1999 Fiscal Conference Comments - Sustainable Public Sector Finance in Latin America: Schneider - The Politics of Administrative Reform: Intractable Dilemmas and Improbable Solutions

The Politics of Administrative Reform: Intractable Dilemmas and Improbable Solutions

BEN ROSS SCHNEIDER
Northwestern University

Introduction: New Institutional Economics and the Political Dilemmas of Reform1

By the late 1980s, after a decade or so of “first-generation reforms” that involved extensive dismantling of state interventions in the economy, building administrative capacity rose to the top of the reform agenda in developing countries and among the multilateral development banks.2 The 1997 World Development Report, The State in a Changing World, was perhaps the most widely publicized indication of this shift, but other publications from governments and multilateral development banks repeated the conclusion that delivering social services, getting resources to the very poor, improving the environment for business by reducing corruption and revamping the judiciary, and regulating newly freed markets all required high-quality public administration. Advocates differed sometimes on the types of reform they favored (these types of reforms will be discussed more below), but these differences detracted little from the consensus on the necessity of administrative reform. While a consensus formed on the desirability of administrative reform, which typically includes diverse policies designed to make public bureaucracies more efficient, accountable, and honest, analysis about how to get it lagged. What was often missing (quite clearly in the case of the 1997 World Development Report) was an appreciation and assessment of the politics of administrative reform—politics that are not at all simple or easy.

In an ideal model of successful reform, the political process in democratic systems can be divided into three stages. In the first stage, parties, leaders in civil society, and politicians overcome obstacles to collective action to elect proreform candidates. Second, the newly elected proreform legislators cooperate with the reformist president to enact reform policies. Third, once enacted, the president (the principal) then delegates implementation to his or her subordinates (agents) in the executive bureaucracy.3 Compared with many other kinds of economic and political reforms, administrative reform encounters especially severe problems at all three stages of this stylized model: election, enactment, and implementation.

On the input or electoral side, the politics of administrative reform are characterized by an intractable dilemma of collective action. The potential beneficiaries of administrative reform are dispersed and disorganized, and each individual beneficiary would gain almost nothing if reform proposals were to succeed. Even if elected on a proreform platform, individual politicians have incentives, once in office, to use the bureaucracy to further their own individual political careers at the expense of general reform initiatives. In other words, elected politicians face a second-stage collective action problem of their own. In clientelist political systems, for example, individual politicians will have incentives to keep their own administrative sources of patronage off the reform agenda (see especially Geddes 1994). Moreover, the opponents of reform (such as unions of public employees) are concentrated; they often perceive their potential losses as enormous and generally have close contact with legislators. In the short run these opponents can raise the political costs to legislative reformers. For these deductive reasons, there are few grounds to hope that reform proposals will emerge from electoral campaigns or elected legislatures.

On the output or implementation side, even if reforms somehow get enacted, they are likely to run into severe principal-agent problems at the third stage of implementation. Ministers and top appointees (the president’s direct agents) have their own policy agendas and have little interest in trying to fix the car they are driving (Heredia and Schneider forthcoming). Each top appointee is expected to get on with his or her government function—health care, education, or financial regulation, for example—and cannot afford to divert scarce time and resources to a long-term program of administrative reform with uncertain payoffs. Below this top level is a vast hierarchical pyramid of thousands and thousands of agents, and agents of agents. Most of the economic restructuring in the first-generation of neoliberal reforms involved only a few agents, who privatized state firms, removed trade barriers and government regulations, and stabilized the economy. Dismantling the developmental state can be done without much manpower. In programs of administrative reform, in contrast, the agents number in the tens or hundreds of thousands. Moreover, these agents are precisely the bureaucrats who were diagnosed as the problem in the frontal attack on the state in first-generation reforms, and they are not therefore likely to embrace a plan they perceive as hostile to them. If top and middle-level bureaucrats choose to thwart the implementation of administrative reform, they have the advantage of an enormous information assymetry and can stymie their hierarchical superiors by withholding or distorting information.

