TABLE OF CONTENTS

List of Tables and Figures

ii

Preface

iii

Acknowledgements

vi

PART I: Comparative Analysis of Public Sector Capacity

             1.    The Role of the State in Development: Quality, Not Quantity

1

             2.    Defining Capacity and a Framework for Analysis

8

             3.    Pursuing Comparative Research: Focus and Process

17

             4.    Assessing Performance and Capacity Gaps: Six Case Studies Compared

23

             5.    Building Capacity: Guidelines for Interventions

61

PART II: Case Studies of Public Sector Capacity

             6.    Public Sector Capacity in Bolivia

78

             7.    Public Sector Capacity in the Central African Republic

97

             8.    Public Sector Capacity in Ghana

115

             9.    Public Sector Capacity in Morocco

131

             10.    Public Sector Capacity in Sri Lanka

147

             11.    Public Sector Capacity in Tanzania

165

Bibliography

183


BUILDING SUSTAINABLE CAPACITY:

CHALLENGES FOR THE PUBLIC SECTOR

Mary E. Hilderbrand

and

Merilee S. Grindle

Harvard University

November 1994

Prepared for the United Nations Development Programme

Pilot Study of Capacity Building (INT/92/676)

by the Harvard Institute for International Development

Harvard University

Mary E. Hilderbrand is a Research Associate at the Harvard Institute for International Development. Merilee S. Grindle is Edward S. Mason Professor of International Development at the John F. Kennedy School of Government, and Faculty Fellow at HIID.



    

TABLES AND FIGURES

TABLES

     4.1    Characteristics of Action Environments that Facilitate Performance
     4.2    Characteristics of Public Sector Institutional Contexts that Facilitate Performance
     4.3    Characteristics of Task Networks that Facilitate Performance
     4.4    List of Organizational Case Studies
     4.5    Characteristics of Organizations that Facilitate Performance
     5.6    Characteristics of Human Resources that Facilitate Performance

FIGURES

     2.1    Dimensions of Capacity
     6.1    Task Network for Budget Formulation in Bolivia
     6.2    Task Network for Maternal-Child Health Services in Bolivia
     7.1    Task Network for Budget Formulation in the Central African Republic
     7.2    Task Network for Maternal-Child Health Services in the Central African Republic
     8.1    Task Network for Budget Formulation in Ghana
     8.2    Task Network for Agricultural Extension Services in Ghana
     9.1    Task Network for Budget Formulation in Morocco
     9.2    Task Network for Agricultural Extension Services in Morocco
     10.1    Task Network for Budget Formulation for Food Crops in Sri Lanka
     10.2    Task Network for Agricultural Extension Services in Sri Lanka
     11.1    Task Network for Budget Formulation in Tanzania
     11.2    Task Network for Maternal-Child Health Services in Tanzania


PREFACE

    Development practitioners and analysts are increasingly asking the same question: Why have so few countries been able to promote and sustain economic and social development? Increasingly, they are focusing on a similar response: because governments have often failed to identify appropriate roles for the state in development and have been unable to organize and manage systems for identifying problems requiring public action, formulating policies to respond to them, implementing activities in pursuit of policy goals, and sustaining these activities over time. The capacity to carry out a wide range of development tasks has not been effectively generated or sustained.

    Because of such questions and responses, capacity building has emerged as a major concern for international institutions and foreign assistance agencies. The United Nations General Assembly, in Resolution 44/211, instructed its agencies to stress the building of national capacities and to come up with a more coherent approach for implementing that emphasis. The United Nations Development Programme then took steps to place capacity building at the center of programming for the Fifth Program Cycle. See footnote 1 In an influential expression of the same concern, the World Bank's Long-Term Perspective Study of Africa identified capacity building as a key to enabling African countries to develop economically and better meet the needs of their people. See footnote 2 More generally, in recent years the World Bank has paid growing attention in all regions to institutional and capacity issues. See footnote 3

    Heightened concern for strengthening capacity within developing countries comes as a response to several different factors. Although there have been some remarkable development successes, primarily in Asia, it has become increasingly clear that many developing countries have not effectively promoted economic and social development. Explanations of the disappointing results of several decades of effort have frequently focused on governments that assumed major responsibilities as engines of national development without the capacity to plan or manage the pursuit of such ambitions. Many development specialists currently share a sense of disappointment with the apparently meager results of considerable investment in state-led development initiatives since the 1950s, especially in Africa.

    More immediately, numerous examples of efforts to carry out major economic

reforms--getting macroeconomic policy right, structural adjustment programs, and extensive negotiations with international financial institutions, creditors, and donors--revealed the extent to which many developing countries suffered from ineffective policy formulation and economic management capacity. See footnote 4 Furthermore, there is evidence that public sector capacity in many developing countries declined because of political and economic crises that affected the budgets of public institutions and the salaries, prestige, and stability of public sector employment. See footnote 5 Instead of finding improvements, many development specialists have been impressed by the degree of deterioration of public sector performance just as they were rediscovering its importance for achieving development.

    On another front, international financial institutions and donor agencies have questioned the efficacy of their efforts in building public sector capacity. They have produced reports indicating that investments in capacity building initiatives have not paid off in terms of improved effectiveness overall or higher levels of individual or institutional performance. See footnote 6 They have pointed to the continued reliance of many governments, particularly those in Africa, on expatriate advisors and consultants to carry out basic functions of government or to provide the expertise for formulating and implementing effective public policies. See footnote 7 Evaluations of technical assistance projects are in general agreement that efforts to strengthen institutions and build capacity have been the least effective type or component of technical assistance. See footnote 8

    This study is part of an effort to assess and support more effective capacity building initiatives in developing countries. Our goal is not to deconstruct the failures of the past but to help construct the future--to find ways to contribute more effectively to capacity building for sustained development. While economic and social development requires a wide range of capacities that reach far beyond the public sector--to characteristics of civic society and markets and to historical, cultural, and international conditions--we focus primarily on public sector capacity. We believe that the ability of government to perform effectively is central to a changed definition of the role of the state in development and its ability to respond to challenging demands of new global and domestic conditions. We therefore begin by considering the current emphasis on capable states and exploring the context which confronts countries that seek economic advancement and better conditions of life for their populations.


    After exploring the importance of capable states to national development, we focus attention on the concepts of capacity and capacity building. We define capacity in terms of the ability of organizations to perform appropriate tasks efficiently and effectively. Although organizations are the principal unit of analysis, we identify five sets of factors--from conditions in the economic, political, and social context in which organizations work to the human resources that are available to carry out particular tasks--that affect organizational performance. In this part of our study, we present an analytic framework for assessing capacity and discuss how this framework can be used as both a diagnostic and a strategic tool for planning interventions to strengthen existing capacity. We use the framework to develop a methodology to assess capacity in specific contexts and apply it in six country case studies. The next part of the study presents the research design and methodology of the case study research. Chapter 4 presents our findings. In Chapter 5, we use the framework and the case studies to present a series of generalizations and recommendations about how capacity building initiatives can be most effectively planned and carried out. Part II presents summaries of each of the case studies.

ACKNOWLEDGEMENTS

This study represents the contributions of many generous, intelligent, and hard-working people. We were able to initiate the work because Gus Edgren and Sheila Smith of the UNDP and Nimrod Raphaeli of the World Bank strongly believed it was a worthwhile enterprise. Sheila Smith was an exceptionally fine project officer who consistently worked to push reluctant bureaucratic wheels, support our efforts, and contribute to its intellectual worth. John Cohen of HIID helped clarify many conceptual issues and prepared a major review of the literature on capacity building. Other HIID colleagues--Richard Goldman, Lester Gordon, Clive Gray, and Richard Pagett--helped define the scope of the work and provided us with valuable insights on earlier drafts of the work. Judith Tendler of MIT also provided intellectual guidance.

Six dedicated and well-informed people carried out the field studies for the project. Guillermo Pacheco Revilla of Bolivia, André Nzapayeke of the Central African Republic, Ghulam Adamu of Ghana, Abderrahmane Haouach of Morocco, Nimal Sanderatne of Sri Lanka, and Rwekaza Mukandala of Tanzania became friends and valued colleagues as we worked together in workshops and in their countries to find answers to difficult questions. They demonstrated to us how much capacity already exists in the countries we studied. We wish to thank them for their insightful reports and for the teamwork and dedication they demonstrated. We hope they will find our comparative findings of interest.

The resident staffs of the UNDP and the World Bank assisted us by arranging access for interviews, facilitating communication between Cambridge and the researchers, and helping to set up interesting and informative field visits. We appreciate their support and their willingness to share their experience and insights. In addition, we are especially grateful to the many personnel in public sector and other organizations who talked with us and provided information and valuable perspectives on the working of their organizations. Without their participation, this study would not have been possible.

We would have been months longer producing this study had it not been for the fine assistance of Lisa Garbus, who used her exceptional editorial skills to clarify and improve the various parts of the project. She also made major contributions to a workshop in which we presented our preliminary results. Dale Johnson was efficient and innovative in turning prose into a series of tables and figures that summarize many of the project's findings. Ellen Pigott contributed her strong organizational skills in coordinating two workshops and extensive overseas travel. Dan Siemann, Sarah Dix, and Sarah Newberry also provided important skills that enabled us to complete this study. We are grateful to all of them.


