Structural Adjustment, Policy Reform andPublic Private Partnerships

1979-2001

Contemporary North-South Issues

Overview Of Financial and Budgetary Management Systems in LDCs

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

Until the 1950s

Recurrent budgets Law and order Colonial models Recurrent vs. Development budgets

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

1950s – 1960s

Growth—domestic development funds with bilateral technical assistance

Relationship between Command economy and the market Keynesianism and the controversial models Soviet Union,

India

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

Mid 1960s – 1970s Distribution and basic needs World Bank and poorest of the poor

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

Mid 1970s – 1980 (Planning vs. Budgets) Planning demanded by technical assistance Technical assistance both grants and loans (no private

loans to Africa) Project planning "wins" over national planning and

budgeting systems

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

1980s Structural Adjustment—"non-budgetary" allocations vs.

incremental budgeting Problem of debt Donor monies drive the system in the degenerated state

Domestic Management Systems and International Influences

Six historical periods of budgetary and fiscal management

1990s Collapse of the Soviet Union “Clash of civilizations”

Second World as New Debtors

Chad vs. Russia

Transitional States Rise of Asia and blocks Crisis in Asia and the return to debt management

Current State of Financial Management

IMF stabilization and trade liberalization

Currency reform, auctions and end of subsidies (urban privileges)

Market prices for agriculture Deregulate the economy

Current State of Financial Management

Conditionality—World Bank, UNDP and the "Management" SAPs

Opposing views of many UNDP Representatives Role of the Resident and Country Plans

The receivership committee Resident Rep., World Bank Representative and the IMF delegate resident ambassadors

Stabilization and Conditionality Requirements Public Sector Reform

Current State of Financial Management

Reality—the absence of recurrent budgets

Activity (economy) driven by technical assistance projects the only game in town

Bridging and sectoral loans and grants major source of international involvement

Current State of Financial Management

Key Conditionality—Privatization of the economy

Divestiture

Contracting out

Liquidation

Sell off public private partnership shares

Current State of Financial Management

Problem—Privatization of the bureaucracyCutback the civil service

Infamous 19% first cut Individuals work with investments and the

service/commercial sectorDepartments sell their services

Statistics in Zaire/Congo

Current State of Financial Management

Problem—Privatization of the bureaucracySub-economic salaries

Offices, houses and telephones—buying soap and selling chickens

International conditions for "good" bureaucratsWorld Bank in Uganda special salaries for those on

contract with the projectGoal: Return to the recurrent budgeting

process of 1950s

The Debate

The primacy of the Nation-State: How sovereign? Impact of trans-national actors Issue of micro-states Rational Actor model- public or social choice theory

Collective choice is non-rational The role of international regimes

UN, World Bank, IMP, etc. New International Order (NIO)

The Debate

The Importance of the Market The end of the Command Economy? The concepts of market and productivity

International systemic hegemony and competition within international markets

Complementarity problem and origins of capital Market failure?

The Debate

The World Economic Regime World Market: Only game in Town? Questions of conflict: pluralist vs. hegemonic models

in the post-war world Economic change vs. political development

Governance (democracy) a pre-requisite? Impact of world economy on Domestic Economies

Development of Underdevelopment

Changing Terms: Review Non-Western World Developing areas or nations Third World Southern Tier States LDCs UDCs

Where are we now?

Public Private Partnerships:The International Context

Defined: Partnerships (formal or informal) between:

Non-Governmental Organizations (NGOs), Community Based Organizations (CBOs), Governments, Donors (International and Private), Private- Business Sector.

Public Private Partnerships Origins-

a. International Donors- Way of Dealing with Umbrella Grants and implementation of development policies

b. Accepting donor money means accepting donor principles

Public Private Partnerships

c. Comes out of Structural Adjustment and Policy Reform d. Seen by some as an alternative to Contracting Out-

Others as part of it e. Critics see it as detrimental to a market approach to

economic change

Public Private Partnerships

Characteristics-

a. Targeted at the expansion of Social Capital and Synergy in the promotion of Economic and Social Development

b. Seeks a holistic or Integrated Approach to Economic and Social Development

c. Involves informal processes, cultural sensitivities as well as legal norms and contracting principles.

Public Private Partnerships (PPPs)PPP Supporting Factors in the International Context

1. Democratic Governance- private sector and NGOs seen as legitimate actors; transparency, accountability and responsiveness

2. Rational Government- Merit Principles, anti-corruption environment, acceptance of non-state actors as service deliverers. Contracting Out

Public Private Partnerships- Factors Factors that Support PPPs

3. Decentralization- Subsidiarity: Governance devolved to the lowest levels capable of implementation and contracting out

4. Legal Frameworks- Acceptance of Contractual Agreement as the basic organizational relationship

Public Private Partnerships-Factors

5. Institutional Norms, Organizational Capacity and regularized principles of inter-organizational interaction. Requires high levels of capacity building

6. Social and Economic Stability

7. Organizational flexibility across all sectors

Public Private Partnerships- Factors

8. Social and Institutional Pluralism- win-win rather than zero sum game across social, ethnic, religious and racial groups

9. Social Networks exist at Grass roots, and intermediate as well as higher levels of government-See diagram

Reference:

Jennifer M. Brinkerhoff,Partnership for International Development:Rhetoric or Results (Boulder, Co.: Lynne Rienner Publishers, 2002)