In terms of theory drawn from the new institutional economics, especially the parts dealing with collective action, principals, and agents, administrative reform seems next to impossible, even compared with other difficult reforms; it therefore requires a special political alchemy or sleight of hand. Empirically, the list of failed proposals for administrative reform from the twentieth century is of course almost endless and provides a good deal of prima facie confirmation for the theoretical pessimism. Yet, reforms do occasionally get enacted and implemented, at least partially, and from a policy perspective this subset of successful cases merits special attention. Theories of principals, agents, and collective action are best at identifying the obstacles; it is necessary to venture further, theoretically and empirically, to analyze how some reformers have overcome, or more often circumvented, these obstacles.

So how, empirically, have reformers in developing countries managed to get anything done at all? The major thrust of the arguments detailed below is that administrative reform has a better chance of being enacted if reformers bring in unwilling, unintended, or in some cases unwitting allies. A first component of this strategy is to attach administrative reform, like a parasite, to other more politically favored kinds of overarching reforms such as macroeconomic stabilization or democratizing political reforms. These “hosts” can advance administrative reform further than it can go on its own. In addition, reformers can seek out “peripheral” allies. These allies are often from outlying and poorer regions of the country. They stand to lose little from administrative reform and can be compensated for a log roll vote for reform (that is, trading their support for reform in exchange for votes on another issue). Lastly, although captive allies such as the unions in a governing labor party are not likely to be mobilizable allies, the restraint of being allied to the reforming government nevertheless reduces potential opposition.

Three Types of Reform: Weberian, Accountability, and Managerial

Before turning to an analysis of the political alchemy of reform, some conceptual clarifications are in order. First, the focus of this discussion is restricted to master plans for reform of much or most of the executive branch of the central government. A lot of meaningful and lasting reform takes place more incrementally, in particular departments, or at the local level; however, these reforms encounter different kinds of political obstacles and solutions.4 Segmented reforms of administration in, say, health clinics, primary education, or central banking have particular political dynamics due to the nature of the “bureaucrats” and their organizations (teachers’ unions or doctors’ associations) and mobilizable proreform allies.5

Furthermore, most reform programs, or major components of them, can be classified analytically as either Weberian, accountability, or managerial reforms (see Table 1 and Heredia and Schneider forthcoming for a fuller discussion of this typology). Each type of reform attempts to fix a different problem in the bureaucracy and each gives priority to a separate set of administrative and institutional measures. Weberian reforms, also called civil service reforms, are intended to reduce clientelism, corruption, and politicization by imposing extensive rules for bureaucratic conduct, enacting merit procedures for recruitment, promotion, and job tenure, and generally insulating the bureaucracy from politics. Accountability reforms reintroduce political control of the bureaucracy, but they do so through institutionalized channels of legislative control over executive behavior, by implementing oversight committees, congressional confirmation of top appointees, and extensive reporting requirements. Managerial reform is the newest and hottest approach in the best practice literature, both among Organization for Economic Cooperation and Development (OECD) countries and in the evolving Washington consensus on development practice.6 Managerial reform seeks to undo the inefficiencies and rigidities of bureaucracy by stripping away a lot of the rules, especially concerning personnel, and granting administrators, or public managers, the discretion to manage their departments and holding them accountable for their performance.


TABLE 1: Three Models of Administrative Reform

            Weberian       Managerial       Accountability

Diagnosis       Personalism, clientelism, patrimonialism, particularism       Inefficiency, red tape, inflexibility       Abuse of power, arbitrariness, lack of accountability, unresponsiveness (to citizens)

Goals       Universalism, professionalism, meritocracy, honesty       Efficiency, responsiveness (to clients), flexibility       Democratic control (directly by citizens, or indirectly by legislatures)

Administrative Measures       Entrance exams, tenure, promotion by merit, oversight, salary increases, rules       Management contracts, competition among agencies, decentralization, end tenure       Legislative oversight, nominee confirmation, citizen participation

Potential Negative Byproducts       Rigidity, loss of accountability, inefficiency       Clientelism, loss of accountability       Politicization, excessive delays, cumbersome procedures

Source: Heredia and Schneider (forthcoming)