PART I

COMPARATIVE ANALYSIS OF PUBLIC SECTOR CAPACITY


CHAPTER 1

The Role of the State in Development: Quality, Not Quantity


    "The truth is," writes Jose Guilherme Merquior of his native Brazil, "that we have simultaneously too much state and too little state. See footnote 9 This epigram effectively sums up a developing consensus about what has gone awry in developing countries. In recent periods, many development specialists have pointed to the economic intrusiveness of governments that were encouraged by development initiatives of the 1950s and 1960s. At the same time, many have argued that the problem is less one of the extent of government intervention in the economy than it is of the nature and quality of state action. Too many states, they argued, have taken on major responsibilities for development at the same time that they have had too little capacity to promote it.

What Role for the State?

    Beginning in the mid-1970s, development specialists became more aware of accumulating evidence that many countries were pursuing misguided economic policies and mismanaging public institutions and public functions. Within the field of development economics, the focus on "market failures" gradually gave way to greater concern with "government failures." Scholars and practitioners alike became increasingly convinced that many public actions distorted markets, encouraged extensive rent-seeking, and created disincentives for productive use of private and public resources. See footnote 10 The cause of poor economic performance, stagnation, and decline was increasingly explained in terms of the policies and actions of states that had "grown too large, intervened in economic interactions too energetically, and mismanaged policy making and implementation too regularly." See footnote 11

    In response to an analysis that singled out the state as the culprit in the poor performance of many developing countries, policy prescriptions of the 1980s generally emphasized the need to reduce radically the extent of government intervention in the economy. Attention focused on how to get the state to cease distorting markets, disengage from microeconomic interventions, and reform its macroeconomic management style. Deregulation, liberalization of trade, and privatization of state enterprises became the centerpieces of a decade of development policy advice and use of conditionality by international financial institutions and donor agencies. The notion of a minimalist role for the state, largely defined in terms of what it should not do, characterized much of this

decade.

    In attempting to implement this revisionist view, however, practitioners confronted the dilemma of state capacity. The "orthodox paradox" identified by Miles Kahler called attention to the problematic need for a relatively effective state apparatus to carry out the reforms required by the minimalist solution to the role of the state. See footnote 12 More generally, the experience of the 1980s suggested that while state minimalism responded to real problems of overcentralized decision making, overzealous regulation, inappropriate incentives for effective management of public sector enterprises, and distorted markets, it failed to give enough attention to the need for capable states if markets are to operate effectively and efficiently. The orthodox paradox forced considerable rethinking of the "virtues of the market and the vices of the state." See footnote 13

    Within the debate about the appropriate role of the state in development, there was a deepening sense that the reaction against the developmental state had been "a reaction too far." See footnote 14 Research on several development success stories in East Asia underscored that states could be as central to explaining success as they could be to explaining failure. See footnote 15 Others looked to the experience of Western market economies to suggest that the notion of a minimalist state was a misreading of the historical record. John Ruggie indicated that this history emphasized the development of "embedded liberalism," in which the market was modified by domestic policies protecting citizens from its harshest expressions. See footnote 16 The "new institutional economics" indicated that institutions created or enforced by public authority--such as rights of private accumulation and the sanctity of contracts--were essential to the development of capitalist economies in the West. See footnote 17

    By the early 1990s, it is safe to say that those concerned about economic development were taking a more positive view of the state, emphasizing what it should do as well as what it should not do to promote economic development. Paul Streeten argued that a "free, competitive market is a public good....Like other public goods, it calls for public or collective action to maintain it." See footnote 18 This public action included such basic contributions as

establishing and maintaining law and order, protecting the sanctity of contracts and property rights, providing effective macroeconomic policies, regulating monopolies and trade, investing in social and physical infrastructure, providing information, and contributing to research and development. Concern about encouraging the development of market-based economies eventually strengthened interest in the notion of effective and capable states that could provide the bases for such markets. See footnote 19

    The positive contribution of the state to economic and social development was also underscored by renewed concern for human development. With the publication of the first Human Development Report by the United Nations Development Programme (UNDP) in 1990, and with mounting pressure from developing countries and non-governmental organizations (NGOs) to attend to the social consequences of economic crisis and structural adjustment measures, the notion of a social agenda for the state gathered increased attention. This agenda focused renewed attention on the existence of widespread poverty and deprivation in many parts of the world, but particularly in Africa, and the growing gaps between the wealthy north and the poverty-stricken south. It emphasized that levels and degrees of poverty could not be reduced unless governments committed extensive investment to human resource development, particularly in health and education. See footnote 20 Adding to renewed concern for the social agenda, researchers provided evidence that investments in human resource development through education added significantly to economic growth over time. See footnote 21

    While discussions of the important role for the state in human development encouraged debate about how such services were to be delivered--are they to be carried out primarily by national or local governments, centralized or decentralized systems, the private sector or the public sector?--there was widespread agreement that ultimately, governments are responsible for ensuring effective human resource development in their countries. In order to carry out this responsibility, however, states must be able to identify problems, formulate policies, and implement and sustain useful social programs. Effective response to the social agenda and the need for human development required capable states just as market-based economic development did.

    New concern for sustainable development also emphasized the positive role that states

must play in economic and social development. Sustainable development was defined as economic growth that does not exhaust a country's natural resources, cause irreparable harm to the environment for future generations, or encourage excessive levels of consumption nationally or internationally. See footnote 22 It is development that emphasizes equity and constraint within countries and among countries. According to recent studies, avoiding unsustainable development, or the tragedy of the commons writ large, requires state action to protect the environment, regulate markets, and promote social policies that alleviate poverty. Those who focused on the need to ensure sustainable development provided evidence that, just as effective markets and social development require effective states, so do the actions necessary to ensure sustainability.

    Such insights encouraged a growing consensus among those concerned about development. If the dominant view during the 1950s and 1960s was that the developmental state should play a central role as the engine of national development, and during the late 1970s and 1980s that the minimal state should exit as much as possible from economic interactions, the early 1990s confirmed that the capable state would contribute most effectively to the achievement of national goals for economic and social development. The orientation toward the state became less negative--although there continued to be healthy concern about controlling the capacity of government to misuse and abuse economic and political power--and more directed at the positive contributions that states can make to market economies, human development, and sustainable development.

    While the capable state view arose in response to the excesses of those who championed the minimal state, it is essential to distinguish clearly between the more recent approach and the earlier view of the developmental state as the engine of development. Lessons about the importance of the market and private sector activities in both the economic and political realms for economic growth and improvement in the well-being of a country's citizens have been learned well and are central tenets of current approaches to development. States acting alone, without regard for or in denial of private activity and the demands of civic society, as too often happened in prior periods, cannot be presumed to be effective. Indeed, identifying appropriate roles for the state and fashioning constructive partnerships between the public and the private sectors are major challenges for contemporary states and societies.

    Discussions of these challenges have advanced to the point that there is general agreement on a set of irreducible functions that capable states must perform. These functions

are those that states are uniquely able to perform, such as maintaining law and order, establishing a system of laws and "rules of the game" for economic and social interactions, setting macroeconomic policy, and conducting foreign policy. Specifying these concrete functions is accompanied by widespread agreement that capable states must be able to identify problems that require public action and formulate and implement effective policies to respond to them.

    Beyond these general points of agreement, there continues to be considerable debate about what other functions or tasks states are required to perform in order for economic and social development to occur. Some efforts to specify such conditions have been stated as universal prescriptions for what states ought to do and what markets ought to do, based on models of their respective comparative advantages. Increasingly, however, more situationally specific definitions of the appropriate role of the state have been adopted, with the extent of the responsibilities assumed by the state determined by historical experience, cultural expectations, and the relative strengths and weaknesses of governments and markets. We accept this second perspective on the appropriate role of the state in development; evidence that successful states have not conformed to a single model to define their role and extensive differences among countries in terms of what states and markets can do and are expected to do by their citizens persuades us that universal prescriptions are of very limited value and relevance. There is a wide range of functions that can be appropriately carried out by the state; the relevant question is the extent to which specific states are able to carry out these functions, or any particular subset of them, effectively.

