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The emergence of institutions as key to development

May 24, 2011

In an earlier blog I wrote when the recent World Development Report (WDR) was published, I celebrated the WDR’s recognition that the emergence of certain kinds of institutions was central to development in conflict affected countries. Actually, I’d go further and say that institutions are central to human progress everywhere.

After all, conflicts are merely the manifestation of differences of interest between people or groups of people, and are thus a natural and normal phenomenon in human society. It follows therefore that all societies have a built-in propensity for violence, unless they establish rules, mechanisms and a culture for managing their conflicts peacefully.

My worry about the WDR is that it will be largely ignored, because it implies a role for the international development organisations which is pretty inconsistent with their existing role and capacity. They aren’t really set up to promote the long-term emergence of institutions: their planning and evaluation timeframe is too short-term for that. And the current political trend in donor countries towards more results-based development programming is likely to make them even more short-term and risk averse.

Nevertheless, it seems likely that they will pay some attention to the WDR. After all, it was published as a flagship document by the mother of all the development agencies, the World Bank. And it’s a well-written, well-argued text which will resonate with many individuals working in development organisations, and will give others pause for reflection. But given the difficulty they will have taking many of its implications on board, within the rather constraining organisations they work for, I fear that many will end up looking for ways to show they are already implementing it – or can do so with minor adjustments – rather than admit that their approach might need to change radically.

I fear that for many it will mean putting old wine in new bottles. They will point to their current work and say look, we are already building institutions by training people and installing better systems in ministries of finance and health, helping to set up government commissions, modernising armies, courts, and so on. Others may push further beyond the boundaries of what they know, and develop new programmes to support accountability-seeking NGOs, anti-corruption and human rights commissions, etc. But essentially it will be new wine in old bottles unless they accept that the fundamental message of the WDR is that societies make progress not only by increasing GDP, improving their score on the human development index and the MDGs, and installing the organisations and outward trappings of good governance, but also and fundamentally by the evolution of institutions in the other, anthropological sense of the word, i.e. the rules of the game.

At a meeting a couple of weeks ago when I made this point, people asked me for examples of what I mean by the rules of the game. I’ve provided a few examples below. None are original ideas dreamt up by me. They are, rather, the kinds of things people tend to refer to when describing history. And “development” as promoted by international organisations is of course really a narrative of the history that we’d like to see happen; history being predicted. So it makes sense to describe in the kinds of terms we use to describe history after the event, rather than just in terms of MDGs and the like. The excellent 2009 book Violence and Social Orders by North, Wallis and Weingast goes into great depth on this, and I highly recommend it.

I limit myself to three examples of institutional development here, for the sake of brevity.

1. The emergence of the rule of law. This is not just a matter of building courts, training judges and police, and passing laws. The rule of law means that those who transgress the law understand the likely consequences if they are caught; it means there is a decent likelihood that they will indeed be caught; that their innocence or guilt will be determined in a way which is fair; and they will be sanctioned according to a predictable tariff of punishment. It may not necessarily mean all people are equal before the law (though of course I believe that to be the ideal) but it does mean that people know in advance how the law will be applied to them, even if unequally. It also enables a high degree of mutual confidence between people carrying out commercial and other civil transactions. All this, emerging in a country like the Democratic Republic of Congo, is likely to take a very long time. If the international institutions genuinely want to support this, they will need to stick around, have a great deal of patience, and understand that they can’t force this process.

2. The holding of power through temporary occupation of a permanent office. The book I referred to earlier claims that this is one of the most significant steps towards what the authors see as a more developed society. They cite the establishment of corporate bodies, in which the organisation or institution has a permanency, outliving any individual or group of people who happen to hold office at a given point in time. Examples in business include the shareholder company; in government, the line ministry; and in civil society, the NGO, the university or religious organisation, held accountable according to enforceable internal regulations as well as the laws of the land. While this too cannot perhaps be forced, it is quite easy to see how corporate structures can be encouraged and fostered, by careful use of incentives, and especially by building up the presence in under-developed contexts of branches of international corporations which import the appropriate rules and values, and are able to adapt, enforce and encourage them with employees or members from the local context. I’ve seen this myself, working in international NGOs in conflict affected contexts.

3. Acceptance that all women and men have a voice in public affairs, and tolerance when the views of others appear to go against one’s own interests. This must be a critical element in the evolution of societies which can manage their differences peacefully. But how does this capacity within society evolve, and can outside development agencies play a role in its emergence, and in reinforcing it? I think they can, if they decide to and are allowed to do so. But they have to get the balance right, and avoid pushing too hard, too fast. This means for example that they need to identify and ally themselves with those in society who already have this acceptance and tolerance, and work with them to promote and extend their values to others. There’s plenty of literature (by Putnam, for example) which indicates that this kind of tolerant, patient culture can be learned first within very local, civil society, before being transferred to the wider political sphere. If people learn, within democratically governed civic organisations, that they can lose a vote but still retain their rights and their voice, and have another chance again in the future, then they can become comfortable with this and begin to apply the same approach to local and national government elections.

One thing that comes across clearly in this short list is the centrality of values, rather than technical abilities or systems, to these institutions. The implication is that if international organisations can genuinely play a role in fostering, promoting and strengthening the institutions which are critical to peaceful development, they need to accept that part of this work involves working with and on peoples’ values. This may sound like neo-colonialism, making people uncomfortable, but I believe that international organisations can play a valid and legitimate role in reinforcing certain values, provided they are transparent about it, and do so based on a good understanding of the local context, and working with people from that context.

I don’t deny that this is controversial. After all, values are the indicators of culture, so changed values equals changes in culture, no? Are international organisations really supposed to act as cultural change agents?

In a way, I think they are – after all, the UN’s own documents say that all Member States should follow and fulfil the Universal Declaration of Human Rights, and what could be more culturally transformative for most states, than that? It’s not the mission which I doubt, it’s more the ability of the international organisations to fulfil that mission, without making substantial changes to the way they work and are organised, as the WDR implies they must.

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