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This paper studies the relationship between devolution, accountability, and service delivery in Pakistan. It examines the degree of accessibility of local policy-makers and the level of competition in local elections, the expenditure patterns of local governments to gauge their sector priorities, and the extent to which local governments are focused on patronage or the provision of targeted benefits to a few as opposed to providing public goods. The main findings of the paper are three-fold. First, the accessibility of policy-makers to citizens in Pakistan is unequivocally greater after devolution, and local government elections are, with some notable exceptions, as competitive as national and provincial elections. Second, local government sector priorities are heavily tilted toward the provision of physical infrastructure - specifically, roads, water and sanitation, and rural electrification - at the expense of education and health. Third, this sector prioritization is in part a dutiful response to the relatively greater citizen demands for physical infrastructure; in part a reflection of the local government electoral structure that gives primacy to village and neighborhood-specific issues, and in part a reaction to provincial initiatives in education and health that have taken the political space away from local governments in the social sectors, thereby encouraging them to focus more toward physical infrastructure.
Degree of accessibility --- E-Government --- Election --- Governance --- Government accountability --- Local elections --- National governments --- Policy implications --- Political Accountability --- Political leadership --- Public Sector Corruption and Anticorruption Measures --- Public Sector Economics and Finance --- Service Delivery --- Service providers --- Transport --- Transport Economics, Policy and Planning
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Why do politicians distort public investments? And given that public investments are poor because presumably that is what is politically rational, what types of reforms are likely to be both efficiency improving and compatible with the interests of politicians? This paper explores these two questions in the context of Mongolia. It argues that Mongolian members of parliament have an incentive to over-spend on smaller projects that bring benefits to specific geographical localities and to under-spend on large infrastructure that would bring economic benefits to Mongolia on the whole. The incentive for the former is that members of parliament internalize the political benefits from the provision of particular, targeted benefits to specific communities. The disincentive for the latter is that large infrastructure carries a political risk because the political faction in control of that particular ministry would have access to huge rents and become politically too powerful. The identity of these "winners" is uncertain ex ante, given the relatively egalitarian and ethnically homogenous nature of Mongolia's society and polity. Anticipating this risk, members of parliament are reluctant to fund these projects. Since these large infrastructure projects are crucial for national growth, neglecting them hurts all members of parliament. Members of parliament will therefore support reforms that collectively tie their hands by safeguarding large, strategic investment projects from political interference thereby ensuring that no political faction becomes too powerful. This protection of mega-projects would need to be part of a bargain that also allows geographical targeting of some percentage of the capital budget.
Access to Finance --- Debt Markets --- Incentive Compatible Reform --- Macroeconomics and Economic Growth --- Parliamentary Government --- Political Economy --- Poverty Reduction --- Public Investments --- Public Sector Expenditure Policy --- Mongolia
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This paper studies the relationship between devolution, accountability, and service delivery in Pakistan. It examines the degree of accessibility of local policy-makers and the level of competition in local elections, the expenditure patterns of local governments to gauge their sector priorities, and the extent to which local governments are focused on patronage or the provision of targeted benefits to a few as opposed to providing public goods. The main findings of the paper are three-fold. First, the accessibility of policy-makers to citizens in Pakistan is unequivocally greater after devolution, and local government elections are, with some notable exceptions, as competitive as national and provincial elections. Second, local government sector priorities are heavily tilted toward the provision of physical infrastructure - specifically, roads, water and sanitation, and rural electrification - at the expense of education and health. Third, this sector prioritization is in part a dutiful response to the relatively greater citizen demands for physical infrastructure; in part a reflection of the local government electoral structure that gives primacy to village and neighborhood-specific issues, and in part a reaction to provincial initiatives in education and health that have taken the political space away from local governments in the social sectors, thereby encouraging them to focus more toward physical infrastructure.
Degree of accessibility --- E-Government --- Election --- Governance --- Government accountability --- Local elections --- National governments --- Policy implications --- Political Accountability --- Political leadership --- Public Sector Corruption and Anticorruption Measures --- Public Sector Economics and Finance --- Service Delivery --- Service providers --- Transport --- Transport Economics, Policy and Planning
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Bosnia and Herzegovina (BiH) face the dual and interlinked challenge of lack of jobs and low quality of public services. Labor force participation rates, especially of women, are among the lowest in Europe, and the country faces high and sustained levels of unemployment, especially of the youth. Even within the employed sector there are concerns regarding the quality of jobs, including high levels of informality. The dearth of quality jobs is linked to skills mismatches between the demand and supply of labor, which in turn reflects the relatively low quality of human capital of workers, and poor education and health services. The objective of this report is to examine the "public sector labor market" in BiH and its implications for this twin challenge. The public sector labor market is defined as the employment, compensation, management, and work environment practices of the public sector. These practices influence the employment choices of individuals, such as whether to work and preferences over public sector or private sector employment. They also affect the selection, retention, motivation, and productivity of public sector workers, which in turn impact the ability of the government to effectively deliver its variety of outputs. The report measures these features of the public sector labor market through an original household survey conducted by the World Bank (WB) in 2021-2022 that is representative of the urban areas of the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS).