New Challenges for Capable States

    The debate about the role of the state in development has been a useful one. By the early 1990s there was more agreement that while the state was often part of the problem of development, it must also be part of the solution. At the same time, the development community became increasingly aware that the contributions of states to economic and social development would be challenged by a new context of international and domestic conditions. In economic development, national policies to promote markets as the principal agents of growth had gone hand-in-hand with widespread adoption of export- and trade-oriented development strategies. These changes were accompanied by trends toward the globalization of trade relationships, investment patterns, information networks, and even labor markets. Each of these factors heightened the importance not only of wise economic management on the part of governments, but also of policy making systems that could respond flexibly to rapidly changing international conditions and provide the strategic capacity to enhance

country competitiveness in a new, more demanding global environment. See footnote 23

    The changed context for state action also encompassed the renewed vigor of civic society in large numbers of countries and the strengthening of international and domestic networks of non-governmental organizations able to mobilize citizens and place demands on government. See footnote 24 Concern for governance--public sector behavior identified with transparent, equitable, and responsive actions--heightened pressures on government to perform in more effective ways. See footnote 25 Public protest and demands for greater democracy in decision making and greater responsiveness to public needs occurred throughout Latin America, Africa, Eastern Europe, Asia, and elsewhere. Regimes were challenged by the expansion of opposition movements, parties, community level movements, and voluntary associations, all demanding that government allow increased debate and participation in national decision making, provide more effectively for social welfare, and pursue policies that are more equitable and less subject to corruption and political favoritism. See footnote 26

    Responding to the new vitality of civic society was complicated by a third factor that has affected the context for state action. In many countries, especially in Africa and Latin America, the resources available to states for development purposes diminished rapidly in the 1980s. Mismanagement of national development strategies and programs contributed to public sector deficits and much expanded international debt; poor commodity prices, high international interest rates, and worldwide recession combined with the consequences of previous development policies to plunge many governments into deep fiscal crisis. Austerity budgets were a universal response to these conditions. Where governments did not willingly address the need to cut public spending, international financial institutions used conditionality to pressure them to do so. In the 1990s, a continuation of low commodity prices and high levels of indebtedness maintained pressure on governments to constrain spending. See footnote 27 At the same time, the amount of foreign assistance declined internationally, while allocations shifted from Africa to other regions of the world. See footnote 28 The dilemma faced by many governments was the clear imperative to improve policy performance and respond to heightened demands from civic society at the same time they continued to operate under tightly controlled austerity budgets.


A Long, Difficult, and Ongoing Process...

    This altered context for state action places considerable pressure on governments to become more agile in decision making, more responsive to civic society in meeting basic economic and social needs, and better at doing more with less. Governments that perform well in responding to these pressures appear to share several characteristics. They are governments that are authoritative in the sense that they concentrate sufficient decision making power to respond effectively to public issues. They are also intelligent, in the sense that they are open to and encourage the use of technical information and analysis in decision making and problem solving. See footnote 29 As indicated above, governments able to pursue development in this new context respond flexibly to rapidly changing domestic and international conditions and demands so that national goals are protected and achieved. See footnote 30 Many are also participatory in the sense that they encourage debate, discussion, and participation in decision making. They are also accountable in the sense that those who are responsible for making and implementing decisions and those who manage public sector organizations are held responsible for their actions and citizens have avenues to redress abuses of power. They are governments that have been able to go beyond concern with specific problems and their solution to develop systems, processes, and cultures that help ensure wise public choices and responsible use of resources.

    If these appear to be characteristics of governments that perform reasonably well in a new and demanding context for economic and social development, the question remains how such characteristics are created and sustained. In our view, they are the consequences of a long, difficult, and on-going process of capacity building. This process involves continuous development and effective utilization of human resources, constructive management of task-oriented organizations, institutional contexts that facilitate problem solving, and economic, political, and social conditions that help sustain such capacity. There are no easy solutions to building public sectors that are capable of effective performance over a broad range of development tasks and there are certainly no quick fixes for those that perform poorly. Nevertheless, capacity for effective performance of development tasks can be built and sustained. A framework that helps identify elements of effective performance and that facilitates identification of capacity gaps is a first step in considering how to intervene to build capacity. Such a framework is presented in the next chapter.


CHAPTER 2

Defining Capacity and a Framework for Analysis

    Although development specialists have placed renewed emphasis on capable states, efforts to improve public sector performance in developing countries are not new. They figure among the first initiatives of developing countries and foreign assistance in the period after World War II when development became a specific concern and field of endeavor. In the following decades, continued efforts and significant shifts in approaches to improving public sector performance occurred. Alternative approaches did not always represent wholly unified schools of thought nor were they mutually exclusive, but they did represent shifts in broad trends of thinking about institutions and development over time. More importantly, they were responses to changes in the real situations confronting countries as well as to recognition of the incomplete success of earlier approaches. Changing definitions and orientations signalled an ongoing effort to define intervention strategies that would achieve the elusive goal of improving government performance. See footnote 31

Defining and Measuring Capacity

    In a useful review of the literature, Peter Morgan identified several distinct phases of concern with building government capacity. See footnote 32 In the 1950s and early 1960s, when many countries were emerging from colonial status to independence, efforts focused on institution building, or "equipping developing countries with the basic inventory of public sector institutions...to manage a program of public investment." See footnote 33 By the later 1960s and early 1970s, however, attention had turned to the notion of institutional strengthening, focusing more on improving the operation of existing organizations and the training and performance of public sector personnel. Then, attention shifted to development management, which concentrated attention on the capacity to manage development programs, particularly those focused on the economic and social conditions of the poor majority, which often required considerable organizational initiative and interinstitutional coordination. Institutional development, a concept that was broadened to include private sector and NGO activities and that focused more on developing institutions with effective processes for managing change, was on the agenda during much of the 1980s.

    These approaches to building capacity in developing countries, and the technical

assistance projects they encouraged, have been subjected to considerable criticism over the years. See footnote 34 They have been held to account for focusing development assistance at a narrow project level rather than encouraging attention to broader issues of policy definition and development strategies. Application of these approaches through technical assistance tended to result in narrowly-defined projects that were pursued with little regard to the social, political, economic, and organizational context in which development activities were carried out. In addition, non-governmental organizations and the private sector as co-participants with government in development activities were often marginalized by the approaches of the past. Overall, many efforts to strengthen capacity focused too much on "getting the job done" rather than on building sustained ability to carry out development-related functions. See footnote 35

    As a result of such criticisms, an explicit concern with capacity building, which Morgan views as the successor to earlier institutional capacity approaches, evolved. See footnote 36 The concept is used in widely differing ways, however. Morgan, for example, refers to capacity building as "the ability of individuals, groups, institutions and organizations to identify and solve development problems over time." See footnote 37 Capacity building in this perspective implies the development of coordinated and interdependent activities of the public sector, the market, and civic organizations and calls attention to a broad array of actions and processes required for sustained development.

    This broad definition has the advantage of bringing into consideration the elements whose omission in past approaches and practice are blamed for the failure of efforts to improve performance. Its very breadth is its weakness, however. By suggesting that capacity building is almost synonymous with development itself, it makes operationalizing the concept in a meaningful way almost impossible.

    Others have preferred to define capacity building much more narrowly in terms of

developing and sustaining the specific skills required by individuals in public sector positions. See footnote 38 This approach avoids the amorphous nature of the definition put forward by Morgan and is useful for planning very focused interventions in the name of capacity building. However, it does not allow for much consideration of institutional or contextual factors that affect the contributions that skilled human resources can make to development activities. See footnote 39 Increasingly, these contextual factors are seen as critical. In assessing the contributions of technical assistance to capacity building in Africa, for example, Eliott Berg calls attention to the importance of a facilitating environment in explaining public sector capacity.

         The past 30 years, for all their disappointments, have witnessed extraordinarily dense institutional growth in Sub-Saharan Africa, and growth in capacity to manage: central banks are now locally run, as are new school systems, agricultural research stations, power plants, airlines, armies, and universities. . . . That many of these institutions do not work very well is more a function of their recent creation, their rapid growth, and--most important perhaps--the lack of an adequate enabling environment in the public sector than of any intrinsic failure of technical cooperation. See footnote 40

    In this study, we identify capacity as the ability to perform appropriate tasks effectively, efficiently, and sustainably. This definition lies between the broadest view that equates capacity with development and the narrowest perspective that equates capacity with the training of human resources. It implies that capacity is not a passive state--the extent of human resource development, for example--but part of an active process. Moreover,

organizations exist for particular purposes and capacity relates to what is required for any particular organization to achieve its purposes effectively, efficiently, and sustainably. At the same time, this definition ensures that both the human resource requirements for effective and efficient action and the broader context that affects such action will be considered.

    Being able to perform appropriate tasks raises the issue of what constitutes an appropriate task. As indicated in Chapter 1, beyond a basic set of irreducible functions--establishing law and order and setting the rules of the game for economic and political interaction, for example--we do not begin with a universal list of what such tasks are. Appropriate tasks are those defined by necessity, history, or situation in specific contexts. Thus, it may be considered appropriate for public sector organizations to provide contraceptive services in one country but not in another. Other tasks, such as the regulation of traffic or the administration of criminal justice, are universally recognized as appropriate tasks for government. This means that in operationalizing the concept for research, the task for which capacity is needed must be specified and assessed for its appropriateness within a given context. For example, an assessment of social sector capacity would require a specification of tasks such as the delivery of maternal-child health services to local communities or the instruction of primary school children in basic literacy and numeracy. In most countries, such activities are considered appropriate tasks for public sector organizations. Such tasks can be identified by these organizations or be assigned to them through a broader process of policy formulation and implementation.

    Capacity requires that tasks be performed effectively, efficiently, and sustainably also. This means that the concept must be measured or assessed in terms of some kind of outcome. Measuring effectiveness, efficiency, and sustainability must be approached with considerable caution, however, because many factors influence outcomes beyond the capacity to perform a given task. See footnote 41 Many of these factors--a recession, a war or natural disaster, a change in political leadership--are beyond the control of particular organizations. Thus, indicators of capacity must be sought primarily in assessments of the quality of organizational performance and constraints on it rather than in assessments of the ultimate impact of the activities undertaken--improved economic and social indicators, for example. Operationally, in measuring capacity, we ask questions such as: was the task effectively identified? were appropriate actions put in place to achieve the task? were skilled human resources assigned to accomplish the task? were resources used efficiently to accomplish the task? was the ability to accomplish the task sustained over time? These are difficult questions to answer in most cases, but they are infinitely more tractable to deal with than questions such as whether GNP

grew or infant mortality declined in response to planned interventions.

