Governance reform : bridging monitoring and action / Brian Levy.

Includes bibliographical references and index.

TABLE OF CONTENTS
EXECUTIVE SUMMARY I
CHAPTER 1: MONITORING DEVELOPING-COUNTRY GOVERNANCE 1
INTRODUCTION 1
A FRAMEWORK FOR MONITORING GOVERNANCE 5
INDICATORS OF GOVERNANCE 11
The Variety 12
The CPIA 13
Kaufmann-Kraay 16
Doing Business and the Investment Climate Surveys 20
GOVERNANCE MONITORING¿FROM BROAD TO SPECIFIC 25
CHAPTER 2: MONITORING AND IMPROVING PUBLIC FINANCE AND ADMINISTRATION 33
MONITORING AND IMPROVING PUBLIC FINANCIAL MANAGEMENT 34
An Overall Assessment 36
Disaggregated Public Financial Management Indicators 38
Strengthening Public Financial Management 42
MONITORING AND IMPROVING ADMINISTRATIVE QUALITY 47
Monitoring Administrative Capability 47
Strengthening Administrative Capability 51
WHAT ALL THIS MEANS FOR SCALING UP AID 55
CHAPTER 3: MONITORING AND IMPROVING NATIONAL CHECKS AND BALANCES INSTITUTIONS 62
THE INNER CONSTELLATION -- DIRECT OVERSIGHT 64
Monitoring Direct Oversight 64
Strengthening Legislative Oversight 68
Decentralization 70
THE MIDDLE CONSTELLATION ¿ JUSTICE AND THE RULE OF LAW 72
Defining 72
Monitoring 74
Reforming 76
THE OUTER CONSTELLATION ¿ TRANSPARENCY AND VOICE 78
The Supply and Dissemination of Information 79
Enhancing Capacity for the Effective Use of Information by Civil Society 83
Monitoring Transparency and Voice 87
THE CHALLENGE OF SEQUENCING CHECKS AND BALANCES AND BUREAUCRACY REFORMS 89
Trajectories of Change 89
Sustainability ¿ Bringing Checks and Balances into the Agenda 92
CHAPTER 4: GOVERNANCE REFORM AT THE FRONT-LINE: SERVICE PROVISION AND THE INVESTMENT CLIMATE 96
GETTING THE PRIORITIES RIGHT 97
Prioritizing Public Spending 97
Prioritizing Investment Climate Reforms 98
GETTING THE ACCOUNTABILITIES RIGHT 108
Balancing Flexibility and Control 108
Empowering the Front-Line 114
GOVERNANCE REFORM AS A CUMULATIVE PROCESS 121
REFERENCES 124
APPENDIX: APPLYING THE INDICATORS ¿ A TYPOLOGY OF COUNTRIES 128
LIST OF FIGURES
Figure 1: National Governance Systems- Actors and Accountabilities ii
Figure 2: Public Financial Management: a Performance Monitoring Framework vi
Figure 3: Net Change in HIPC Indicator Tracking Scores, 2001-4 vii
Figure 4: A ¿Constellation¿ of Checks and Balances Institutions ix
Figure 5: Perceptions of Service Delivery Performance in Nine Bangalore Agencies, 1994-2003 xiv
Figure 6: Governance Turnarounds¿Three Trajectories xvii
Figure 1.1: National Governance Systems- Actors and Accountabilities 7
Figure 1.2: Trends in Administrative Corruption in Corruption in Europe 23
Figure 1.3: Corruption in Specific Sectors in ECA, 2002-2005 24
Figure 2.1: Public Financial Management: A Performance Monitoring Framework 35
Figure 2.2: Low-income Aid Recipient Countries by CPIA 13 (Quality of Budgetary and Financial Management) Score, 2004 37
Figure 2.3 Net Change in HIPC Indicator Tracking Scores, 2001-4 43
Figure 2.4: A Platform Approach to Budget Management Reforms in Cambodia 46
Figure 2.5: Low-income Aid Recipient Countries by CPIA 15 (Quality of Public Administration) score, 2004 50
Figure 3.1: A ¿Constellation¿ of Checks and Balances Institutions 62
Figure 3.2: The Virtuous Circle of Transparency ¿ from Disclosure to Responsiveness 79
Figure 3.3: Measuring Country Statistical Capacity: IBRD, IDA, and IDA-Africa, 1999-2005 81
Figure 3.4: Governance Turnarounds¿Three Trajectories 91
Figure 4.1: Obstacles to Growth 99
Figure 4.2: The Top Investment Climate Concern of Firms 102
Figure 4.3: Perceptions of Service Delivery Performance in Nine Bangalore Agencies, 1994-2003 117
Figure 4.4: A Governance Virtuous Spiral? 121
