Synthesis documents

Aiding institutional reforms in developing countries. Lessons from the Philippines on what works, what doesn't and why, by David Booth, ODI, 2014.

    Description
    Recent economic and social reforms in Philippines supported by The Asia Foundation provide a range of relevant experiences of what it means to think and work 'politically' in a development programme. The paper examines two completed reforms, one concerning the formalisation of residential land rights, the other taxation and public health. As well as outlining the ‘external story’ of how the reforms were achieved, the paper asks: how was it possible for this to happen on an aid-funded basis, given the difficulties that aid agencies usually have in working in a flexible and adaptive way?

    Two reform examples are studied in depth: Property rights and health tax reform.

    Summary of results
    The two examples of the potential for reform ‘against the odds’ in highly unequal and poorly governed developing countries suggest the meaning that should be given to the new mantra of ‘thinking and working politically’. They underline what really differentiates the reform approach that works. Thinking and working politically is about liberating and harnessing the potential of local reformers to shape and steer processes of change in flexible, politically attuned ways.
    These experiences suggest several cardinal rules of effective reformism:
    - Avoid as far as possible those kinds of reform that are likely to incur greatest resistance;
    - Go for good second-best policy changes;
    - Keep it simple and prioritise;
    - Do not underestimate the resistance to reforms that are promoted frontally;
    Even if it wants to, the executive branch of government may well not be able to drive through a reform on its own;
    - Consider seriously working with the structure of government, even when dysfunctional;
    - More generally, work with the interests that people and organisations have;
    - Ideas matter;
    - Build tacit coalitions in a pragmatic way;
    - Above all, do not try to follow a blue-print of the process of reform.

    Investigation of the conditions under which donor funding can provide an enabling environment for reform entrepreneurship of this kind suggests the following conclusions:
    -The traditional form of donor support – the large pre-programmed reform project – breaks several of the cardinal rules of effective reformism;
    -Under typical conditions, competitive tendering of a project implementation contract involves specifying in advance both what you want and how you expect to get it, which is already a mistake;
    - Tendering also skews the selection of implementers towards organisations and individuals with impressive technical qualifications, distracting from a proper assessment of the political needs;
    - The funding modality must be of a kind to attract people and organisations that are motivated to pursue their own reform agenda and are equipped to do so;
    - The team on the ground must be freed from donor default concepts on country ownership, stakeholder inclusion, transparency etc.;
    - Partnership funding modalities exist in most official bilateral agencies, and they can and should be used more widely and continuously to support key reforms;
    - However, the funder must be consistently willing to ‘let go’ and to resist internal pressures to reassert control;
    - Funding the front-line reform team through a respected intermediary organisation can be very helpful.

    Thinking and working politically means, above all, being smart and realistic about institutional reform goals and their sequencing, given the underlying social and economic realities. That means a learning-oriented practice that targets feasible changes with big impacts, on development outcomes in the first place and institutional quality in the longer term.