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Why do politicians distort public investments? And given that public investments are poor because presumably that is what is politically rational, what types of reforms are likely to be both efficiency improving and compatible with the interests of politicians? This paper explores these two questions in the context of Mongolia. It argues that Mongolian members of parliament have an incentive to over-spend on smaller projects that bring benefits to specific geographical localities and to under-spend on large infrastructure that would bring economic benefits to Mongolia on the whole. The incentive for the former is that members of parliament internalize the political benefits from the provision of particular, targeted benefits to specific communities. The disincentive for the latter is that large infrastructure carries a political risk because the political faction in control of that particular ministry would have access to huge rents and become politically too powerful. The identity of these "winners" is uncertain ex ante, given the relatively egalitarian and ethnically homogenous nature of Mongolia's society and polity. Anticipating this risk, members of parliament are reluctant to fund these projects. Since these large infrastructure projects are crucial for national growth, neglecting them hurts all members of parliament. Members of parliament will therefore support reforms that collectively tie their hands by safeguarding large, strategic investment projects from political interference thereby ensuring that no political faction becomes too powerful. This protection of mega-projects would need to be part of a bargain that also allows geographical targeting of some percentage of the capital budget.
Access to Finance --- Debt Markets --- Incentive Compatible Reform --- Macroeconomics and Economic Growth --- Parliamentary Government --- Political Economy --- Poverty Reduction --- Public Investments --- Public Sector Expenditure Policy --- Mongolia
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This paper takes advantage of unique intra-country variation in the Philippines power sector to examine under what conditions politicians have an incentive to "capture" an electric utility and use it for the purposes of rent-seeking. The authors hypothesize that the level of capture is determined by the incentives of, and the interactions between, local and national politicians, where the concepts of "local" and "national" are context specific. A local politician is defined as one whose electoral jurisdiction lies within the utility's catchment area; by contrast, a national politician is defined as one whose electoral jurisdiction includes two or more utility catchment areas. These jurisdictional differences imply different motivations for local and national politicians: because of "spillover" effects, local politicians have a greater incentive to use the utility for rent-seeking than a national politician as they capture only a portion of the political gains from utility performance improvements as some of the benefits of improved service will go to other electoral jurisdictions within the utility's catchment area. The authors posit that three variables impact the magnitude of these incentives of local and national politicians: (i) the local economic context, specifically the scale of rents that can be extracted from an electricity cooperative (ii) the degree of competitiveness of local politics; and (iii) the political salience of an electricity cooperative's catchment area for national politicians. The authors illustrate this framework through case studies of specific power utilities, and suggest some policy implications.
Economic Theory & Research --- Electoral Jurisdiction --- Electric Utility --- Energy --- Intra-Country Variation --- Macroeconomics and Economic Growth --- Political Economy --- Political Systems and Analysis --- Politics and Government --- Power Sector --- Public Sector Corruption & Anticorruption Measures --- Utility Performance Improvements
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This paper takes advantage of unique intra-country variation in the Philippines power sector to examine under what conditions politicians have an incentive to "capture" an electric utility and use it for the purposes of rent-seeking. The authors hypothesize that the level of capture is determined by the incentives of, and the interactions between, local and national politicians, where the concepts of "local" and "national" are context specific. A local politician is defined as one whose electoral jurisdiction lies within the utility's catchment area; by contrast, a national politician is defined as one whose electoral jurisdiction includes two or more utility catchment areas. These jurisdictional differences imply different motivations for local and national politicians: because of "spillover" effects, local politicians have a greater incentive to use the utility for rent-seeking than a national politician as they capture only a portion of the political gains from utility performance improvements as some of the benefits of improved service will go to other electoral jurisdictions within the utility's catchment area. The authors posit that three variables impact the magnitude of these incentives of local and national politicians: (i) the local economic context, specifically the scale of rents that can be extracted from an electricity cooperative (ii) the degree of competitiveness of local politics; and (iii) the political salience of an electricity cooperative's catchment area for national politicians. The authors illustrate this framework through case studies of specific power utilities, and suggest some policy implications.