    Tasks can be defined very narrowly and involve the actions of only one organization or organizational unit. Many public sector tasks that are important to development, however, require the coordinated action of several organizations. In this case, we refer to networks of organizations that are involved in performing particular tasks. The components of networks are organizations and the interactions among them. In practice, however, the main unit of analysis is usually the organization or unit situated within the network, viewed with an eye to both its own capacity and the coordination of its activities with those of other organizations with which it must interact. Networks can be composed of only public sector organizations or a mixture of public and private. Thus, although our use of the term focuses primarily on public sector capacity, it is framed explicitly to include the interaction of public and private organizations. See footnote 42

    In turn, capacity building refers to improvements in the ability of public sector organizations, either singly or in cooperation with other organizations, to perform appropriate tasks. This requires improvements in the ability to identify problems requiring public action, assess options for responding to these problems, formulate policies that constructively address these problems, implement activities required by these policies, and sustain such activities over sufficient time to have an impact on conditions for economic and social development. Building capacity does not mean that, for any given task, there is no capacity in existence; the term equally has the connotation of "building up," strengthening, and developing.    

    We assume that capacity building implies the development of local capacity in developing countries. Whereas maximizing local capacity, like self-reliance more generally, is not the only goal and may in some instances conflict with the pursuit of other goals, See footnote 43 building local capacity is important for the sustainability of development programs, as well as for enabling developing countries to carry out programs in line with their own priorities. A major criticism of much prior investment in human resource development and institution building is that whatever capacity was built was often lost or eroded and that, in fact, some

donor methods of delivering technical assistance actually undermined sustainability. See footnote 44 Therefore, intervention strategies designed to build local capacity must take sustainability as a prime consideration.

A Framework for Analysis

    We consider five dimensions, and correspondingly, five levels of analysis, that affect capacity and capacity building interventions as we have defined them. They incorporate a panorama of factors that influence the ability of specific organizations to achieve specified goals, without isolating them from consideration of the human resources they have available to them or the larger environments in which they are expected to achieve results. The five dimensions are described below and are represented schematically in Figure 2.1.

    As indicated, the central unit of analysis in the framework is an organization charged with performing all or part of a task. But, as we have argued, organizations do not exist in a vacuum. Rather, they are embedded in complex environments that affect their ability to carry out tasks effectively and efficiently. The first two levels of analysis in the framework assess the range of factors in these complex environments that affect organizational performance.

The Action Environment

         At the most general level of analysis is the broad action environment. This refers to the economic, social, and political milieux in which organizations attempt to carry out their activities and the extent to which conditions in the action environment facilitate or constrain performance.

    Within this dimension, a broad set of factors must be considered in terms of their impact on the ability to carry out particular tasks at the organizational level. In terms of broad economic factors, the level and growth rate of GNP, conditions in international markets for commodities and capital, conditions in the labor market, the level of development of the private sector, and the nature and extent of development assistance impinge on virtually all activities carried out by government. Politically, task performance is affected by factors such as the degree of leadership support it has, the extent to which civic society is mobilized politically, the degree to which the government more generally enjoys widespread legitimacy or faces significant threats to its stability, and the nature and development of political institutions such as political parties, elections, representative

institutions, and interest groups. Social factors such as the overall level of human resource development in the country, the degree of tolerance or tension among social groups, the extent of social mobilization and needs, the development of non-governmental organizations, and the degree of participation in economic, social, and political life at national, regional, and local levels are also important.

The Public Sector Institutional Context

         A second dimension of capacity is the institutional environment within the public sector that facilitates or constrains organizational activities and affects their performance.

    This dimension of capacity includes the laws and regulations affecting the civil service and the operation of government, such as hiring, promotion, and remuneration policies, general operating procedures, and standards of performance. It includes the financial and budgetary support that allows organizations to carry out particular tasks. It also includes the policies in effect that constrain or hinder the achievement of particular development tasks. For example, in many countries, stabilization or structural adjustment measures will have a significant impact on the ability to deliver agricultural extension services, even though the policies themselves have nothing to do with extension. The public sector institutional context also includes laws and regulations defining responsibilities and power relationships among organizations as well as the informal power relationships that often mean that some ministries or agencies are more able to acquire resources than others or to influence policy more effectively than others.

The Task Network

    In addition to these two contextual dimensions of performance, networks of organizations involved in accomplishing tasks need to be identified and assessed. This is the third level of analysis.

         A third dimension of capacity relates to the coordinated activities of several organizations that are required to accomplish particular tasks--the task network. The interactions of organizations within this network can facilitate or constrain organizational performance.

    Within many task networks there are organizations that are more central to the accomplishment of a given task than others or that are more effective in carrying it out than others. We consider these to be the primary organizations for performing the task.

Secondary organizations may have a less central role in accomplishing the task but are nevertheless essential to it. For example, the budget office of the ministry of finance or the national statistical institute are not central to the delivery of maternal-child health care, but clearly make important contributions to the capacity of maternal-child health organizations to accomplish their tasks. In addition, there are often supporting organizations that provide important services or support that enables a task to be performed, such as institutes that provide specialized educational or training services or those that provide information and data analysis, communications, or computer services. How these networks of organizations function and the nature of formal and informal interactions among them are important aspects of organizational performance for particular tasks. Organizations within a single task network can be public or private and can represent diverse levels of government, from central to provincial to local. In addition, any particular organization can belong to several task networks.

Organizations

    The fourth and fifth dimensions of capacity are the organization and the human resource base the organization has to work with. These two levels of analysis are closely intertwined.

    A fourth dimension of capacity focuses on organizational structures, processes, resources, and management styles that affect how individual talents and skills are used to accomplish particular tasks.

    This is an important dimension because organizations establish goals, structure work, define authority relations, and provide incentives and disincentives that shape the behavior of those who work within them. They define and encourage management practices that increase or decrease the productivity of officials and component units. They also provide the environment within which officials are able or unable to develop their skills and careers. Organizations provide the physical resources and conditions that enable or deter people from carrying out their assigned duties, including mundane but nevertheless essential inputs such as desks, vehicles, pencils, and telephones. Organizations encompass both formal and informal forms of communications and behavior that facilitate or obstruct effective action by individuals and entire organizations. Thus, it is important to know how organizations define their goals, how they are structured, what routine processes define the flow of work, how incentive systems operate, what management styles are adopted, what physical resources are available to them, and how communication flows operate within the organization. In considering this dimension of capacity, informal structures, processes, and management cultures are often as important--or even more important--as formal ones.


Human Resources

         A fifth dimension of capacity relates to the training, recruitment, utilization, and retention of managerial, professional, and technical talent that contribute to task performance at the organizational level.

    This dimension focuses in part on the training and recruitment of skilled personnel to fill middle and upper level positions within public sector organizations. Training means higher and specialized professional education required for filling particular roles within organizations as well as in-service training activities required for the performance of role-specific activities. Recruitment refers to the process of locating and attracting skilled individuals to fill critical roles and positions in public sector organizations. This dimension of capacity thus directs attention to how people are educated and attracted to public sector careers and the skills that enable them to carry out technical, professional, and managerial roles effectively. In addition, this dimension of capacity focuses attention on how talents are used within organizations--how well positions and responsibilities are matched with skills, for example--and the ways in which professionals are encouraged to develop meaningful careers in the organization.

Applying the Framework

    This framework is designed to be a tool for decision makers and managers. It can be used to assess constraints, capacity gaps, and opportunities and also as the basis for developing intervention strategies to build more effective capacity to achieve development tasks. Capacity building initiatives can be focused on any level--contextual, institutional, interorganizational, organizational, or individual--and indeed, there is considerable experience with such initiatives at each of these levels. The application of the framework in six case studies will enable us to identify the factors that appear to be most critical for encouraging effective and efficient action at each level of analysis and among the five dimensions. This will enable us to make recommendations about intervention strategies that are both feasible and effective in promoting overall capacity to address problems of economic and social development.


CHAPTER 3

Pursuing Comparative Research: Focus and Process

    In addition to developing a framework that can serve as a useful instrument in assessing capacity and capacity building, we used the framework to guide case study research in six countries. Our case studies provide a valuable perspective from which to assess the dynamics of the interaction among various dimensions of capacity. By looking at the actual performance of development tasks and functioning of organizations, the relative importance of the factors that we have identified can be understood. The results of the case study research form the basis of an elaboration of lessons and guidelines for capacity building. In this chapter, we explain the focus of the case study research and describe how it was conducted.

    Research was carried out in Bolivia, Central African Republic, Ghana, Morocco, Sri Lanka, and Tanzania. The country cases were selected by the UNDP and the World Bank at the beginning of the study. This set of countries offered substantial diversity in terms of region, level of development, and political and social conditions. This diversity contributes to a broad comparative view of capacity building, as well as demonstrating the usefulness of the framework across a wide range of countries and capacity settings.

