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Harvard Kennedy School
DEV325M, January 2018
Policy and Bureaucracy: Opening the Black box of Governance
Faculty Adnan Khan Office TBA Email [email protected] Office Hours TBA. Appointments also available by request. Lectures Daily lectures from 9-1 pm (with break) on January 2, 3, 4, 5, 8 and 9, 2018 Syllabus The course is designed to engage development professionals and anyone interested in public policy in thinking more deeply about policy challenges and finding feasible solutions. It uses principal-agent model as an analytical framework to look at incentive mechanisms facing bureaucracies and explores how best to recruit, motivate and monitor bureaucrats. Since policy formulation and implementation are embedded in politics, it covers political economy of government performance and explores conditions under which governments can be held accountable for performance. The final part of the course explores opportunities for pro development policy change. It looks at role of evidence in improving policy outcomes, ways of improving organizational capacity for creating, identifying and building on opportunities for policy change, and ways of making politics work for improved performance. The course is aimed at anyone who is interested in public policy, development, and building more effective governments that are accountable to their citizens. It balances theory and practice and draws on policy questions and examples from the real world. Bureaucratic performance matters in multiple ways since policy failures often happen not only because of failure to adopt better policies but, perhaps more importantly, also because of failure to successfully implement public policies and programs. Identifying opportunities for policy change thus requires an understanding of the internal working of the state and of bureaucratic performance. The course brings the world of practice into the world of analytics. The instructor brings to the class many years of experience as a bureaucrat, as an activist and as a researcher and catalyzer of policy-relevant research.
Requirements and Evaluation Attendance: An alert, inquisitive presence in each and every class is mandatory. The course involves lectures in the morning and group readings/work in the afternoon. Some of the afternoon sessions are mandatory while others are strongly advised. Readings: Students are expected to have completed the critical readings before class and required readings after class and review these in the afternoon sessions. Note that there are required readings for the first day of class.
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Grading:
Class Participation 10% Group Project 40% Individual Essay 50%
Group project Involves a group presentation on 8 January. Individual essay is a 3,000 words paper that applies the concepts and framework of the course to a specific topic with submission deadline being Monday 22 January 2018.
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Session 1: Rethinking Policy and Bureaucracy - Principal-Agent Framework
Key Themes: • Public policy and bureaucracy, policy failures • Changing perspectives on the role of bureaucracy – moving beyond Weber • Principal-Agent Model as a framework for examining bureaucratic performance
Key Questions:
• Why does performance of bureaucracies matter?
• Why is the principal-agent model a good framework for examining and improving bureaucratic performance?
Critical Readings:
• Thomas B. Pepinsky, Jan H. Perskalla, and Audrey Sacks. 2017. “Bureaucracy and Service Delivery”. Annual Review Political Science. 20:249-68. [p. 1-9]
• Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy Change: How to Apply Political Economy Concepts in Practice” (Washington D.C.: World Bank Publications) [Chapter 1]
Required Readings:
• Innovations for Successful Societies. 2010. Case Study. “Rejuvenating the Public Registry: Republic of Georgia, 2006-2008”. Princeton University, USA.
• Matt Andrews, Lant Pritchett and Michael Woolcock. 2017. “Building State Capability: Evidence, Analysis, Action”. Oxford University Press. [Chapter 1]
Optional Readings:
• Jan Banning, ‘Bureaucracy: A Global Portrait of Red Tape’, Photo exhibition. • ‘Yes Minister’ and ‘Yes Prime Minister’, BBC TV series; ‘The Complete Yes Minister’ book by Jonathan
Lynn and Antony Jay, BBC Books. 1988.
• James Q. Wilson. 1989. “Bureaucracy: What Government Agencies Do and Why they Do it” (New York: Basic Books) [Chapters 1-2]
• J-PAL Policy Briefcase. 2013. “Truth-Telling in Third Party Audits”. Poverty Action Lab. • Ernesto Dal Bo and Frederico Finan. 2016. “At the Intersection: A Review of Institutions in Economic
Development”. EDI Working Paper Series WP16/11.01 • Abhijit V. Banerjee and Esther Duflo. 2011. “Poor Economics: A Radical Rethinking of the Way to
Fight Global Poverty”, Public Affairs (New York) [Chapter 4]
Session 2: Selection and Bureaucratic Performance
Key Themes:
• Principal-Agent Model and Personnel Economics • Selection and Recruitment: • Signaling and screening models • Role of ability, motivation, and personalities
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Key Questions:
• How to best recruit, motivate and train bureaucrats?