In practice, many reform programs attempt to fix all problems—clientelism, lack of accountability, and inefficiency—simultaneously incorporating measures from each type of reform. Analytic distinctions help identify where these composite attempts will run into problems: loose, arm’s length controls in managerial reform, for instance, open up opportunities for clientelism. In addition, corresponding to the theoretical obstacles identified in the previous section, each type of reform will encounter different types of problems. For example, Weberian reforms run into a brick wall of collective inaction in clientelist systems (Geddes 1994). Accountability reforms, in contrast, should be more popular in electoral politics and pose fewer problems in collective action among legislators as well as encounter fewer principal-agent problems in implementation. Fewer principals are involved and they have stronger interests in implementation (legislators who stand to gain from their media exposure, say, in oversight hearings), and there are fewer agents (top bureaucrats with information on the functioning of their agencies). Of course, the information assymetry, as well as strategic motives to exploit the assymetry, still exist. The differences among the models are most pronounced in the consolidation phase, which will be considered later.

Parasitic Reforms

Given the difficulties identified in the theoretical discussion and the weakness of proreform coalitions, or rather of latent coalitions, it is not surprising to find in practice that successful reforms often come packaged in other overall programs of economic or political reform. Given its own political liabilities and weaknesses, administrative reform gets carried along like a parasite on a stronger political host. The host can be a comprehensive reform project in economics, in politics, or in both together. Reformers in the government often recognize their own isolation as well as the daunting problems they face in overcoming the obstacles to collective action in the legislature. To circumvent these obstacles, reformers tie administrative measures to other broader proposals that can overcome obstacles to collective action. This strategy is not of course without costs, especially for implementation and consolidation. Few powerful “hosts” survive long enough to carry administrative reform through consolidation (and resolve the longer-term principal-agent dilemmas of implementation). A more probable outcome is for the “host” to pass away, stranding the administrative reform in midstream.

In Thailand, administrative reform was packaged with overall political and constitutional recasting (Unger forthcoming). The Thai bureaucracy has long had Weberian practices (see Evans and Rauch 1997), and the financial bureaucracy had a special reputation for competence and political neutrality (Maxfield 1997). However, by the 1990s other parts of the bureaucracy had gained reputations for corruption and a lack of accountability. When the constituent assembly was formed to write a new, democratic constitution, bureaucratic corruption and autocracy were central targets of the reformers. In this case sweeping administrative reforms, especially accountability reforms, were passed quickly. The implementation, however, has not been rapid and it is too early to tell just how far the reforms will proceed. The point here is that at the stage of enactment, reformers used the constituent assembly to bypass parties and politicians and packaged administrative reforms with other democratizing measures.

In Argentina and Brazil administrative reform was an element in the popular stabilization programs, the Cavallo Plan and the Real Plan, respectively. Macroeconomic teams in both instances identified fiscal deficits as a major part of the problem, so their attention naturally turned to the government’s wage bill. However, the linking of stabilization programs and administrative reform came differently in Argentina than it did in Brazil.

In Argentina in the early 1990s, downsizing was the core element of administrative reform, and President Carlos Menem delegated very concentrated policy power to a small group of technocrats (Ghio 1998 and Rinne 1999). In Argentina, administrative reformers had a harder and longer time getting issues other than downsizing on the reform agenda.

In Brazil, Collor (1991–92) had accomplished some downsizing—in a very negative, acrimonious, and ultimately damaging way (Rinne 1999). The original Real Plan of 1994 thus did not focus much on the wage bill (though economic officials were preoccupied with the fiscal accounts). Later, though, once the minister in charge of administrative reform, Luiz Carlos Bresser Pereira, had managed to get administrative reform on the agenda in early 1995, officials in other economic ministries began to see Bresser’s plan as important to the continuing success of the Real Plan. In the Brazilian case though, this stronger political support backed a much more ambitious reform agenda for the federal bureaucracy than would be necessary just to sustain the Real Plan (see MARE 1995).

In Hungary, as in most postsocialist countries, administrative reform was from the start part of a complete economic and political overhaul (Nunberg forthcoming). There were so many simultaneous reform agendas that sometimes ran at cross purposes—taking advantage of bureaucratic expertise to manage economic policy versus lustration (weeding out Communist cadres), for example—that packaging did not necessarily have the same parasitic advantage it had in other countries. What did ultimately give administrative reform more coherence and political buoyancy was tying it to the longer-term, politically popular goal of becoming a member of the European Union (EU). Of all the political hosts, the goal of accession to the EU may be the best for longer term programs of administrative reform. As considered further below, other political hosts can run out of steam before administrative reforms are consolidated, depriving administrative measures of support when they may need it most. Getting into the EU requires a more sustained program of reform as well as maintenance of the reforms once admitted.