    The case study research was conducted in each country between November 1993 and June 1994 by a national of that country. All of the researchers followed guidelines drawn from the conceptual framework. Thus, unlike many multi-country studies where the result is a series of highly differentiated analyses of the cases, this study was designed to produce sufficient commonality in approach to make cross-national comparison workable in practice. At the same time, the depth of understanding and knowledge of each country that the national researchers possessed was an important contribution to the quality of the individual case studies.

Focusing the Research

    In order to provide the focus necessary for the case studies to be meaningful and to ensure comparability across cases, we defined specific functions to be studied. See footnote 45 We chose two broad types of functions: macroeconomic management and the delivery of services. We further specified the particular tasks to be studied: within the area of macroeconomic management, formulation of the budget was selected for study; for service delivery, the

provision of either maternal-child health care or agricultural extension would be the focal task. Thus, each country case includes study of the performance of two tasks.

    We selected each of these from a wide variety of potential functions and specific tasks for several specific reasons. A major lesson drawn from the severe deterioration of the economy in most developing countries during the 1980s is that the quality of macroeconomic management is critical for economic performance. Indeed, this area was the initial target of the capacity building efforts of the World Bank in connection with its structural adjustment programs, and it continues to be of prime concern to both governments and donor agencies. Managing the macroeconomy--from analyzing the economic situation to assessing options to making and implementing policy--is crucial for both enabling the government and the public sector to operate effectively and efficiently and for the creation of an environment that supports, encourages, and sustains private economic activity. Thus, even when the state's role in the economy is defined in very narrow terms, creating an enabling environment for economic activity through management of the macroeconomy is a fundamental requirement. The inherent centrality of capacity to manage the economy effectively, the concern about the weakness or lack of such capacity, and the prominence it has had in capacity building efforts are the reasons for choosing it as one of two functions in the current study.

    Macroeconomic management alone does not meet a country's economic and social development needs. Many other activities in support of these objectives require that various kinds of services be delivered to particular groups in the population. Human resource development, which is a clear priority on current policy agendas throughout the world, is an example. Providing services to the population is essential to human resource development and is a task that is quite different from managing the macroeconomy. It involves both planning and policy making activities at the center, as well as action on the ground, dealing directly with the public. Recent work on these types of activities emphasizes the importance of communication with and participation by clients and other stakeholders in determining the ultimate effectiveness or ineffectiveness of such activities. See footnote 46 Furthermore, whereas government is responsible for ensuring that necessary services are provided, it does not necessarily deliver them entirely itself, but may interact with private organizations in doing so. Studying service delivery, then, offers the opportunity to get at capacities required to coordinate central policy and on-site implementation, to deal with clients, and to interact with the private sector and NGOs.

    Whereas these two broad functions cannot represent all the types of public actions

important for development nor all the kinds of capacities that are needed, they do provide a view of two very different kinds of activities and the possibility of a comparative perspective on those. See footnote 47 We consider the different challenges they present for identifying problems, formulating and implementing policies, and sustaining effective programs.

    For the purpose of the study, specific tasks within these general areas were selected based on feasibility of research and expected fruitfulness of the application of the framework to them. The task needed to be identified and defined in a sufficiently clear and bounded way to make research manageable. The promise of meaningful lessons required that the task involve substantial human resource capacity and that it depend on interactions between several different organizations or organizational units.

    Formulation of the budget clearly meets these criteria and meets them more fully than do some other macroeconomic management tasks, some of which can be performed--even if not ideally--by a few technocrats with little institutional depth (such as analyzing the economic options and making broad fiscal, monetary, and exchange rate policy) and others whose boundaries are difficult to define specifically enough to provide a clear focus for study (such as monitoring economic performance). Formulating the budget requires regular coordination of many organizational units, typically including the offices of the finance ministry that have core responsibility for the budget, units of planning ministries and the central bank, the functional ministries, and statistical and other technical support agencies. It requires trained economists, accountants, budget specialists, and effective managers, along with experts in information systems and other technical fields. It is a defined process which has a specific output and whose performance can be evaluated, although it is by no means a narrowly circumscribed task in its scope and importance for the public sector and for the economy as a whole.

    Two service delivery tasks--maternal-child health care and agricultural extension--were selected for study, with each researcher focusing on one. The decision to include two tasks reflected researchers' assessments of access and potential for results in different countries. It is based on the premise that, as service delivery tasks, they share basic characteristics that make them inherently comparable. See footnote 48


    Delivery of services such as maternal-child health care or agricultural extension is a clearly identifiable task. It also requires trained personnel and involves the interaction of a range of institutional units, from headquarters offices that make policy to research and training institutes to field offices. Many times it also involves sharing responsibility among different levels of government and sometimes with private actors, such as NGOs, private universities, or commercial enterprises. Given the need to respond to realities in different parts of the country and to the demands of clients, it also clearly requires a different type of interaction and different kinds of capacities than the budget task.

    It must be underlined that these tasks--budget formulation and delivery of either agricultural extension or maternal-child health care services--were not studied for their own sake. While we have been careful to choose tasks that are inherently important, their purpose here is as vehicles for studying questions of capacity and capacity building more generally.

Assessing Quality

    Because capacity is to be assessed in light of how well a task is performed, some basic judgments have to be made about the quality of that performance. Some general criteria can be applied to most tasks. These include such considerations as quality of output, adequacy and appropriateness of policy guidance, coverage, and cost. Each task has its own characteristics, however, and how these are judged must be specially tailored to each one. In addition, there are criteria that relate to some tasks, but not to others.

    To assess performance on budget formulation, researchers considered several questions: Is the budget produced in a timely way? Is it a "real" budget that forms the basis of government spending and reflects actual resources? Is the budget based on discussion, assessment, and prioritization of needs and programs? Does the budget formulation process link the budget with the government's fiscal policy? Are the central budget authorities able to provide guidance and enforce decisions about allocation on other parts of the government? How effectively do other parts of government provide data and contribute to the performance of the overall budget process?

    For the delivery of agricultural extension, researchers used the following questions to judge the quality of task performance: To what extent are services being delivered to farmers? Is the technical information that is provided appropriate and useful to farmers? Is there a link between research and extension? Are the needs and demands of farmers being taken into account in delivering agricultural extension services? Is the provision of

agricultural extension guided by an appropriate and adequate policy framework?

    Assessing the effectiveness of maternal-child health care provision involved a similar set of questions. To what extent are maternal-child health services being delivered? Is the health care technology appropriate? Are the needs of the community being taken into account in the design and delivery of services? Are maternal-child health care services guided by an appropriate and adequate policy framework?

    Answering these questions allows for an assessment of strengths and weaknesses in performance. By looking at these strengths and weaknesses through the various lenses of the framework, capacity and capacity building issues can be better understood.

The Framework in the Field


    The study of each task began with mapping the organizations involved in performing it. The organizational map is the picture of the task network: the organizations with primary responsibility for carrying out the task, those that are less central but still play a role, and those that provide various kinds of support to the performance of the task. The description of interactions between these organizations is important, as is analysis of whether the interactions among the institutions are effective or are an area of capacity weakness. Questions of relationships and coordination among organizations are important here. Starting with a map of the organizations in the task network places the performance of the task at the center of the research design, just as it is central to the conceptual framework. All the dimensions of capacity are viewed from the perspective of the performance of the task.

    The second step in the case study research involved looking outward from the task network. What contextual factors play a significant role regarding the capacity to perform these tasks, and how do they affect how--and how well--the tasks are performed? At the level just above the task network, the impact of the institutions of the public sector was considered. Looking further, the analysis also assessed the effects of factors in the broader economic, political, and social environment.
    
    The third step, looking back from the map of the task network into the organizations themselves, required selecting particular organizations for study. A minimum of two for each task were selected from the organizational map. In designing the study, we specified that one be a primary organization, while the second could be another primary organization or one playing a secondary or supporting role. To be selected for study, an organization had to rely on skilled managerial, professional, and technical personnel. It also had to work with other organizations; there had to be significant interactions between the two organizations

chosen. For the service provision task, there was the additional criterion that one organization be a headquarters unit and the second an on-site unit actually involved in delivering the service to the public.

    Once the organizations were selected, research focused on the organization and its human resources--the two final levels of analysis. These are closely interwoven, with the human resources a principal component of an organization's capacity, but only as brought together, structured, and utilized by the organization. A profile of the human resource dimension focused on the recruitment, training, and retention of skilled managerial, professional, and technical personnel. What impact does the organization's human resource profile have on its ability to perform its assigned tasks and reach its goals? What are the human resource strengths and weaknesses? What factors, at what levels of analysis, affect those strengths and weaknesses?

    Whereas the human resource profile of an organization is very important, whether those skilled personnel are effectively utilized is frequently the key to an organization's level of capacity to perform its assigned tasks and reach its goals. This issue focused research on the organizational level, where such factors as the structure of work and authority relations, incentive systems, formal and informal behavioral norms, management practices, and leadership influence whether skilled personnel are willing or able to contribute fully to performing the task.

    In addition, there are other capacity issues at the organizational level that go beyond the utilization of human resources that we needed to find out about. Does the organization have adequate financial and physical resources to function effectively? Is it organized in such a way to use those resources effectively and efficiently to reach its goals? Is it able to communicate with other organizations and to interact well with them? Is it able to communicate with clients and other stakeholders and to use that communication constructively?

