PDIA for Building State Capability

Many countries, like Sri Lanka, are trying to diversify their economies but often lack the capabilities to lead diversification programs. One of these capabilities relates to targeting new sectors to promote and pursue through a diversification policy: countries know they are ‘doomed to choose’ sectors to target,¹ but lack effective capabilities to do the targeting. This paper narrates a recent (and ongoing) initiative to establish this kind of capability in Sri Lanka. The initiative adopted a Problem Driven Iterative Adaptation (PDIA) process, where a team of Sri Lankan officials worked with Harvard Center for International Development (CID) facilitators to build capabilities. The paper tells the story of this process, providing documented evidence of the progress over time and describing the thinking behind the PDIA process. It shows how a reliable targeting mechanism can emerge in a reasonably limited period, when a committed team of public officials are effectively authorized and engaged. The paper will be of particular interest to those thinking about targeting for diversification and to those interested in processes (like PDIA) which are focused on building state capability and fostering policy implementation in public contexts.

¹ The term here comes from Hausmann, R. and Rodrik, D. 2006. Doomed to Choose: Industrial Policy as Predicament. Draft.

We divide the 102 historically developing countries (HDCs) into those with ‘very weak’, ‘weak’, ‘middle’, and ‘strong’ state capability. Analyzing the levels and recent growth rates of the HDCs’ capability for policy implementation reveals how pervasively “stuck” most of them are.

Only eight HDCs have attained strong capability, and since most of these are small (e.g., Singapore, UAE), less than 100 million (or 1.7%) of the roughly 5.8 billion people in HDCs currently live in high capability states.

Almost half (49) of these countries have very weak or weak capability, and thus their long-run pace of acquiring capability is also very slow.

Alarmingly, three quarters of these countries (36 of 49) have experienced negative growth in state capability in recent decades, while more than a third of all countries (36 of 102) have low and (in the medium run at least) deteriorating state capability.

At current rates, the ‘time to high capability’ of the 49 currently weak capability states and the 36 with negative growth is obviously “forever”. But even for the 13 with positive growth, only three would reach strong capability by the end of the 21st century at their current medium run growth.

Many development challenges are complex, involving a lot of different agents and with unknown dimensions. Solutions to these challenges are often unknown, and contextually dependent. At the same time, there are political imperatives at play in many contexts which create pressure to ‘find the solution now…and then scale it up.’ Such pressure raises a question: how does a policy entrepreneur or reformer find a new solution and scale it up when dealing with complexity? This is the subject we address in the current paper, which is the fifth in a series on ‘how to’ do problem driven iterative adaptation (PDIA) (Andrews et al. 2015, 2016a, 2016b, 2016c).

The paper focuses on building broad agency solutions in the process of identifying problems and finding and fitting contextually appropriate solutions. The broad agency is, in our opinion, a most effective mechanism to ensure scaling and dynamic sustainability in the change process. As with other working papers on this topic, the contents here do not offer all answers to those asking questions about how to do development effectively. It closes by reflecting on the importance of ‘you’ (the reader, and ostensibly part of a policy change or reform team somewhere) using this and the other ideas as heuristics to rethink and reorient how you work—but with your own signature on each idea.

Many of the challenges in international development are complex in nature. They involve many actors in uncertain contexts and with unclear solutions. Our work has proposed an approach to addressing such challenges, called Problem Driven Iterative Adaptation (PDIA). This paper is the most recent in a series intended to show how one can do PDIA, building on the first paper, "Doing Problem Driven Work.” The current paper addresses a key part of the approach one moves to once a problem has been identified, performing real-time experimental iterations. This is intended as a practical paper that builds on experience and embeds exercises for readers who are actually involved in this kind of work.