Critical Readings:
• Ernesto Dal Bo and Frederico Finan. 2016. “At the Intersection: A Review of Institutions in Economic Development”. EDI Working Paper Series WP16/11.01. [p. 24-30]
• Finan, Frederico, Benjamin Olken, and Rohini Pande. 2015. “The Personnel Economics of the State”, Prepared for the Handbook of Field Experiments. [p. 7-13]
Required Readings:
• Edward P. Lazear and Michael Gibbs. 2009. “Personnel Economics in Practice” (John Wiley & Sons Inc) [Chapter 2, 9]
Optional Readings:
• Dixit Avinash. 2002. “Incentives and Organizations in the Public Sector”, Journal of Human Resources XXXVII
• Ashraf, Nava, Oriana Bandiera and Scott Lee. 2016. “Do-Gooders and Go-Getters: Selection and Performance in Public Service Delivery”. Working Paper.
• Ashraf, Nava, Oriana Bandiera, and Kelsey Jack. "No Margin, No Mission? A Field Experiment on Incentives for Public Services Delivery." Journal of Public Economics View Details
• Dal Bó, Ernesto, Frederico Finan, and Martín A. Rossi. 2013. “Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service.” Quarterly Journal of Economics 128 (3): 1169-1218.
• Short Documentary: Health Workers in Zambia
Session 3: Incentives and Bureaucratic Performance
Key Themes:
• Incentive structures for bureaucratic performance o Performance rewards o Intrinsic versus extrinsic motivation
• Non-financial rewards and broad motivators for performance
Key Questions:
• When do performance rewards improve performance? When do they fail? Do these crowd out intrinsic motivation?
• When do non-financial rewards and broad motivators for performance work? • What are optimal incentive structures for bureaucratic performance?
Critical Readings:
• Ernesto Dal Bo and Frederico Finan. 2016. “At the Intersection: A Review of Institutions in Economic Development”. EDI Working Paper Series WP16/11.01 [p. 30-33]
• Finan, Frederico, Benjamin Olken, and Rohini Pande. 2015. “The Personnel Economics of the State”,
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Prepared for the Handbook of Field Experiments. [p. 20-24] • J-PAL Policy Briefcase. 2016. “Paying for Performance”. Abdul Latif Jameel Poverty Action Lab. MIT.
USA
Required Readings: • Chaudhury, Nazmul, Jeffrey Hammer, Michael Kremer, Karthik Muralidharan, and F. Halsey Rogers.
2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries", Journal of Economic Perspectives, vol. 20(1), pp. 91–116.
Optional Readings:
• Duflo, Esther, Rema Hanna, and Stephen P. Ryan. 2012. "Incentives Work: Getting Teachers to Come to School." American Economic Review, vol. 102(4), pp. 1241 –78.
• Muralidharan Karthik, Venkatesh Sundararaman. 2011. “Teacher Performance Pay: Experimental Evidence from India” Journal of Political Economy, vol. 119, issue 1, pages 39 – 77
• Khan Adnan, Asim Khwaja, and Benjamin Olken. 2016. “Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors”, Quarterly Journal of Economics.
• Khan, Adnan, Asim Khwaja and Benjamin Olken. 2016. “Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats through Performance-Based Postings”. JPAL Working Paper.
• Banerjee, Abhijit V., Rachel Glennerster, and Esther Duflo. 2008. “Putting a Band-Aid on a Corpse: Incentives for Nurses in the Indian Public Health Care System.” Journal of the European Economic Association 6 (2/3): 487-500.
• Short Documentary: Taxing Pakistan: How to motivate civil servants
Session 4: Civil Service Reform and Political Economy
Key Themes:
• Broad motivators: o Management practices o Inefficiency in government
• Monitoring • Long and short routes of accountability
Key Questions:
• What are optimal incentive structures for bureaucratic performance and how do these interact with organizational practices?
• Under what conditions can government performance be improved through top-down and bottom- up monitoring?
• How does politics interface with bureaucratic accountability>
Critical Readings:
• Ernesto Dal Bo and Frederico Finan. 2016. “At the Intersection: A Review of Institutions in Economic Development”. EDI Working Paper Series WP16/11.01 [p. 33-36]
• Finan, Frederico, Benjamin Olken, and Rohini Pande. 2015. “The Personnel Economics of the State”, Prepared for the Handbook of Field Experiments [p. 20-24]
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• World Development Report 2004 [Overview]
Required Readings:
• Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy Change: How to Apply Political Economy Concepts in Practice.” Washington D.C.: World Bank Publications. [Chapter 2].
Optional Readings:
• Rasul Imran and Daniel Rogger. “Management of Bureaucrats and Public Service Delivery: Evidence from the Nigerian Civil Service”, Working Paper.
• Bandiera, Oriana, Andrea Prat, and Tommaso Valletti. 2009. "Active and passive waste in government spending: evidence from a policy experiment." American Economic Review 99, no. 4 (2009): 1278-1308.