    How these factors at the organizational level affect the capacity to perform each task effectively, either directly or through their impact on human resources, was a key concern of the research. In some instances, answering why they operate the way they do, or do not operate as they should, involves the impact of factors at other levels of the framework. Therefore, researchers returned to look at the institutional context and the action environment in light of their influence on particular organizations and human resources.

    We used a series of methodologies in conducting the case study research. Interviewing key informants was the primary means of collecting data. The interviews were

relatively focused, in-depth discussions aimed at eliciting specific information as well as perceptions and interpretations of the situation. The informants included high-level officials with responsibility for the organization being studied; their counterparts in organizations with which it interacts; managerial, professional, and technical personnel; persons in charge of personnel planning, recruitment, and training; clients and other stakeholders; and officials of donor agencies that had been involved with technical assistance to the organization studied. The interviews were supplemented with documentary research, where such information was available. The technique of organizational mapping, the third methodology used, was based on data collected from the interviews and documentary research.


CHAPTER 4

Assessing Performance and Capacity Gaps: Six Case Studies Compared

    The analytic framework presented in Chapter 2 describes a broad set of factors that affect organizational capacity. These range across five levels of analysis, from the characteristics of individual public officials to those of the economic, political, and social context within which these individuals carry out their activities. Each of the five dimensions of capacity is important in explaining performance. Nevertheless, the framework presents a daunting array of possibilities for action to support capacity development. Under most conditions, it is not feasible for capacity building interventions to attack constraints at all levels. Given limited resources, a series of questions must be asked:

*    What should be the priorities for capacity building action and investment of time, resources, and energy?

*    Where should specific capacity building interventions focus?

*    Under what conditions will focused interventions at particular levels lead to improvements in the ability to perform development tasks?

*    Under what conditions will these interventions be fruitless?

    Analysis of the results of the case studies carried out in Bolivia, Central African Republic, Ghana, Morocco, Sri Lanka, and Tanzania can help respond to these questions. The framework structured the research by signaling what factors needed to be studied. Researchers were asked to assess how and to what extent factors at each level of analysis affected the ability of specific organizations or organizational units to achieve effective, efficient, and sustainable performance. The case studies, then, identify constraints, assess the extent to which they are binding, and provide guidance about capacity gaps that are most critical to improving performance. Based on this analysis, policy makers and program managers are in a better position to make strategic decisions about what capacity building interventions will have the greatest return in terms of improving performance.

    Findings of each of the case studies are summarized in Part II of this study. In this chapter, we look across the cases to develop a more general set of observations about the sources of capacity gaps. First, however, we review the cases to assess how well the tasks studied were performed. This assessment allows us to determine what capacity and capacity gaps exist. The more interesting task, however, is to explain why capacity or capacity gaps exist in particular cases, and so we use the case studies to identify the factors that are most important to explaining performance in particular cases. In the next part of this report, we consider the cases to generate guidelines about how capacity building initiatives can deal with

constraints that are identified at each level in the analytic framework.

Assessing Performance
    
    In Chapter 3, we identified a series of questions that can be asked to assess how well budget formulation is being performed and whether agricultural extension or maternal-child health services are being effectively and sustainably delivered. The questions for the budget formulation process seek to assess issues related to the timeliness, usefulness, and authoritativeness of the budget in disciplining public spending. Questions about service delivery focus primary attention on their reach and quality.

    The ability to carry out essential public sector tasks varied widely in the case study countries. At the most general level, state capacity was weakest in the Central African Republic and Tanzania and strongest in Morocco and Sri Lanka. Bolivia and Ghana demonstrated major shortcomings in being able to carry out essential functions, but were nevertheless more able to accomplish them than was true of the least capable states. In addition, we found that governments that performed relatively well in one area were likely to perform relatively well in others. Modest and poor performers follow similar patterns. But we also discovered that performance is not always meaningful in terms of capacity. In Bolivia, for example, the capacity to formulate the budget--perhaps best assessed as modest--was at the same time largely irrelevant to government spending because the "actual" budget was the set of conditions agreed to between the government and the IMF in regular negotiations. In the Central African Republic, the budget, although relatively well-formulated and effective in government decision making, did not reflect national capacity at all. Assessments of capacity must therefore include concern about process variables as well as output variables.

Budget Formulation

    For each of the country cases, the researchers asked a series of questions about budget formulation. Is the budget produced in a timely way? Is it a "real" budget that forms the basis of government spending and reflects actual resources? Is the budget based on discussion, assessment, and prioritization of needs and programs? Does the budget formulation process link the budget with the government's fiscal policy? Are the central budget authorities able to provide guidance and enforce decisions about allocation on other parts of the government? How effectively do other parts of government provide data and contribute to the effectiveness of the overall budget process?

    The case studies indicated that Morocco and Sri Lanka had relatively good capacity to

produce a timely budget document that was useful in the actual process of allocating and accounting for public resources. In Bolivia, Tanzania, and Ghana, there were major gaps in the capacity to produce a budget. The Central African Republic was a special case. As described below, that country's budget played relatively effective role in macroeconomic management: indeed, the budget formulation process was central to the entire economic policy-making process. However, because of the heavy presence of the IMF and the low level of national control of and participation in the process, budgeting in that country did not reflect national capacity to accomplish this particular task.
    
    Bolivia

    Bolivia had a well-defined annual budget process that included elaboration by the executive branch and approval by the legislature. The law defining the budget process beginning in 1990 was considered a model of public sector financial regulation in Latin America. Nevertheless, formulating the budget was a complex process involving a large number of organizations with varying degrees of capacity to carry out their assigned roles. Moreover, organizations that were centrally involved in the budget process in the past lost technical capacity during the 1980s; other institutions were created to fill the gaps, causing budget tasks to be more widely shared and to require higher levels of cooperation. Poor information and lack of effective communication hampered the annual production schedule. High levels of staff turnover and uneven skills among budget officers were further factors in limiting the effectiveness of the budget. Neither the schedule nor the process was adhered to on a regular basis.

    Despite input from the fiscal side from the Central Bank and the Economic Policy Analysis Unit (UDAPE), as the budget was elaborated allocations to various sectors and programs tended to be set in negotiations that involved the Budget Division of the National Treasury Secretariat, the spending ministries, legislators, and representatives of various interest groups. Generally, the outcome of these negotiations depended on the political importance of the particular ministry or groups and the skill of their negotiators. An important aspect of this process was that interest groups had multiple points at which to lobby for budget allocations. As a result of the wide participation in the process, the approved budget bore little resemblance to the draft budget. Most important in assessing the budget process in Bolivia is that the budget was not really a definitive mechanism for public expenditure because a "shadow budget," established through negotiations with the IMF, was the real basis of government decision making.

    Central African Republic

    In this country, the budget reflected fiscal policy and the levels of resources available to government and effectively influenced government decision making. This was largely in place because of the stringent conditionalities established and monitored by the IMF. Given the virtual capture of the budget process by the international financial institutions, there was considerable capacity to impose discipline on other parts of the government. Perversely, this contributed to the marginalization and weakening of a number of organizations that used to play a role in budget formulation, including both the planning department and the technical ministries. In fact, a handful of people in only a couple of offices produced the budget, with extremely limited input from other public organizations. Actual budget formulation was not carried out according to established procedures nor in line with a set timetable. The budget in the Central African Republic largely reflected the priorities of the international financial institutions that became custodians of the country's fiscal management. The country's capacity to produce a budget could not be effectively assessed because of the overwhelming presence of these international actors.

    Ghana

    Budget performance in Ghana improved significantly after the Economic Recovery Program of 1983 was put into effect. The budget reflected the importance that fiscal restraint acquired in government policy and the pressure that the IMF and the World Bank placed on it to implement its structural adjustment program. The annual budget cycle began with in-depth discussions of policy framework papers and a forum for major stakeholders, including not only government ministries but also the private sector, unions, and NGOs; and this policy discussion provided some broad policy basis for the budget process. The Bank of Ghana, in its role as advisor to the process, increased the capacity to link the budget to the government's fiscal policy, although this aspect of budget formulation needed to be strengthened further. The effectiveness of the Ministry of Finance's budget officers was constrained, however, by a lack of skills in critical areas such as policy analysis and information systems. Furthermore, although the Economic Reform Program created a situation under which fiscal management improved, the international financial institutions had relied on their own staff and consultants to play key roles in the process. As this study was being conducted there was movement toward returning responsibilities to the Ghanaian organizations and their staff, as well as programs to provide adequate training for budget and other personnel in the Ministry of Finance.

    There was a relatively effective system for coordinating budget planning within government. Sectoral ministries, however, varied in their ability to formulate their programs and to provide draft estimates in accordance with budget circulars. In part because of limited technical capacity at the sectoral level, the annual budget schedule was poorly

adhered to. Moreover, although the budget formulation process improved, it was still not a completely adequate guide for spending decisions because of continued expenditure overruns and poor control of information about expenditures.

    Morocco

    Morocco's stabilization and structural adjustment programs contributed to substantial strengthening of the budget formulation process. The process was reformed in 1990 to improve coordination and timeliness of decision making, implementation, and monitoring. The emphasis on fiscal control within government enhanced the visibility and prestige of the Ministry of Finance, and staff performance improved. A computerized budget management system, standardized nomenclature, improved training and skill levels among budget officials, and more effective administrative procedures contributed to a budget that was produced through a regular process and on a schedule that was adhered to throughout government. The budget was effectively linked to fiscal policy and became an important tool for financial stabilization. It was authoritative and constrained public sector spending decisions to the activities and levels that it specified. Among the case studies, the capacity of Morocco's government to formulate a timely and effective budget was clearly the strongest.

