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Democracy has its own way of developing public policies. Decisions grow out of a negotiated equilibrium of interests; they conform to transparent rules; and they are made in the public arena.... Policies do not reflect the supposed omniscience of illuminated technocrats; instead, they represent the harmonization of legitimate interests, in a concert of wills, including that of the government itself.
— Fernando Henrique Cardoso,
speech presented to ECLAC in August 2003 |
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Ten main messages can be extracted from this year’s report.
1. Processes matter!
The process by which policies are discussed, approved, and implemented (the policymaking process) has an important impact on the quality of public policies, including the capacity of countries to provide a stable policy environment, to adapt policies when needed, to implement and enforce policies effectively, and to ensure that policies are adopted in pursuit of the public interest.
2. Beware of universal policy recipes that are supposed to work independently of the time and place in which they are adopted.
Recent experience of countries in Latin America with the reforms of the Washington Consensus shows that reforms with similar orientation and content can have very diverse results. One of the pitfalls of advocating the adoption of universal policy recipes—and one of the driving motivations for this report—is that policies are not adopted and implemented in a vacuum. Rather, they must proceed within the context of a country’s political institutions. These political institutions, as well as the policymaking processes they in turn help shape, can have a profound impact on the success or failure of any policy.
3. Certain key features of public policies may be as important in achieving development goals as their content or orientation.
The impact of public policies depends not only on their specific content or particular orientation, but also on some generic features of the policies. An “ideal” policy that lacks credibility and is poorly implemented and enforced may be more distortionary than a “suboptimal” policy that is stable and well implemented. This study examines six such key features: stability, adaptability, coherence and coordination, the quality of implementation and enforcement, public-regardedness (public orientation), and efficiency. These key features have a great deal of bearing on whether policies can actually enhance welfare, can be sustained over time, and can contribute to overall development.
4. The effects of political institutions on policymaking processes can be understood only in a systemic manner.
Policymaking processes are very complex, as a result of the multiplicity of actors with diverse powers, time horizons, and incentives that participate in them; the variety of arenas in which they play the game; and the diversity of rules of engagement that can have an impact on the way the game is played. A focus on a few institutional characteristics (such as whether the country has a presidential or parliamentary system, or whether the electoral rules are of the plurality or proportional representation variety) will only produce a very fragmented and unsatisfactory understanding of these processes. In order to understand them more fully, the institutional setup needs to be addressed by a systemic or “general equilibrium” approach.
5. Political and institutional reform proposals based on broad generalizations are not a sound reform strategy.
A corollary of the previous point is that the merits of potential changes in political and institutional rules must be considered carefully, with an understanding of how these rules fit within the broader institutional configuration. Broad generalizations about the merits of different political regimes, electoral systems, or constitutional adjudication of powers among branches are not very useful. Partial equilibrium views that stress the importance of a single institutional dimension may lead to misguided institutional and policy reforms. Understanding the overall workings of the political process and of the policymaking process in each specific country, with its specific historical trajectory, is a crucial prerequisite for developing appropriate policy reform proposals and institutional reform proposals.
6. Policy or institutional reforms that have important feedback effects on the policymaking process should be treated with special care, and with an understanding of the potential ramifications.
Policy reforms often have feedback effects on the policymaking game. In some sectors, these feedback effects are likely to alter the specific sector’s policy game by creating new actors or changing the rules of engagement among them. But some reforms (particularly in sectors such as decentralization, budget processes, or civil service reforms) can have a much broader impact and alter the dynamics of the country’s policymaking process. Policy or institutional reforms that have important feedback effects on the policymaking process should be considered with special care, and with an understanding of the potential ramifications.
7. The ability of political actors to cooperate over time is a key determinant of the quality of public policies.
Multiple actors (such as politicians, administrators, and interest groups) operate at different points in time over the policymaking process. Better policies are likely to emerge if these participants can cooperate with one another to uphold agreements and sustain them over time. In systems that encourage cooperation, consensus on policy orientation and structural reform programs is more likely to emerge, and successive administrations are more likely to build upon the achievements of their predecessors.
8. Effective political processes and better public policies are facilitated by political parties that are institutionalized and programmatic, legislatures that have sound policymaking capabilities, judiciaries that are independent, and bureaucracies that are strong.
• Well-institutionalized political parties (especially parties that have national and programmatic orientations). Institutionalized, programmatic parties tend to be consistent long-term policy players. A political system with a relatively small number of institutionalized parties (or coalitions) is more likely to generate inter-temporal cooperation, and to lead to the emergence of consensual sustained policy stances on crucial issues (Políticas de Estado).
• A legislature with strong policymaking capabilities. Policies tend to be better when legislatures develop policymaking capacities and constructively engage in national policymaking, rather than when they simply adopt a subservient role, rubber-stamping the wishes of the executive.
• An independent judiciary. A well-functioning and independent judiciary can be a facilitator, fostering bargains among political actors by providing enforcement that binds them to their commitments, and by ensuring that none of the players oversteps its boundaries.
• A well-developed civil service. A strong and technically competent civil service can contribute to the quality of public policies by making policies more stable, by enhancing the overall quality of implementation, and by preventing special interests (which often choose to wield their influence during the policy implementation stage) from capturing the benefits of public policies.
9. Most of these “institutional blessings” are not granted overnight. Building them, and keeping them in place, depends on the political incentives of key political actors.
The incentives of professional politicians such as presidents, legislators, and party leaders (as well as their interaction with the rest of society) are crucial for the workings of institutions. Improving the capabilities of congress requires that legislators have incentives to develop such capabilities. Independent judiciaries are built only over time, but they can be destroyed overnight. Adopting the best civil service law in the world will not work if patronage involving positions in the bureaucracy remains an important currency used by politicians to reward their partisan base.
10. Leadership, if functional, can be a vital force for institution-building.
Individual leaders can play a vital role as catalysts in the development of institutions. Functional leadership can encourage deliberative processes that allow policies and institutions to adapt to the needs and demands of society. Leadership, however, can also be dysfunctional. Rather than contributing to institution-building, dysfunctional leaders can have the opposite effect. Their accumulation of power allows them to get things done, but at the expense of weakening institutions.
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