Towards more effective state institutions

State capacity and the quality of governance

Despite the importance of effective state institutions and the considerable investments made in reinforcing their capacity to manage public affairs, many Central and East European and CIS countries continue to face daunting challenges related to inadequate internal and external control systems,1 public service provision, protecting human rights, and providing access to justice.

State capacity is an integral part of the broader realm of national capacities, including those of civil society and the private sector. It can be defined as state institutions’ abilities to manage the business of the executive, judiciary and the legislature towards human development ends. Indicators of effective state capacity can be found in how national policies are made, services are delivered, markets are developed, justice and security provided, and rights are protected. Where this is done well–where large numbers of people benefit over time from development, when an economy grows and society is engaged in democratic processes and feels secure–then state capacity can be viewed as effective.

Democratization does not automatically improve development outcomes. In developing and transitional societies where poverty and social exclusion are high, effective state institutions are particularly needed for market development, social justice, and environmental sustainability. During times of unfolding economic, food and climate change crises, the need for enhanced state capacity to manage and deliver has never been more compelling.

Capacity development challenges for state institutions differ widely across the region. Still, there can be little doubt that reinforcing state capacity is needed both in low-income countries with fragile state institutions such as Tajikistan (to transfer the benefits of economic growth to those who would not otherwise share them) and in middle-income countries and the new EU states where capacity in many state institutions is high, but gaps and regional and social disparities persist. On the basis of research2 on UNDP projects related to EU accession and integration in Bulgaria, Turkey, Serbia, Georgia, and Moldova, we present here a theoretical framework for conceptualizing institutional development of state bodies, and describe the processes through which this development occurs.3

Institutions, organizations,
and capacity development

While discussions about reinforcing state capacity often focus on the structure and workings of formal organizations, broader institutional issues–particularly informal rules of social and political interactions–can likewise influence the effectiveness of capacity development interventions. Nobel Prize winner Douglas North formulated the standard definition of an institution as ‘... the rules of the game in a society or, more formally, the humanly devised constraints that shape human interaction’.4 Organizations as defined by North are ‘... groups of individuals bound by some common purpose to achieve objectives’.

Institutional capacity development5 encompasses multiple levels of actors, policies and legislation, power relations and social norms (the enabling environment), as well as organizational and human resource development. To be effective, such interventions must usually take place over a considerable period of time. Their success often hinges on such factors as political will and leadership for real change. Institutional capacity development is about the dynamics of change–organizational, institutional, personal, political, and logistical. Yet these dynamics remain among the least understood aspects of capacity development.

Social assistance and administrative justice

A review of UNDP-Bulgaria’s institutional development project portfolio underscores the challenges of applying comprehensive and systemic approaches that recognize interdependencies between different actors and levels of capacity. One of the success stories is the ‘Social Assistance against New Employment’ project, which supported the development of new social assistance systems to address rising unemployment levels during 2002-2006. The project helped the government develop the enabling legislation needed for a national social assistance programme, strengthen the organizational capacity of municipalities and community service providers, as well as provide social assistance trainings for the unemployed–some of whom were later hired to work as social assistants at the community level. Thanks in part to work done under this project, some 650 social assistance providers are now registered with the Social Assistance Agency; 1,700 individuals were trained as social assistants.

Social assistants in training – the once unemployed provide much needed social services to the elderly and disabled in Bulgaria. © UNDP Bulgaria

Similar conclusions can be drawn from a 2003-2005 administrative justice reform project, under which UNDP supported institutional changes needed to establish a new administrative justice system. These changes included the development of an administrative procedure code, the establishment of a system of specialized administrative courts, improvements in internal review and appeals processes, and the design and implementation of training programmes on the new administrative procedure code for magistrates, court staff and civil servants. UNDP played the role of facilitator and intervened at the right time for the creation of national consensus on further steps to be taken to advance administrative justice in Bulgaria.

Public administration reform

Broader public administration reform strategies (to restructure state agencies or modernize the civil service) are often preconditions for the development of state capacity. In 2005-2006, UNDP in Moldova – along with the World Bank, the Swedish International Development Cooperation Agency (SIDA), and the UK Department for International Development (DFID) – established a public administration reform working group to coordinate support for public administration reform efforts. The functional reviews that were conducted with UNDP’s support helped reduce duplication between and within individual ministries. Institutional development plans for each ministry were put in place, guiding the ministry’s medium-term development in line with its environmental and resource constraints.

On the other hand, the absence of overall public administration reform strategies can reduce the effectiveness of UNDP’s capacity development efforts (e.g., in Georgia and Serbia prior to 2004). In the absence of a consolidated policy framework, UNDP responses tend to be rather scattered and fragmented. Since UNDP mostly responds to demands articulated by individual institutions, such piecemeal efforts may be counterproductive if they are not part of comprehensive reforms that are consistently implemented. Pre-2004 support provided to Serbian public institutions under the Capacity Building Fund was found to have only limited impact on wider reform efforts–reducing the effectiveness of national systems for delivering public goods and services.
 
Local governance
The 2005 Paris Declaration on Aid Effectiveness underscores the importance of national ownership of development programming.6 Project implementation directly by donors, or via the creation of project management units or other parallel structures, is often seen as inconsistent with national ownership. While desirable in theory, in practice such principles can over-burden incompletely consolidated state structures and subject capacity development efforts to unintended risks. Managing such risks places a premium on the early identification and involvement of the appropriate state partners. In Georgia, local governance legislation passed in 2005-2006 significantly increased the duties of municipalities, not all of which had the institutional capacity needed to effectively discharge their new functions. UNDP-Georgia launched a support programme7 focusing on capacity development for municipal servants (particularly training on project management and communications), organizational processes and procedures (focusing on functional reviews of local governance structures), and the enabling environment (helping higher government levels to formulate development strategies). It is hoped that this pilot initiative will provide a model for replication in other parts of the country.

Summary

As the above examples show, not all capacity development initiatives lead to rapid improvements in the quality of governance. Efforts to train civil servants may not mean much if they continue to work in unreformed institutional structures, without modern administrative tools or public oversight. To be effective, capacity development approaches must be adapted to local circumstances; ‘one-size-fits-all’ approaches are rarely successful. Moreover, even when they have been developed, state capacities can be lost to such ‘shocks’ as man-made or natural disasters, conflict, or economic or environmental crises. Still, the capacity development expertise that comes with UNDP’s country presence can be a valuable asset on which a country can draw, especially when facing the compound challenges of transition.

Dafina Gercheva is Capacity Development Practice Leader for the UNDP Bratislava Regional Centre. Joe Hooper is Capacity Development Specialist and Alexandra Windisch-Graetz is Capacity Development Research Assistant.