The parasitic hypothesis also finds some confirmation in countries that lack both administrative reform and other major reform programs that could serve as hosts. In countries like Korea, for instance, there were no sweeping proposals to reform the bureaucracy and no overall packages to reform the economy or polity, at least until the financial crisis hit Asia in 1997. Reform proposals in Korea in the mid-1990s in the Kim Young Sam government focused on accountability measures that did tie in tangentially with the overall transition to democracy (see Kim 1998). And, there were some signs in 1999 that the government of Kim Dae Jung may be linking administrative reform to the overall efforts of his government to reform development strategy, private corporate governance, and practices in Korean politics. Overall, though, administrative reform advanced little in Korea in the 1990s.

Democratization in the early 1990s was also the context of initial plans for administrative reform in Chile. In addition, the new democratic governments were committed to expanded social programs to redress inequalities generated in Chile’s transition, under military rule, to a market-oriented economy. Chile’s relative abundance of resources, as well as the new government’s modest aims for administrative reform, obviated the need for packaging administrative reform. In fact, much of the administrative reform in Chile in the early 1990s focused on rebuilding morale and expertise in the bureaucracy by greatly expanding spending, in part through sustained real increases in public sector salaries (Garretón and Cáceres 1999; Marcel 1999). The new civilian government could afford these measures because they increased taxes from a rate that was previously very low and because the economy was a growth leader in the developing world until the end of the 1990s. Hence, the lessons from Chile for the majority of developing countries that regularly experience low growth and fiscal crises are few.

The Mexican experience of the 1990s shows the limits of the parasite strategy (and hypothesis); it proves to be, at best, necessary but not sufficient. Mexico had a major economic crisis in the wake of the 1994 peso devaluation and experienced ongoing political crises in the rocky successions to the presidency of Ernesto Zedillo in 1994 and to divided government in 1997. However, the government response to the economic crisis was orthodox and did not involve a major neoliberal restructuring since there was little left on that first-generation agenda. In politics, the government negotiated fairly sweeping electoral reforms but never tied administrative reform to them. Overall, discretionary, political control of the bureaucracy is essential to the way the Institutional Revolutionary Party (PRI) functions and dominates Mexican politics; thus presidents are unlikely to push administrative reform even if there are powerful political hosts, unless perhaps they are worried about losing presidential elections and future control of the bureaucracy (see Guerrero and Arrellano forthcoming and Graham 1998).

Despite the short-term advantages, hitching administrative reform to other broader, politically powerful reforms can be costly. First, the broader reform program can force alterations in plans for administrative reform. In Brazil, for example, getting rid of ironclad tenure for civil servants was one element in the Bresser Plan; but, in the context of fiscal emergency and the fallout from the financial crisis in Asia, eliminating tenure became the central issue in the government’s efforts to pass the constitutional amendments required to implement Bresser’s plan. Another cost of political parasitism, discussed further below, is that support for administrative reform is contingent on the support for its “host” reform program, and that support can dissipate and orphan administrative reform well before changes in the bureaucracy can be consolidated.

Central Reformers, Passive Partners, and Peripheral Allies

Because of the intractable problems of building proreform coalitions through electoral campaigns and party platforms, reform proposals more often emerge from small groups or “change teams” in the executive branch that have special support from the president.7 The Argentine reforms of the early 1990s were designed by a few people in a specially created body (CECRA, or the Executive Committee for Auditing Administrative Reform) with close ties to a few officials from the World Bank (see Ghio 1998). In Brazil, Bresser Pereira took over a small ministry and staff which generated the comprehensive set of managerial reforms. Both of these “change teams” had strong presidential support. In Mexico, in contrast, two change teams, one in the finance ministry and the other in SECODAM—Mexico’s agency for administrative development—produced reform proposals, but neither had unequivocal presidential backing (Guerrero and Arrellano forthcoming). The policy implication is that these small, often marginal, groups in the executive branch deserve support. Many of them never gain presidential backing, but those that do need to be prepared.