    The emphasis on stabilization and adjustment, however, meant that assessments of needs and programs were subordinated to the claims of the adjustment packages. This emphasis reduced the budget to a narrow outline of annual allocations rather than a document that contributed to and reflected longer-term development planning for the country. Beyond this large issue, the basics of a good budget process were in place and capacity building initiatives could well focus on fine-tuning existing systems. Activities could focus on improving job descriptions, making some procedures less time-consuming, targeting training programs more effectively, and better utilizing existing personnel.

    Sri Lanka

    The budget in Sri Lanka was produced on a regular schedule and resulted from a well-institutionalized process. The capital budget generally reflected the government's priorities because of the requirement that it be linked to the Public Investment Program (PIP). The recurrent budget, however, was formulated with less discussion of government's priorities. The Central Bank played a significant role in providing fiscal input and the IMF and the World Bank also intervened strongly on behalf of fiscal restraint.

    In recent years, the budget's authoritativeness was gradually undercut in a number of ways. Supplementary budgets, which were not as rigorously screened as the regular budget, increased in number and size. Increasing military budgets also eroded fiscal discipline. Moreover, ministries making annual budget requests tended to anticipate cuts when their submissions were reviewed in the Ministry of Finance. As a result, they overstated their needs; this frequently resulted in considerable unspent funds at the end of a fiscal year because of the inability to estimate needs effectively. Over time, also, professional and technical capacity in the Central Bank and budget departments was weakened by a significant brain drain. In addition, increasing politicization of public sector activities reduced the independence of the Ministry of Finance and the Central Bank and limited their ability to follow established norms. Management practices in the Central Bank compensated in part for some of these difficulties.

    Tanzania

    Budget formulation was poorly performed in Tanzania. The budget was not produced on a timely basis as budget circulars were produced too late to provide effective guidance for ministries or regional governments. Neither central budget departments nor sectoral ministry budget offices had the technical skill or structures to contribute to useful discussions about government needs and priorities. Further, responsibility for the budget was widely dispersed within the Treasury and other central government offices. Within the Budget Department of the Treasury, staff were poorly utilized and poorly remunerated, and the department itself suffered from low prestige relative to other central economic function departments. In the regional budget offices, these problems were magnified. Their estimates--which formed the basis of much of the overall budget--were essentially unreliable and reflective of little capacity to assess and plan programs.

    There was, in fact, a dual budget in Tanzania. The formal budget was regularly superseded by an informal budget that represented ad hoc demands and allocations to ministries and programs during the fiscal year. In the formal budget, IMF and World Bank involvement provided some link to government fiscal policy, but this link all but disappeared in the informal budget. In addition, the government was engaged in a wide range of activities with very limited resources, so the budget only served to set standards for consistently underfunding them. It was not a good instrument for authoritative management, resource allocation, or imposition of discipline on other parts of government.

Agricultural Extension

    In three of the six country cases--Ghana, Morocco, and Sri Lanka--researchers focused on the delivery of agricultural extension services. In these countries, extension was selected to explore capacity for service provision. In each, the organization primarily

responsible for providing agricultural extension services was studied as well as a site-based unit directly engaged in delivering concrete services to farmers or involved in the research or training aspects of extension.

    In each of the three countries, a series of questions defined the assessment. To what extent are services being delivered to farmers? Is the technical information being provided appropriate and useful to farmers? Is there a link between research and extension? Are the needs and demands of farmers being taken into account in delivering agricultural extension services? Is the provision of agricultural extension guided by an appropriate and adequate policy framework?

    At the most general level of assessment, the studies revealed a range of performance of agricultural extension service delivery and considerable change in recent years. In the two countries where services were being delivered, the extent of service provision was somewhat uneven. Morocco's agricultural extension service emerged as the most effective in providing good services for a relatively large portion of farmers in the country. Ghana's capacity to provide agricultural extension was modest overall, with the quality and reach of services limited; but donor and government efforts in recent years led to substantial improvement, especially regarding maize production. Sri Lanka's past record of relatively good agricultural extension services deteriorated sharply as a result of changes in the government's development priorities and other political decisions.

    Ghana

    Extension services in Ghana were traditionally delivered by many organizations, ranging from the Ministry of Food and Agriculture to the Cocoa Board to NGOs and private agricultural processing firms. Until recently, as agriculture was not a high priority of the government, there was little coordination of the scattered extension activities. As a result of the structural adjustment program, however, agricultural extension was included in a broader framework of government policies that placed agriculture at the center of the country's development strategy. The Ministry of Agriculture began to play a more active role in coordination and improvement of service delivery, but there was still unevenness in quality and coverage based on crop, region, and the organization delivering the services. Low salaries, poor facilities, lack of equipment, and other problems reduced the effectiveness of government extension service.

    In recent years, projects--many financed at least partly by donors--to strengthen

agricultural extension delivery made a big difference by supporting training for extension workers, agricultural research, and the links between research and extension. These were particularly successful in the case of maize. Maize producers generally received appropriate technical information and widely adopted the new technologies. Problems that had limited the relevance of extension advice, such as unavailability of the credit or inputs necessary to adopt technical innovation, were addressed and lessened by broader agricultural sector reforms. Adaptive research began to improve the participation of and communication with farmers in the extension system. Whereas many farmers were women, there were few women extension agents. The government recognized the need to reach women farmers, however, and began efforts in that direction.

    Morocco

    In Morocco, agricultural extension reached a significant portion of farmers. Services covering a range of crops were provided in both irrigated and non-irrigated areas. Nevertheless, budget resources limited the extent to which all farmers could be reached and the ratio between agent and farmer was much higher in irrigated zones than in non-irrigated zones. Within the non-irrigated areas, there were also disparities between regions and projects that had assistance from international agencies and those that did not.

    Although there was room for improvement, the technical information being provided to farmers through a variety of means was generally appropriate. The link between research and extension existed, but needed considerable strengthening. How well the linkage functioned depended on the personal relationships established between researchers and agents or agent supervisors. There was also considerable room for improvement in assessing farmer needs and developing effective communication techniques. Nevertheless, the overall capacity of agricultural extension services in Morocco was clearly the strongest of the three countries assessed. The quality of extension services improved markedly after the structural adjustment program of 1986 put emphasis on the agricultural sector in the country's development strategy. Extension was seen as a central part of agricultural development policy; and a major program aimed at updating its technologies and improving training and service delivery was responsible for much of its good performance.

    Sri Lanka

    Extension services for food crops in Sri Lanka, which had been effective and had played an important role in the development of paddy production in that country, were subject to changing agendas that interfered with their ability to build up focused capacity to

accomplish particular tasks over the long term. See footnote 49 A 1989 decision to deploy extension agents to work on poverty alleviation initiatives seriously undercut their ability to provide extension services to farmers. This policy was abandoned, but extension services still suffered from the loss of capacity that occurred during that period. In addition, extension delivery was disrupted by provincialization, under which the function was devolved to the provinces. The link between the Department of Agriculture and the extension workers in the field was broken, with nothing there immediately to replace it. At the time this research was carried out, agricultural extension services were delivered only minimally, but the situation was expected to improve as provinces developed the ability to manage it and as relationships between the center, the provinces, and the extension system were worked out.

    In an effort to restructure and improve extension services overall, Sri Lanka's agricultural institutions were working to strengthen the link between research and service delivery. Adaptive research and field testing of new technologies were being stressed in an effort to integrate farmers' needs with extension practice. As in the other countries, lack of financial resources was a serious constraint on the implementation of extension services and on agricultural research to support it. On a more positive note, an effort was underway to place extension in a more coherent and appropriate policy framework, with assistance from the World Bank.

Maternal-Child Health Services

    In three countries--Bolivia, the Central African Republic, and Tanzania--researchers selected maternal-child health services in order to assess service provision capacity. In each country, an organization centrally responsible for providing such services was selected. In all cases, this was the ministry of health or one of its central units. In addition, one or more site-focused units or projects was studied in order to gain insight into how actual services were delivered in the field.

    Researchers asked a series of questions to assess these services. To what extent are maternal-child health services being delivered? Is the health care technology appropriate?

Are the needs of the community taken into account in the design and delivery of services? Are maternal-child health care services guided by an appropriate and adequate policy framework?

    In terms of overall performance, none of the three countries achieved good capacity to deliver maternal-child health services. In Bolivia, relatively poor performance in the public sector was partially compensated for by innovative and relatively effective NGO programs, the provision of private health care to wealthy and middle class sectors of the population, and the use of traditional medicine by the poorest sectors. Public sector capacity was stronger when programs or units had foreign assistance. Tanzania's performance was also weak in the public sector. Better performance was noticeable in public sector services that were supported by foreign assistance and in NGO programs. In the Central African Republic, the capacity to provide maternal-child health care was very limited. To the extent that services existed, urban areas were much better served than rural ones in all three countries.