Resumen:

Muchos de los desafíos que enfrentamos en el desarrollo internacional son complejos por naturaleza. Involucran a muchos actores en contextos de incertidumbre y sin soluciones claras. Nuestro trabajo ha propuesto una aproximación a esos retos que se llama Adaptación Iterativa Orientada al problema (en inglés Problem Driven Iterative Adaptation, PDIA). Este artículo es el más reciente dentro de una serie que pretende mostrar cómo uno puede hacer PDIA, y que parte del primer artículo, “Trabajando con orientación al problema”. Este artículo se ocupa de una parte clave del enfoque que asumimos, que ocurre una vez hemos identificado el problema y empezamos a hacer iteraciones experimentales en tiempo real. Esperamos estar ofreciendo un artículo práctico que se apoya en la experiencia y que contiene ejercicios para lectores que ya están involucrados en este tipo de labor.

Development and state building processes are about change. Change is, however, elusive in many contexts. In prior work, we have offered problem driven iterative adaptation (PDIA) as an approach to tackle wicked hard change challenges. This is our fourth practical working paper on ‘how’ to do PDIA. The working paper addresses questions about authority, given that authority is needed to make change happen—especially in hierarchical government settings. This authority is often difficult to attain, however. It is seldom located in one office of person, and is often harder to lock-in with complex challenges, given that they commonly involve significant risk and uncertainty and require engagement by many agents responding to different kinds of authority. Every effort must be taken to address such challenges, and efforts should include an explicit strategy to establish an appropriate authorizing environment. This working paper suggests ideas to adopt in this strategy, with practical exercises and examples to help the reader apply such ideas in her or his own work.

Manejando tu ambiente de autorización en un processor PDIA (resumen):

Los procesos de desarrollo y construcción de capacidad institucional están hechos de cambios. Pero el cambio tiende a ser elusivo en muchos contextos. En trabajos previos, ofrecemos la Adaptación Iterativa Orientada al problema (PDIA por sus siglas en inglés) como enfoque para encarar desafíos de cambio muy difíciles. Este es nuestro cuarto papel de trabajo práctico sobre cómo hacer PDIA. En este artículo respondemos cuestiones sobre la autoridad, la que uno necesita para hacer que los cambios ocurran —especialmente dentro de gobiernos jerárquicos. Pero la autoridad con frecuencia es difícil de obtener; rara vez se concentra en una oficina o en una persona, y es difícil comprometerla en la solución de desafíos complejos, porque estos suelen implicar un riesgo significativo, así como mucha incertidumbre, y necesitan del concierto de varios agentes que responden a distintos tipos de autoridad. Esos desafíos requieren de todos los esfuerzos posibles, lo cual nos obliga a tener una estrategia explícita para establecer un ambiente de autorización apropiado. Este papel de trabajo sugiere ideas para adoptar en esta estrategia, con ejercicios prácticos y ejemplos que ayudan al lector a aplicar esas ideas en su propio trabajo.

Efforts to build state capability often take the form of commonly used, highly designed and engineered best practice solutions that have worked in many other places and that we suspect (and hope) will work again in many contexts. Such interventions do sometimes work, especially when the treatment actually addresses problems that fester in the context. Where the contextual problems are different, however, the treatment is just isomorphic mimicry—it looks good but will not be a solution to problems that actually matter. Development organizations often cannot see this, however, and offer the same solution again and again—hoping for a different outcome but imposing a capability trap on the policy context, where a new diagnosis and prescription is actually needed. In some countries the treatment has an even worse impact, fostering premature load bearing—where the context cannot actually handle what is prescribed. How can development experts identify in advance where they will have such negative impacts, and how can they identify in advance where they need to do development differently? This paper addresses such questions, and introduces an approach to building state capability in the latter contexts (called 1804 contexts), called problem driven iterative adaptation.

We often observe that more successful efforts to establish complex state capabilities are problem driven; focused relentlessly on solving a specific, attention-grabbing problem. This is the first principle of Problem Driven Iterative Adaptation, which we are introducing in pieces in a series of working papers over the coming months. The current working paper starts with a discussion about why problems matter as entry points to complex state capability building challenges. It then offers practical ideas and tools to help those trying to use problems to foster change (given the need to construct problems, deconstruct problems and then promote problem driven sequencing). The working paper should help readers who wonder why we emphasize problems as entry points and positive motivators of change (we don’t agree that problems demotivate or disempower) and how we work practically to define and tackle problems.