These change teams also need medium-term support outside the executive branch, particularly if reform requires approval in the legislature. Passage is obviously easier if the President’s party has a majority in the legislature; however, majority control is not a necessary requirement for passage, as the Brazilian case shows, though it is probably a prerequisite for the kind of blank-check delegation President Menem got from the Argentine Congress. Nonmajority situations are likely to force some adjustment (sometimes anticipated) in the government’s reform proposal. Majority control is also no guarantee that administrative reform will get on the government’s agenda.

Geddes (1994) in fact argues just the opposite, that enduring and strong majorities make administrative reform less likely because the ruling party—or rather the politicians in it—will want to exploit the bureaucracy to enhance their clientelist electoral support. In Mexico, inaction by the majority PRI (until 1997) would support her argument. Geddes argues instead that Weberian reforms are more likely when two large parties are more or less evenly matched. Under these circumstances both parties have equal access to patronage, and thus neither suffers relative losses if all parties forego patronage. Among other problems with Geddes’s argument is its exclusively empirical focus on recruitment examinations. Moreover, Geddes appliesher argument only to democracies that have existed long enough for major parties to alternate in power; she claims that parties gain equal access to patronage resources over the course of these cycles. Few countries that became democratic in the 1980s and 1990s have established regular patterns of alternation, however: Uruguay and Colombia, maybe, but not Argentina, Brazil, Peru, or Chile. Yet, in the absence of party parity, a great deal of experimentation is going on in efforts to reform the bureaucracy. Reformers may not ultimately, as Geddes predicts, be able to root out clientelism completely, but the other significant reform measures they adopt cannot be explained by the party-parity argument.

Institutional forms like party parity or party fragmentation without social and political content cannot explain much. So, what kinds of coalitions have supported administrative reform? Generally they do not comprise proreform groups but, rather, passive, captive, or peripheral allies. A natural ally of reformers in government would be the outraged middle class. Historically, middle-class voters have supported efforts to clean up government. In terms of a general taxation and bargaining model, citizens in the middle class should be more likely to demand competent services in exchange for the taxes they pay; they will therefore use political resources to pressure for administrative reform. The rich in Latin America often forgo public services and replace them with higher-quality private services (schools, health care, security, and even streets, sewers, and sanitation in many areas of Latin America); the poor in the informal sector do not pay taxes and have low overall expectations from government services. The middle class pays taxes and cannot always opt out of publicly provided services, so their demands would be natural sources of political support for change teams to tap into. There is some evidence of middle-class support for administrative reform in Latin America, but it is most visible in public opinion polls.

There are two obstacles, however, to greater middle-class projection into political debates. The first is a collective-action problem related to the one that Geddes identifies. Citizens in the middle class may have the keenest collective interest in administrative reform, yet they may still vote for clientelist politicians who deliver benefits to them individually (the family may not have access to universal medical care, for instance, but one of the family members gets a patronage job). The second, and related, problem is the lack of middle-class parties. Class-based parties were generally weaker at the end of the twentieth century than they were at the beginning, when parties associated with the middle class pushed administrative reform in the United States and Europe (see Shefter 1994 on the earlier period). Interestingly, in Thailand, where the middle sectors were more politically visible in pushing reform, they did so directly through an independent constitutional convention rather than through the traditional parties (Unger forthcoming).

Instead of relying on a proactive middle-class partner, reformers are more likely to court passive allies. Groups like organized labor may have a general aversion to administrative reform (even if they do not organize government employees), yet if their party is in government they may opt to provide only passive support, or at least they will not oppose administrative reform actively (see Haggard 1997). Peripheral politicians, those from remote and poor areas of the country, may not be “captive” in the way organized labor is, but they are often open to log-rolling exchanges. Especially in electoral systems that overrepresent these constituencies, like those in Brazil and Argentina, these politicians may be relatively “inexpensive” partners in legislative log-rolling (see Gibson, Calvo, and Falleti 1999). Peripheral politicians have fewer—and usually poorer—voters, so that expanding a government program in the constituency costs less than providing pork to a large, wealthy constituency. Moreover, peripheral politicians are more likely to be indifferent to the fate of upper-middle-class bureaucrats who live in the capital and major cities of the country. In Brazil, for example, hundreds of thousands of employees of the federal government live and work in Rio de Janeiro. Deputies and senators from the far north and west are not likely to sympathize much if these bureaucrats oppose reform, especially if federal programs in peripheral regions stand to gain.