Figure A-1: IDA Countries Grouped by Bureaucratic Quality and Checks and Balance 130
LIST OF TABLES
Table 1: Transactions Costs of Doing Business ¿ DB and ICS Results xii
Table 2: Intermediate Outcomes¿Corruption Versus Policy xv
Table 3: State Capacity and State Accountability xvi
Table 1.1: Nodes of Transparency in National Governance Systems 8
Table 1.2: 2004 Country Scores for the CPIA Public Institutions Cluster 14
Table 1.3: KK Estimates of the Extent of Corruption in 209 Countries 2004 20
Table 1.4: Intermediate Outcomes¿Corruption Versus Policy 26
Table 1.5: Governance Monitoring Indicators 28
Annex Table 1. 1 KK Estimates of the Extent of Corruption in 209 Countries, 2004 29
Annex Table: 1.2: Doing Business Indicators and Investment Climate Surveys¿Some Useful Measures for Governance Monitoring 31
Table 2.1: Quality of Budget Management Systems in 25 Heavily Indebted Poor Countries, 2004 38
Table 2.2: Bureaucratic Capability and Governance Outcomes¿Some Correlations 51
Table 2.3: Public Administrative Reform in Three Countries 53
Annex Table 2.1: CPIA¿Quality of Budget and Financial Management 57
Annex Table 2.2: The PEFA PFM Performance Indicator Set 59
Annex Table 2.3: CPIA ¿ Quality of Public Administration 60
Table 3.1: Executive Constraints ¿ 2004 Polity IV Results for 60 Low-income Countries 66
Table 3.2: The Quality of Some Direct Oversight Institutions in 25 Countries Summarized by Groups 68
Table 3.3 KK Rule of Law 2004, Adjusted for CPIA Rules for 66 Low-income Aid Recipient Countries 75
Table 3.4 The Quality of Some Attributes of the Justice System in 25 Countries 76
Table 3.5: Participation in the PRS, 2005 85
Table 3.6: KK Voice and Accountability 2004, IDA and Blend Countries 88
Table 3.7: Public Integrity Index¿ Transparency and Civic Participation 89
Table 3.8 State Capacity and State Accountability 90
Annex Table 3.1: Checks and Balances Institutions: Patterns of Country Performance 94
Table 4.1: Top 3 Constraints to Enterprise Investment ¿Perceived and Computed 103
Table 4.2: Transaction Costs of Doing Business ¿ DB and ICS Results 104
Table A-1: IDA Countries Grouped by Bureaucratic Quality and Checks and Balances with Level of Actual and Predicted Corruption 131
LIST OF BOXES
Box 1.1: Governance and Growth ¿ the Big Picture 3
Box 1.2: Governance and Corruption are Not the Same Thing 6
Box 1.3: How Information Links Democracy and Development Effectiveness 9
Box 1.4: The 2004 CPIA¿s 16 criteria 13
Box 1.5: How Precise is the CPIA? 15
Box 1.6: Three Aggregate Governance Doing Business and Investment Climate Survey Indicators 22
Box 2.1: Two IMF tools to support fiscal management and transparency 36
Box 2.2: Recent Advances in Monitoring the Quality of Procurement 40
Box 2.3: Actionable Indicators on Public Administrative Quality 49
Box 3.1: The POLITY IV ¿ Executive Constraints¿ Criteria 65
Box 3.2: The Global Public Integrity Index as a Tool for Governance Monitoring 67
Box 3.3: Legislative Oversight in Africa¿A Work in Progress 69
Box 3.4: Common Definitions of the ¿Rule of Law 73
Box 3.5 Indicators of the Efficiency of Judicial Processes 76
Box 3.6: Global Norms for Collection and Publication of Economic and Social Data 80
Box 3.7: The Principles that Generally Underpin Freedom of Information Laws 83
Box 3.8: How Media Access can Influence Development Outcomes 87
Box 4.1: The Politics of Electricity Reform in Andhra Pradesh, India 101
Box 4.2 Why Stand-alone Investment Projects can be Bad for Governance 105
Box 4.3: Regulatory Imbalances in Chile and Jamaica: Some History 114
Box 4.4: Linking Community-based Resource Transfers and Decentralization in Albania, Indonesia and Peru 119