckve demand from cikzens, local actors Development challenges keep ge^ng harder, not easier (e.g., United States)

18 Varia+on, all the way down

19 Varia+on, all the way down especially wrt implementa+on

20 Conclusion Engaging with social insktukons is a perpetual work in progress All countries struggle with this, and will always struggle with this Because economic growth itself changes social insktukons Because the mechanisms that comprise governance (laws, norms, trust, countervailing social pressure) are human invenkons, as disknckve and variable as each country, as each subnakonal unit Sound technical policies really mader, but equally important is Sustaining the legikmacy of the change process Building the capability of agencies to implement increasingly complex and contenkous tasks, at scale Ø These are very different problems, that require very different solukons

21 Further reading, sources Andrews, Mad, Lant Pritched and Michael Woolcock (2013) Escaping capability traps using Problem-Driven IteraKve AdaptaKon World Development 51(11): Andrews, Mad, Lant Pritched and Michael Woolcock (2017) Building State Capability: Evidence, Analysis, Ac*on (New York: Oxford University Press) Brixi, Hana, Ellen Lust and Michael Woolcock (2015) Trust, Voice and Incen*ves: Learning from Local Success Stories in Service Delivery in the Middle East and North Africa (Washington, DC: World Bank) Pritched, Lant, Michael Woolcock and Mad Andrews (2013) Looking like a state: techniques of persistent failure in state capability for implementakon Journal of Development Studies 49(3): 1-18 hdp://buildingstatecapability.com/ hdp://doingdevelopmentdifferently.com/ hdp://bsc.cid.harvard.edu/