Sometimes the support from peripheral politicians is more than just passive. Depending on constitutional provisions and general legislation on administrative reform, local executive politicians, governors and mayors, may also have an interest in reforming national legislation. In Brazil, the 1988 constitution granted all state and local bureaucrats tenure (estabilidade) so that governors elected after 1988 had little leeway in hiring new supporters or redirecting spending: budgets were already committed to the government payroll, a portion of which went to employees hired by previous executives who were often from opposing parties. Governors in Brazil are powerful in the federal legislature, so their support for reform legislation at the federal level contributed to its enactment (Bresser Pereira forthcoming and Melo forthcoming).

Constraining Successors

Much of the literature on reform, administrative or otherwise, focuses on the early honeymoon years in a presidential mandate. Later years and tail-end, lame-duck periods are generally discounted as improbable moments for reform initiatives. Given the presumption that time horizons for politicians are short, little is expected of presidents who are finishing up their terms, especially of those presidents whose popularity ratings are dragging as they head for retirement. Presidential capacity to forge legislative coalitions or galvanize the executive branch is presumed to fade as the term expires. Or, in cases of reelection-seeking presidents, the incentive is to avoid contentious issues. In some cases, however, especially when presidential succession coincides with fundamental transitions to more democratic politics, political leaders may attempt to use administrative reform, particularly Weberian reform, to constrain their successors in power.

Historically, concerns over successors have been strong motives for outgoing leaders to modernize and depoliticize administration. Silberman (1993) identifies variations in the historical patterns of leadership succession in the late nineteenth century across Japan, the United States, England, and France as a primary source of differences in patterns of administrative reform. In particular, leaders who perceived a threat to their continued status, as did English aristocrats during the extension of the electoral franchise in the nineteenth century, sought to reform administration to lock out those they presumed would follow them in power.

The concerns of outgoing autocrats in more recent waves of democratization have not always resulted in reformed bureaucracies, in part because so many dictators leave power abruptly (as in Argentina in 1983). In more gradual transitions with set deadlines, administrative reform is at least possible.8 One of the clearest examples came from Chile. General Pinochet enacted civil service reforms when it became clear he had to leave power (see Garretón and Cáceres forthcoming). In Mexico, high-level bureaucrats (almost all tied to the PRI) have been debating the merits of granting civil service tenure (see Guerrero and Arrellano forthcoming). Part of the conflict within the bureaucracy and within the PRI revolves around how long the protagonists think they will be in power. Advocates of managerial reforms, especially old-guard PRI politicians like Arsenio Farell in SECODAM, claimed that the bureaucracy at top levels already worked pretty well and conformed to many managerialist precepts. Against the managerialists, proponents of Weberian reforms noted that any opposition victory would destroy the existing, informal managerialism, politicize the bureaucracy, and, of course, leave the current incumbents without jobs. In sum, while succession politics in Latin America have to date generated few deep administrative reforms, the incentives Silberman identifies may yet play a greater role in future transitions.

Consolidation: So Many Agents, So Few Principals

There are special political conditions under which reformers may generate proposals in the executive branch and forge legislative coalitions large enough to pass legislation. Once these proposals are enacted, however, administrative reform encounters new problems because, unlike economic reforms, it takes so long to implement. Over the medium term, favorable political conditions can rapidly dissipate. Unlike first-generation reforms like privatization or trade liberalization, administrative reform does not automatically create strong winners who can then make sure the reforms are not overturned. Administrative reform thus confronts special obstacles to consolidation. While parasitic packaging has great political advantages in the short run as a way of overcoming the intractable collective action problem of administrative reform, the hosts usually die before the administrative reforms are consolidated. Economic reforms either succeed, so that administrative reforms lose urgency, or economic reforms fail and administrative reform is unnecessary. Overall, political reforms generally take longer, but they may also lose urgency.