Trabajando con orientación al problema (resumen):

A menudo observamos que los esfuerzos más exitosos en la construcción de capacidades institucionales complejas han estado orientados a un problema: es decir, se han enfocado todo el tiempo en resolver un problema específico que ha requerido toda la atención. Este es el primer principio de la Adaptación Iterativa Orientada al Problema, que iremos presentando por partes en una serie de documentos de trabajo durante los próximos meses. Este documento de trabajo comienza con una discusión sobre por qué son importantes los problemas como punto de partida, a la hora de encarar los retos de la construcción de capacidades institucionales complejas. Luego ofrece ideas y herramientas prácticas que ayudan a quienes están tratando de usar esos problemas para impulsar cambios (dada la necesidad de construir problemas, deconstruirlos y luego promover la secuenciación en torno a ellos). El presente documento pretende ayudar a sus lectores a preguntarse por qué hacemos énfasis en los problemas como puntos de acceso y posibles motivaciones al cambio (no estamos de acuerdo con que los problemas nos restan motivación o poder) y cómo trabajamos en la práctica para definir y enfrentar los problemas.

The incredibly low levels of learning and the generally dysfunctional public sector schooling systems in many (though not all) developing countries are the result of a capability trap (Pritchett et al. 2010). Two phenomena reinforce persistent failure of schooling systems to produce adequate learning outcomes. One is the mismatch between system design—the allocation of activities across organizations and mechanisms of accountability—and the insights of the 'new institutional economics' from principal agent models and contract theory. In particular, many education systems attempt to manage teaching and learning as a 'thin' or 'logistical' activity that can be managed with top-down control and an emphasis on compliance. The reality is that teaching is a 'thick' or 'implementation intensive' activity that performs better when teachers and operators of schools are given performance standards, have multiple in-depth accountability channels, and are given greater autonomy. The second phenomena that facilitates persistent failure is global isomorphism on enrollment and inputs (Meyer et al. 1977; Boli et al. 1985; Meyer et al. 1997). That is, the field (in the sense of Bourdieu 1993) of global education has produced a near exclusive emphasis on enrollments and duration in school, adequacy of physical inputs, and formal qualifications that allowed, perhaps encouraged, national systems to ignore completely performance on child-learning (of any type, measured in any way). I conclude with a comparison in India of the national governments recent efforts in basic education which have been almost exclusively isomorphic.

Many public sector reforms in developing countries fail to make governments more functional. This is typically because reforms introduce new solutions that do not fit the contexts in which they are being placed. This situation reflects what has recently been called the 'capability trap' in development—which results in many interventions producing new forms that are not functional in states across the globe. The work on capability traps suggests that reforms can yield more functional influence in even the most complex states, however; if reformers adopt non-traditional approaches to doing reform. In particular, the work suggests that reforms will tend to be more contextually fitted if: (i) They are driven by problems that agents in the context care about; and (ii) They are introduced iteratively—through a stepwise process where ideas are tried and lessons are learned and used to adapt (or fit) ideas to context.

The capability traps work embeds these ideas into an approach to doing reform called Problem Driven Iterative Adaptation (PDIA). This approach has deep roots in various literatures but many observers still ask how PDIA-type reforms could work to foster successful reform in complex hierarchical developing country governments and whether these approaches really help foster reforms that better fit such complex contexts. This paper responds to such question by describing an action research study where PDIA is being used to retell a story of reform that has to date been limited. The action research study is in Mozambique’s judicial sector and will examine whether and how a problem driven iterative approach can (i) flush out the contextual factors that often limit reform success, (ii) provide a viable route to find and fit reforms that actually foster greater functionality, and (iii) promote the authority needed to ensure change is implemented and institutionalized.

