The context in many African countries (among others) is not conducive to successful bureaucracies. For example:
o Information and evaluation are scarce and expensive, which inhibits internal and external controls.
o Information-processing skills are weak at both the individual and institutional levels, due for example to low levels of education and few computers, as well as relatively few specialists such as accountants, auditors, statisticians, and so forth.
o Incentives are weak, in the sense that good performance goes relatively unrewarded and bad performance relatively unpunished.
o Political monopolies dominate, sometimes coupled with violence and intimidation.
o Countervailing institutions are weak, in part because of information and incentives problems but also because of hostile actions by the state.
o Some governments face a soft budget constraint, meaning that foreign aid will fill a good part of any deficiency due to inefficiency or corruption .
o Consequently, good economic reasons explain the failure of government institutions to perform. One need not cite cultural or political factors, and one need not immediately turn there for solutions.
Faced with this unfavorable environment, one has several options. One can try to remedy the enabling environment. Or one can experiment with alternatives to government agencies operating under the bureaucratic paradigm (for example, privatizing, using civil society, or experimenting with post-bureaucratic organizational forms.
The argument for institutional adjustment in brief: the success of economic reforms depends on a government policies and on limiting the state role, but it also depends in ways that economists can readily grasp on the quality of government management, and this in turn depends on economic concepts like information, incentives, competition, and budget constraints. For private sector adjustment to work, we need something akin to adjustment in the public sector. This includes, importantly, reducing corruption.
In the decade ahead we will come to conceptualize the substance of administrative adjustment in economic terms, based on information, incentives, and organizational structure. The principles of administrative adjustment will include:
o Enhance information and evaluation. Put it in the hands of clients, legislators, and those with official oversight (regulators, auditors, judges, etc.).
o Improve incentives. Link incentives to information about the attainment of agreed upon objectives. In a phrase, administrative adjustment must be incentive compatible.
o Promote competition and countervailing forces – including civil society, the media, the legislature and the courts, and political parties – and procedures that allow these different interests and voices to make a difference in policy and management.
o Harden the budget constraint. One possibility is to reduce foreign assistance. Another is to make aid contingent on progress in administrative adjustment.
This approach contrasts with approaches based on more: more training, more resources, more buildings, more coordination, more central planning, and more technical assistance. The logic is that without adjustment, more will not solve the problem of inefficient, corrupt public administration in contexts like those found in many African countries.