Unlike many other kinds of reforms or changes in government policy, administrative reform requires the sustained cooperation of the agents themselves. Beyond downsizing, few administrative reforms can survive the long-term opposition of the objects of the reforms. Strategies to overcome this sort of opposition include persuasion, division, and replacement. If it works, persuasion is in principle the least expensive strategy. Minister Bresser, for example, used any and all forums for talking about his reform program in an effort to reach the middle- and upper-level bureaucrats, who he and his team felt would be natural allies (Bresser Pereira forthcoming). They consistently conveyed the message that Bresser’s managerial reform would bring these upper levels more autonomy, more resources, and more prestige. Some survey data suggest that the message resonated (Bresser Pereira forthcoming). Reformers can also attempt more Machiavellian tactics. Reformers in Argentina took full advantage of the split in labor representation among public employees; for example, the union for higher-level bureaucrats was brought into policy deliberations, and by some accounts reformers gave it extraordinary benefits, such as advance consultation of the list of names of people to be downsized (see Rinne 1999 for a full analysis).

The most effective longer-term strategy is to hire new bureaucrats and establish brand-new agencies, creating in either case bureaucrats who owe nothing to the past regime and are the primary, direct beneficiaries of the administrative reforms. In addition, through training and self-selection, they are more likely to endorse the reform program even before signing their employment contracts. This strategy is of course not new and was used extensively in the past in Latin America in the accretion of new agencies and state enterprises that formed the developmental state (see Schneider 1999). In the past this side-stepping of the traditional, unreformed bureaucracy was easier because the developmental state was expansive and required new personnel and agencies to undertake the new functions of the state. In contrast, reform of the postdevelopment state takes place in the context of continuing pressures to downsize and limit government employment. The major second-generation goal is in fact to reform many of the traditional, and previously unreformed, parts of the government bureaucracy. Where the strategy of creating new agencies is more likely to work is in regulatory agencies formed in the wake of privatization of public utilities.

The three types of reform—Weberian, accountability, and managerial—have different consolidation dynamics. Weberian reforms confront the most difficult principal-agent dilemmas because they require the active cooperation of the agents who are the objects of reform. For instance, sitting bureaucrats will have to shift their criteria for promotion in order to install merit procedures. Weberian reforms may of course involve a lot of rule making, but compliance is a more difficult matter. Accountability reforms do not rely to such a great extent on bureaucrats themselves, though minimal cooperation is necessary to open up the bureaucracy to outside, mostly legislative, scrutiny. However, the primary source for consolidating accountability reforms will probably come from those doing the accounting: the legislators and members of the judicial branch to whom bureaucrats from the executive are obliged to report. If the accountability reforms shift power in meaningful ways, then legislators should have enough self-regarding incentives to consolidate the reforms. If, however, the accountability measures do not generate visibility for politicians (as a confirmation hearing does, for example) and if, furthermore, the documents and reporting are highly technical, then consolidation by actors outside the bureaucracy may stall.

Managerialist reforms too depend in part on external agents for their consolidation. In design, the increased competition among agencies is meant to provide quasimarket incentives to consolidate the “new public management.” That is, if the budget of a school or clinic is dependent on its capacity to attract students or patients, then competition takes care of the problem of implementing managerial reforms. Those who refuse to accept managerialism will lose budgets and ultimately, once the market has exposed them, their jobs. However, this apparently easy route to consolidation is often confounded by financial administrators who refuse to decentralize finance (see Campbell 1995 on the United Kingdom).

Conclusion

To summarize, multilateral development banks, development and administrative experts, and reformers across the developing world agree that administrative reform should be near the top of the agenda for second-generation reforms. Yet, administrative reform confronts numerous obstacles. Foremost among them are dilemmas of collective action and principal-agent relations. Voters and legislators have a hard time acting collectively to promote their collective interest in honest, effective administration. Even if they manage to overcome the obstacles to collective action, the reform measures they enact may founder on opposition from “agents” in the process of implementation. Focusing on a few recent cases of successful administrative reform generated some hypotheses about how reformers could overcome or circumvent problems in collective action and implementation. In particular, attaching administrative reform to stronger political “hosts” and building coalitions with peripheral and passive allies seemed to help reforms progress.