This paper synthesizes the approach I take to looking at governance in nations states. The approach emphasizes ends as the starting point for any view of governance. (Asking about what governments do rather than how they do them). I also emphasize means; but in thinking about what it takes to produce ends, not as stand-alone factors. I provide some detail on the specific ends and means I look at in nation states and promote the idea of using governance dashboards and narratives to look at governance (not hold-all indicators). I also discuss how my approach might be useful in the current discussions about including a governance indicator in the post 2015 development goals. I expect that some will disagree and even disapprove with the approach I discuss, but I hope that the approach nonetheless offers a useful contribution to current discussions.

A key argument in my book is that reforms that actually improve functionality and yield institutions that work in complex contexts typically happen step-by-step. In Mozambique I say poco-a-poco.

The book explains the rationale for this by referring to the 'muddling through' work of Charles Lindblom. I argue that we need to create processes of 'purposive muddling'to overcome the limits of institutional reform in development.

Public sector reforms are commonplace in developing countries. Much of the literature about these reforms reflects on their failures. This paper asks about the successes and investigates which of two competing theories best explain why some reforms exhibit such positive deviance. These theories are called 'solution and leader driven change' (SLDC) and 'problem driven iterative adaptation' (PDIA). They are used to analyze data emerging from a case survey involving thirty cases from Princeton University's Innovations for Successful Society (ISS) program. The bulk of evidence from this study supports a PDIA explanation, but there is reason to believe that SLDC hypotheses also have value. It seems that PDIA and SLDC are two viable paths through which positive deviance can emerge; although PDIA seems to provide the wider path for more positive deviance.

The prevailing aid orthodoxy works well enough in stable environments, but is ill-equipped to navigate contexts of volatility and fragility. The orthodox approach is adept at solving straightforward technical or logistical problems (paving roads, building schools, immunizing children), but often struggles or outright fails when faced with complex, adaptive challenges (fighting corruption, upholding the rule of law, establishing democratic institutions). South Sudan, the world’s newest country, presents a post-conflict environment full of complex, adaptive challenges. Prior to the signing of the Comprehensive Peace Agreement (CPA) in 2005 South Sudan had no formal institutions of self-governance. During the CPA period and after independence in 2011, foreign development agencies have contributed billions of dollars of aid and technical assistance to "build capacity" in the nascent Government of South Sudan (GoSS). The donors utilized approaches and mechanisms of support that at least nominally reflect the prevailing aid orthodoxy. We argue that orthodox state building and capacity building more or less failed in South Sudan, leaving the world’s newest country mired in a "capability trap" (Andrews, et al 2012). Despite countless trainings, workshops, reforms, and a large corps of foreign technical assistants embedded within state ministries, there is an absence of real change, and GoSS now "looks like a state" but performs as anything but. The challenges presented by this new, complicated, post-conflict country demand innovative approaches to building state capability which go beyond importing "best practice" solutions while feigning "client ownership." We explore one such approach to disruptive innovation that has emerged: Problem Driven Iterative Adaptation (PDIA). To escape from the world's newest capability trap, South Sudan’s government and its international donors must challenge themselves to imagine innovative paths to state building, which diverge from "business as usual" and attempt to create something that lasts.

This paper begins by noting that Uganda has been a public sector reform leader in Africa. It has pursued reforms actively and consistently for three decades now, and has produced many laws, processes and structures that are 'best in class' in Africa (and beyond). The problem is that many of the reforms have been limited to these kinds of gains—producing new institutional forms that function poorly and yield limited impacts. Various kinds of data showed—in various areas (civil service and public administration, public financial management, revenue management, procurement, and anti-corruption)—that laws are often not being implemented, processes are being poorly executed, and there is insufficient follow-up to make sure that new mechanisms work as intended. The paper suggests that government should reframe its reform agenda to address these limitations and close the gaps between what Uganda’s system looks like and how it functions. The proposed approach to doing reform in the future is called problem-driven iterative adaptation (PDIA) and builds on past reform activity (rather than proposing an entirely new set of solutions). PDIA will require Ugandans to work together and own their reform processes more actively than ever, coming to terms with the problems they face and working iteratively—in broad groups—to find and fit local solutions to these problems.