• Iyer, Lakshmi and Anandi Mani. 2012. “Traveling Agents: Political Change and Bureaucratic Turnover in India.” Review of Economics and Statistics 94 (3): 723-739.
Session 5: Political Economy of Government Performance
Key Themes:
• Delegation from politicians to bureaucrats o Necessity and cost of delegation o Ex-ante and ex-post control mechanisms
• Collective action and accountability to citizens • Potential of collective action in mobilizing citizens for pro-development reform • Logic of collective action
Key Questions:
• What are the tradeoffs in delegation from politicians to bureaucrats? When do ex ante and ex post control mechanisms work?
• How can collective action improve policy implementation and strengthen accountability?
Critical Readings: • Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy
Change: How to Apply Political Economy Concepts in Practice.” Washington D.C.: World Bank Publications. [Chapters 3, 5]
• Hirschman, A. 1986. “Exit and Voice: An Expanding Sphere of Influence” in Rival Views of Market Society, New York: Harvard University Press
Required Readings:
• Huber and Shipan. 2006. “Politics, Delegation and Bureaucracy.” Oxford Handbook of Political Economy. [Chapter 14]
Optional Readings:
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• Ernesto Dal Bo and Frederico Finan. 2016. “At the Intersection: A Review of Institutions in Economic Development”. EDI Working Paper Series WP16/11.01
• Bobonis, Gustavo J., Luis R. Cámara Fuertes, and Rainer Schwabe. 2015. “Monitoring Corruptible Politicians.” Working Paper.
• Ferraz, Claudio and Frederico Finan. 2008. “Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes.” Quarterly Journal of Economics 123 (2): 703-745.
Session 6: Institutions, Elite Capture and Government Performance
Key Themes:
• Role of institutions • Elite capture and implications for development interventions
Key Questions:
• What constraints do political structures and processes place on bureaucracies? How can they be alleviated or overcome?
• Should policy interventions take the current distribution of political power as given, or take into account elite capture?
Critical Readings:
• Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy Change: How to Apply Political Economy Concepts in Practice.” Washington D.C.: World Bank Publications. [Chapter 6]
• Pande Rohini. 2011. “Can informed voters enforce better governance? Experiments in low income democracies” Annual Review of Economics, 2011:3 215-237.
Required Readings:
• Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy Change: How to Apply Political Economy Concepts in Practice.” Washington D.C.: World Bank Publications. [Chapters 7, 8]
Optional Readings:
• Jean-Marie Baland, Karl Ove Moene and James A. Robinson. 2010. “Governance and Development” in Handbook of Development Economics, Chapter 69, Volume 5.
• World Bank. 2004. “World Development Report 2004: Making Services Work for Poor People.” World Bank 2004. [ Chapters – Overview, 3, 6]
• Mansuri, Ghazala, and Vijayendra Rao (2012), “Localizing Development: Does Participation Work?” World Bank Policy Research Report, World Bank.
Session 7: Evidence and Policy
Key Themes:
• Role of evidence in development policy o Potential and challenges
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• Biases in policy judgments o De-biasing decision-making
• Program Evaluation and evaluating an evaluation • Promoting use of evidence in development
Key Questions:
• When do policy actors use evidence to inform policy decisions? • How does policy and program evaluation improve development outcomes? • What are the principle challenges of policy and program evaluation and evidence-informed policy
formulation? What methods, practices and processes are required to overcome these challenges?
Critical Readings:
• Gertler, Paul J., Sebastian Martinez, Patrick Premand, Laura B. Rawlings, Christel M. J. Vermeersch. 2011. “Impact Evaluation in Practice.” Washington D.C.: The World Bank. [Chapter 1]
• Carden, Fred. 2009. “Knowledge to Policy: Making the Most of Development Research.” International Development Research Centre, Sage Publications, Ottawa. [Chapter 1]
• Michael Callen, Adnan Khan, Asim I. Khwaja, Asad Liaqat and Emily Myers. 2017. “These 3 barriers make it hard for policymakers to use the evidence that development researchers produce”. The Monkey Cage at The Washington Post on 13.8.2017
Required Readings:
• Redelmeier, Donald A. 2012. “Quis custodiet ipsos custodes? Debiasing the Policy Makers Themselves”. In Shafir, Eldar (Ed). The Behavioral Foundations of Public Policy. Princeton Univ Press.