Unfortunately, the fairly narrow comparative analysis in this paper cannot fully dispel the usual pessimism for the future of deep, sweeping administrative reform in developing countries. However, research on the politics of administrative reform is incipient, and trajectories of other bodies of political analysis provide some grounds for optimism. Throughout much of the 1980s and early 1990s the conventional wisdom was that market-oriented economic reform faced daunting opposition from the powerful, organized beneficiaries of the unreformed system. In some analyses governments required great autonomy and heroic reformers in order to enact reforms over the forceful protestations of rentseekers and others expected to lose from the reforms. Subsequent research has increasingly turned up less opposition and much more active support from a wider variety of potential winners, from the beginning of the reform process (see Bates and Krueger 1993, Haggard 1997, Calvo 1999). Perhaps as research proceeds on administrative reforms, the proreform coalitions will become easier to identify and prove more powerful than previously predicted.

Such research needs to keep a broad focus and examine not only parties and legislatures but also bureaucratic politics and social coalitions. Redemocratization in the 1980s rightly redirected a lot of scholarly attention to the analysis of elections, parties, and legislatures and especially to the formal rules shaping behavior in these new political arenas. Analysis of such rules, both formal and informal, is essential to identifying obstacles to administrative reform; however, analyses that stop there will miss much of the politics of administrative reform and remain theoretically and empirically incomplete. For one thing, much of the initial politics of reform will involve small numbers of reform mongerers in the executive branch. Thus, commissions, panels, study groups, and the like still deserve our attention (see Grindle 1999). Moreover, analysis of the formal rules of political contention often neglects the social content: we still need to analyze the roles of labor, rural or peripheral constituencies, and the amorphous middle class.

 

Notes
 
1    This paper draws heavily on a larger project, “Building State Capacity in Developing Countries,” funded by the Tinker Foundation. For more on that project, see www.nwu.edu/cics/contents.html. I am grateful to Andrés Fontana, Elizabeth McQuerry, and Kurt Weyland for feedback on earlier versions of this article.
 
2    First-generation reforms are also called neoliberal or market-oriented reforms and include measures like trade liberalization, deregulation, privatization, and generally downsizing the state both in terms of functions and personnel. Second-generation reforms include measures designed to make the newly created markets work (regulatory agencies to maintain competition and judicial reform, for example) as well as efforts to improve the functioning of remaining social welfare programs (see World Bank 1997, 152). Administrative reform is crucial to most second-generation reforms. Administrative reform includes a wide variety of specific measures that alter incentives in the bureaucracy, including merit recruitment and promotion, performance incentives, training, transparency in decision making, and reporting requirements. The distinction between first and second generations is an analytic distinction; in practice first- and second-generation reforms may be simultaneous.
 
3    Collective action and principal/agent analysis are core elements in the emerging theoretical framework of the New Institutional Economics or NIE. For recent discussions of NIE and its applications to development, see Clague (1997), Burki and Perry (1998), Drobak and Nye (1997), and Williamson (1996).
 
4    For example, a full history of administrative reform in Brazil would have to consider both efforts to reform the whole bureaucracy (from the creation of the Departamento Administrativo de Serviço Público under Vargas, through laws like DL 200 under military rule in the 1960s, to the Collor and Bresser reforms of the 1990s) and the piecemeal creation of “bolsões de eficiência” or especially effective agencies like the national development bank BNDES (Willis 1986, Evans 1995). Overall, see Geddes (1994), Gouvêa (1994), and Schneider (1991). Much narrower political coalitions can sustain outposts of administrative efficacy. For an analysis of reform through pilot projects in Chilean education, see Angell (1996).
 
5    See Filgueira (forthcoming) and Graham and Naím (1998).
 
6    On managerialism generally, see Osborne and Gaebler (1993), Osborne and Plastrik (1997). For an indication of managerialism’s place in the evolving “Washington consensus,” see Burki and Perry (1998: 121–37). For a word of caution in the application of OECD models to developing countries see Nunberg (1995). For an enthusiastic evaluation of New Zealand’s experience with managerialism, see Schick (1996).
 
7    The term “change team” is from Waterbury’s (1992) discussion of the small groups of technocrats responsible for implementing first-generation economic reforms. Grindle (1999) analyzes reforms, similar to some kinds of administrative reforms, that devolve or decentralize power away from the reforming president. She too finds that the reforms originate with initially isolated and marginal commissions and working groups.
 
8    The Brazilian transition of 1985 was gradual and had been scheduled for years. However, the outgoing government did not attempt any major administrative reform, despite preoccupation with possible civilian successors.
 

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