Many reform initiatives in developing countries fail to achieve sustained improvements in performance because they are merely isomorphic mimicry—that is, governments and organizations pretend to reform by changing what policies or organizations look likerather than what they actually do. The flow of development resources and legitimacy without demonstrated improvements in performance, however, undermines the impetus for effective action to build state capability or improve performance. This dynamic facilitates 'capability traps' in which state capability stagnates, or even deteriorates, over long periods of time despite governments remaining engaged in developmental rhetoric and continuing to receive development resources. How can countries escape capability traps? We propose an approach, Problem-Driven Iterative Adaptation (PDIA), based on four core principles, each of which stands in sharp contrast with the standard approaches. First, PDIA focuses on solving locally nominated and defined problems in performance (as opposed to transplanting pre-conceived and packaged "best practice" solutions). Second, it seeks to create an 'authorizing environment' for decision-making that encourages 'positive deviance' and experimentation (as opposed to designing projects and programs and then requiring agents to implement them exactly as designed). Third, it embeds this experimentation in tight feedback loops that facilitate rapid experiential learning (as opposed to enduring long lag times in learning from ex post "evaluation"). Fourth, it actively engages broad sets of agents to ensure that reforms are viable, legitimate, relevant and supportable (as opposed to a narrow set of external experts promoting the "top down" diffusion of innovation).

There is an inherent tension between implementing organizations—which have specific objectives and narrow missions and mandates—and executive organizations—which provide resources to multiple implementing organizations. Ministries of finance/planning/budgeting allocate across ministries and projects/programmes within ministries, development organizations allocate across sectors (and countries), foundations or philanthropies allocate across programmes/grantees. Implementing organizations typically try to do the best they can with the funds they have and attract more resources, while executive organizations have to decide what and who to fund. Monitoring and Evaluation (M&E) has always been an element of the accountability of implementing organizations to their funders. There has been a recent trend towards much greater rigor in evaluations to isolate causal impacts of projects and programmes and more ‘evidence base’ approaches to accountability and budget allocations. Here we extend the basic idea of rigorous impact evaluation—the use of a valid counter-factual to make judgments about causality—to emphasize that the techniques of impact evaluation can be directly useful to implementing organizations (as opposed to impact evaluation being seen by implementing organizations as only an external threat to their funding). We introduce structured experiential learning (which we add to M&E to get MeE) which allows implementing agencies to actively and rigorously search across alternative project designs using the monitoring data that provides real time performance information with direct feedback into the decision loops of project design and implementation. Our argument is that within-project variations in design can serve as their own counter-factual and this dramatically reduces the incremental cost of evaluation and increases the direct usefulness of evaluation to implementing agencies. The right combination of M, e, and E provides the right space for innovation and organizational capability building while at the same time providing accountability and an evidence base for funding agencies.

In many nations today the state has little capability to carry out even basic functions like security, policing, regulation or core service delivery. Enhancing this capability, especially in fragile states, is a long-term task: countries like Haiti or Liberia will take many decades to reach even a moderate capability country like India, and millennia to reach the capability of Singapore. Short-term programmatic efforts to build administrative capability in these countries are thus unlikely to be able to demonstrate actual success, yet billions of dollars continue to be spent on such activities. What techniques enable states to "buy time" to enable reforms to work, to mask non-accomplishment, or to actively resist or deflect the internal and external pressures for improvement? How do donor and recipient countries manage to engage in the logics of "development" for so long and yet consistently acquire so little administrative capability? We document two such techniques: (a) systemic isomorphic mimicry, wherein the outwardforms(appearances, structures) of functional states and organizations elsewhere are adopted to camouflage a persistent lack of function; and (b) premature load bearing, in which indigenous learning, the legitimacy of change and the support of key political constituencies are undercut by the routine placement of highly unrealistic expectations on fledging systems. We conclude with some suggestions for sabotaging these techniques.