Economic Theory & Research --- Electoral Jurisdiction --- Electric Utility --- Energy --- Intra-Country Variation --- Macroeconomics and Economic Growth --- Political Economy --- Political Systems and Analysis --- Politics and Government --- Power Sector --- Public Sector Corruption & Anticorruption Measures --- Utility Performance Improvements
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The objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and health with the aim of distilling useful lessons for policy-makers in developing countries. This study to our knowledge is the first that aims to disaggregate the available evidence by: (i) the quality of the empirical study; (ii) the different public sector contexts, in particular the different types of public sector jobs; and (iii) geographical context (developing country or OECD settings). The paper's main findings, based on a comprehensive review of 110 studies of public sector and relevant private sector jobs are as follows. First, we find that overall a majority (65 of 110) of studies find a positive effect of performance-related pay, with higher quality empirical studies (68 of the 110) generally more positive in their findings (46 of the 68). These show that explicit performance standards linked to some form of bonus pay can improve, at times dramatically, desired service outcomes. Second, however, these more rigorous studies are overwhelmingly for jobs where the outputs or outcomes are more readily observable, such as teaching, health care, and revenue collection (66 of the 68). There is insufficient evidence, positive or negative, of the effect of performance-related pay in organizational contexts that that are similar to that of the core civil service, characterized by task complexity and the difficulty of measuring outcomes, to reach a generalized conclusion concerning such reforms. Third, while some of these studies have shown that performance-related pay can work even in the most dysfunctional bureaucracies in developing countries, there are too few cases to draw firm conclusions. Fourth, several observational studies identify problems with unintended consequences and gaming of the incentive scheme, although it is unclear whether the gaming results in an overall decline in productivity compared to the counterfactual. Finally, few studies follow up performance-related pay effects over a long period of time, leaving the possibility that the positive findings may be due to Hawthorne Effects, and that gaming behavior may increase over time as employees become more familiar with the scheme and learn to manipulate it.
Behavioral economics --- E-Business --- Economic Theory & Research --- Educational Sciences --- Labor Policies --- Macroeconomics and Economic Growth --- Performance-related pay --- Poverty Reduction --- Public administration --- Tax administration --- Tertiary Education
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Using a cross-country data set on e-government systems, this paper analyzes whether e-filing of taxes and e-procurement adoption improves the capacity of governments to raise and spend resources through the lowering of tax compliance costs, improvement of public procurement competitiveness, and reduction of corruption. The paper finds that information and communications technology can help improve government capacity, but the impact of e-government varies by type of government activity and is stronger in more developed countries. Implementation of e-filing systems reduces tax compliance costs as measured by the number of tax payments, time required to prepare and pay taxes, likelihood and frequency of firms being visited by a tax official, perception of tax administration as an obstacle, and incidence of bribery. The effects of e-procurement are weaker, with the number of firms securing or attempting to secure a government contract increasing with e-procurement implementation only in countries with higher levels of development and better quality institutions. The paper finds no systematic relationship between e-procurement and bureaucratic corruption.
Corruption --- Debt Markets --- E-Business --- E-Filing --- E-Government --- E-Procurement --- Finance and Financial Sector Development --- Governance --- Macroeconomics and Economic Growth --- Private Sector Development --- Public Procurement --- Tax Administration --- Taxation & Subsidies
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The objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and health with the aim of distilling useful lessons for policy-makers in developing countries. This study to our knowledge is the first that aims to disaggregate the available evidence by: (i) the quality of the empirical study; (ii) the different public sector contexts, in particular the different types of public sector jobs; and (iii) geographical context (developing country or OECD settings). The paper's main findings, based on a comprehensive review of 110 studies of public sector and relevant private sector jobs are as follows. First, we find that overall a majority (65 of 110) of studies find a positive effect of performance-related pay, with higher quality empirical studies (68 of the 110) generally more positive in their findings (46 of the 68). These show that explicit performance standards linked to some form of bonus pay can improve, at times dramatically, desired service outcomes. Second, however, these more rigorous studies are overwhelmingly for jobs where the outputs or outcomes are more readily observable, such as teaching, health care, and revenue collection (66 of the 68). There is insufficient evidence, positive or negative, of the effect of performance-related pay in organizational contexts that that are similar to that of the core civil service, characterized by task complexity and the difficulty of measuring outcomes, to reach a generalized conclusion concerning such reforms. Third, while some of these studies have shown that performance-related pay can work even in the most dysfunctional bureaucracies in developing countries, there are too few cases to draw firm conclusions. Fourth, several observational studies identify problems with unintended consequences and gaming of the incentive scheme, although it is unclear whether the gaming results in an overall decline in productivity compared to the counterfactual. Finally, few studies follow up performance-related pay effects over a long period of time, leaving the possibility that the positive findings may be due to Hawthorne Effects, and that gaming behavior may increase over time as employees become more familiar with the scheme and learn to manipulate it.
Behavioral economics --- E-Business --- Economic Theory & Research --- Educational Sciences --- Labor Policies --- Macroeconomics and Economic Growth --- Performance-related pay --- Poverty Reduction --- Public administration --- Tax administration --- Tertiary Education
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