• Gertler, Paul J., Sebastian Martinez, Patrick Premand, Laura B. Rawlings, Christel M. J. Vermeersch. 2011. “Impact Evaluation in Practice.” Washington D.C.: The World Bank. [Chapters 2-3, 13]
• Carden, Fred. 2009. “Knowledge to Policy: Making the Most of Development Research.” International Development Research Centre, Sage Publications, Ottawa. [Chapter 2-3]
Optional Readings:
• Kahneman, Daniel. 2011. “Thinking Fast and Slow”. New York: Farrar, Strauss, Giroux. • Logged On (Chapters 1-3)
Session 8: State Capacity
Key Themes:
• Pathology of weak state capacity • Public sector management reform • Problem-Driven Iterative Adaptation as a strategy for action • Bridging micro and macro, policy and implementation, precision and proximity
Critical Readings:
• Matt Andrews, Lant Pritchett and Michael Woolcock, Building State Capability: Evidence, Analysis, Action (Oxford University Press 2017. [Chapter 8 ]
• Derick W. Brinkerhoff and Jennifer M. Brinkerhoff. 2015. “Public Sector Management Reform in
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Developing Countries: Perspectives beyond NPM Orthodoxy”. Public Administration and Development. 35: 222-237.
Required Readings:
• Matt Andrews, Lant Pritchett and Michael Woolcock, Building State Capability: Evidence, Analysis, Action (Oxford University Press 2017. [Chapters 5-7 ]
• Andrews Matt, Lant Pritchett, Michael Woolcock. 2010. “Capability Traps? The Mechanisms of Persistent Implementation Failure”
Optional Readings:
• Matt Andrews. 2013. “The Limits of Institutional Reform in Development.” Cambridge University
Press. [Chapter 10] • Ashraf, Nava, Edward Glaeser, and Giacomo A. M. Ponzetto. “Infrastructure, Incentives and
Institutions”. American Economic Review: Papers & Proceedings 106(5), (2016): 77–82. • Lant Pritchett. 2011. “Isomorphic Mimicry: Can Camouflage be Sabotaged?” • IGC Evidence Paper. 2015. “State Effectiveness, Growth and Development”
Session 9: State Capacity and Organizational Reform
Key Themes:
• Role of Technology/E-governance and Information Systems • Norms and Leadership
Critical Readings: • Colin Hoag and Matthew Hull. 2016. “A Review of the Anthropological Literature on the Civil
Service”. World Bank Group, Washington D.C. • Thomas B. Pepinsky, Jan H. Perskalla, and Audrey Sacks. 2017. “Bureaucracy and Service Delivery”.
Annual Review Political Science. 20:249-68. [p. 9-16] • Finan, Frederico, Benjamin Olken, and Rohini Pande. 2015. “The Personnel Economics of the State”,
Prepared for the Handbook of Field Experiments. [p. 24-26]
Required Readings:
• James Q. Wilson. 1989. “Bureaucracy: What Government Agencies Do and Why they Do it” (New York: Basic Books) [Chapter 20]
• Abhijit V. Banerjee and Esther Duflo. 2011. “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty”, Public Affairs, New York. [Chapter 10]
Optional Readings:
• Paul Collier. 2016. “The Cultural Foundations of Economic Failure: a Conceptual Toolkit”. • IGC Evidence Paper. 2015. “State Effectiveness, Growth and Development”
• Kleven, Henrik, Claus Thustrup Kreiner, and Emmanual Saez. 2009. “Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries”. NBER Working Paper No. 15218.
• Kleven, Henrik, Martin Knudsen, Claus Kreiner, Soren Pedersen, Emmanuel Saez. 2011. “Unwilling or
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Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark.” Econometrica 79(3): 651-692. • Timothy Besley and Torsten Persson. 2011. “Pillars of Prosperity: The Political Economics of
Development Clusters”, Princeton University Press, New Jersey. [Chapter 9]
Session 10: Making Politics Work for Development
Key Themes:
• Building effective states for development • Exploring opportunities for change • Identifying and mobilizing reform drivers
Key Questions:
• How can politics be made to work for development? • How does pro-development policy change happen? • What is the role for politicians, bureaucrats and civil society actors in driving change? • What incentives are required to encourage politicians and bureaucrats to introduce and implement
pro-development policy?
Critical Readings:
• World Bank Policy Research Report. 2016. “Making Politics Work for Development: Harnessing Transparency and Citizen Engagement”. World Bank Group, Washington D.C. [Chapter 7, p. 213-243]
• World Bank Group. 2017. “World Development Report: Governance and the Law”. World Bank Group, Washington D.C. [Chapters 7, 8; p. 196-212, 226-241]
Required Readings:
• Cristina Corduneanu-Huc, Alexander Hamilton and Issel Masses Ferrer. 2012. “Understanding Policy Change: How to Apply Political Economy Concepts in Practice.” Washington D.C.: World Bank Publications. [Chapter 11]
Optional Readings:
• IGC Evidence Paper. 2015. “State Effectiveness, Growth and Development”