    Bolivia

    General health care services provided by the public and NGO sectors in Bolivia reached only 37 percent of the population. The rural poor had the least access to public health facilities; the urban middle and lower middle class had the most access to such services. Private medical care reached approximately 20 percent of the population, primarily in urban areas and among middle and high income groups. Approximately 43 percent of the population did not have access to modern health care services. Medical training traditionally paid little attention to preventive medicine, poverty-related diseases, and communication and management skills. Decentralizing the health care system, a reform underway, may improve the appropriateness of the maternal-child care that was delivered. The NGO sector was much more sensitive to linking maternal-child services with the economic and social setting in which they were delivered and more responsive to community needs.

    In 1994, Bolivia was attempting to strengthen its public health care delivery system and to stress preventive medicine and public education and to focus on vulnerable groups such as women and children. The lack of financial resources and management skills, along with a long-standing bias toward large hospitals and research institutes, constrained restructuring, however.

    Central African Republic

    The provision of maternal-child health services in the Central African Republic was extremely limited beyond the confines of the capital city. In fact, the farther mothers and children lived from Bangui, the less likely it was that they had any access to maternal-child health care services. Although there was a health care system that extended throughout the country, in practice it functioned only erratically at lower levels. Trained medical personnel--including doctors, midwives, and childbirth assistants--and financial resources were primarily located in hospitals, especially the central facilities and other large urban clinics. Bad roads also made access difficult. In addition, the program was limited in its potential effectiveness by people's distrust of government and consequent hesitancy to use services even when they were available.

    The program, like the Ministry of Health generally, was highly centralized and did not encourage involvement in program design or service delivery from the lower levels or from the community. The current program was part of the National Plan for Health Care Development for 1992-96, which gave it priority and which specified goals, identified obstacles to success, and designed strategies to deal with them. The failure to deliver maternal-child health care services lay not in an inadequate policy framework, then, but in its implementation.

    Tanzania

    Tanzania's comprehensive health care system was targeted to reach 76-99 percent of urban residents and 72 percent of those in rural areas. Nevertheless, the system was in a state of crisis characterized by very low quality and a high degree of ineffectiveness. Lack of trained personnel meant that health care centers were overwhelmed with patients and had little ability to affect the health conditions of mothers and children. Regional variation in quality of services was also notable, as were differences among projects that had foreign assistance and those that did not. Higher income urban groups had some access to private sector care.

    The quality of maternal-child health services was low and its appropriateness to the health needs of women and children marginal. Health care technology tended to focus on urban hospitals and curative medicine rather than rural, preventive, and poverty-focused care. There was little evidence that community needs were taken into consideration in the design or delivery of maternal-child health care, nor was such care well integrated with the health policy framework, which focused on a system of referral hospitals. National policy did not effectively identify priority areas and the government was unable to provide sufficient

resources to carry out the objectives it did identify.

Explaining Performanc

    Responding to the general question of how well a particular task is performed does not take us very far if we are concerned with building capacity. In order to do something to ameliorate capacity gaps, it is necessary to identify their sources: What are the causes of poor, adequate, or good performance? In most cases, there are likely to be many factors that explain levels of performance; these factors will range across the five dimensions of capacity. Among them, which are the most binding constraints? Can priorities for action in particular cases be identified? Similarly, there are likely to be a series of factors that explain relatively good performance. Which of them can make a significant difference in building capacity in weaker organizations? Here, we look at the case studies, drawing on the evidence across countries and tasks, to respond to these questions.

The Action Environment

    Broad economic, political, and economic conditions in a country are important in shaping the public sector's ability to carry out development tasks. The action environment is a source of constraints to effective performance in most of the cases, but there are also cases in which factors at this level are or have been supportive of capacity. Clearly, factors in the action environment are not static, but can and do change over time. Indeed, a profile of the capacity of a country's public sector reflects its economic, political, and social history, as well as the effects of more current conditions. These points are illustrated by the contrast among three cases that varied widely in the effects of the action environment:

*    Morocco's relatively high level of economic development; its far-reaching educational system at all levels, reflecting the country's emphasis since independence on creating an educated society; and a stable and legitimate political system worked together to create a high level of capacity on which the public sector could draw.

*    The Central African Republic, in stark contrast, suffered under a history of military coups and repressive regimes that silenced opponents, drove skilled people into exile, and ravaged state and national resources; human development of the population was low; and there was little economic development. The country depended heavily on French technical and financial assistance. That environment constrained the creation

of capacity. Only with the advent of an elected government and a newly-democratic political system was there an environment with the potential for supporting capacity development.

*    Sri Lanka illustrates how changes in the environment can lead to changes in capacity. High levels of education and a history of participation by Sri Lankans in the political system supported human development of the society as a whole and the creation of highly qualified human resources for the public service. This was diminished, however, by growing ethnic conflict, which led to the flight of many of the most highly trained people, a lowering of educational quality, and political conditions under which personnel and organizations were not able to perform to their fullest.

    These examples suggest a number of factors in the action environment that are particularly important for capacity. In this section we discuss elements of the economic, political, and social setting that the case studies show to be important in supporting or constraining public sector capacity to perform development tasks.

    Economic Situation

    Several economic factors affect public sector capacity: level of economic development, current economic conditions, and characteristics of the labor market. The first two are relevant because of their consequences for the level of resources available. The latter has a direct impact on the availability of human resources for the public sector.

     Morocco, with its higher level of per capita income, stood out from the other, less developed, countries by virtue of its relatively high capacity, both in institutional and human resource terms. Whereas there was a clear relationship between the level of economic development and capacity, the case of Sri Lanka indicated that it was not a deterministic one. By using its resources for the purpose of supporting human development at all levels, Sri Lanka, with a considerably lower per capita income than Morocco, built up impressive capacity in its public administration. It was an exceptional case in that regard, however.

     All six countries were hurt, though to varying degrees, by the economic crisis of the 1980s. Economic constraints were so severe for many countries during recent years that this period was generally one of weakening capacity, rather than building on what was created before. The economic crisis and its effects were intertwined with other elements in the action environment and the public sector institutional context. The economic crisis was partly caused by other longer-term features of the policies and political economies of these and other countries, and it is also difficult to separate the effects of the economic crisis from

the economic reform programs that have accompanied them. Still, the resource scarcity that resulted from the adverse economic conditions and performance during the last fifteen years had an immediate effect on public sector capacity.

     Adverse economic conditions affect capacity through falling real income levels for government employees and shortfalls in revenue and foreign exchange to pay for supplies, equipment, and vehicles. These effects of the economic crisis were especially clear in Bolivia, the Central African Republic, Ghana, and Tanzania, all of which experienced deep economic crises. Sri Lanka and Morocco were similarly affected but to a lesser extent. In two countries--Ghana and Tanzania--the economic crisis played a particularly large, though not exclusive, role in weakening the capacity of the government to perform development tasks. In Ghana, low salaries and salary compression led to the loss of many good people and inability of government to train its human resources. In Tanzania, low real income made public sector jobs insufficient to live on. The combination of loss of qualified people and diversion of employees' attention and energy had a direct negative impact on the capacity of the public sector. In the Central African Republic, the government was simply unable to pay salaries for months at a time, leading to a general strike and the complete breakdown of the public sector.

    A particularly important economic factor is the labor market. The labor market has a direct impact on capacity through its effects on the ability of the public sector to recruit and retain qualified personnel. It is a function of several different elements: the availability of job opportunities in the public and private sectors, within international organizations, or in foreign countries; relative salaries and, where particularly substantial, non-salary benefits; and the status of working in the public sector, compared to the private. The cases present a range of possibilities. In Sri Lanka, public and private salaries were not all that divergent, and public sector work was respected. In areas where the skills were highly marketable for better-paying jobs, as between the Central Bank and jobs in banking overseas, or with international organizations, retention of personnel was difficult. Where skills were not that marketable elsewhere, as with planning, there was not a significant loss of staff to alternative jobs. Similarly, in Morocco, there were few alternatives for highly qualified personnel and working in the public administration was a respected profession; furthermore, there was a high level of unemployment in the country. Therefore, the labor market in Morocco did not create a problem for the public sector, although it might in the future with increased private development.

    In Tanzania, salaries in the public sector had become extremely low, but employees--especially those at higher levels--benefitted from substantial non-salary perquisites such as housing that often kept them from seeking alternatives despite the low pay. In fact, other

opportunities in the country were limited, although jobs in southern African countries and overseas attracted some Tanzanian professionals. In health, a growing private sector was beginning to offer doctors the possibility of private practice which was better-paying and was drawing them (and their patients) from the public health system. In Bolivia and Ghana, where regular government pay was low and where there had been extremely high involvement of donor organizations for the past few years, a market for skilled personnel to work as consultants for the donor agencies in projects, often within the government ministries, was a favored alternative for highly qualified personnel. It drew qualified people out of regular public sector employment, but then brought them back to work in the government at higher pay. In both of these countries, increased economic activity was creating more job alternatives in the private sector. Recruiting and retaining well-qualified people under the conditions that obtained in Bolivia and Ghana, therefore, were somewhat difficult, whereas the picture in Tanzania was mixed.
    
    The Central African Republic had so little economic development that there were few jobs outside the government, although the government's former policy of guaranteeing jobs to all graduates had to be abandoned and unemployment was high. The alternatives for the few highly trained Central Africans were to work with donors or NGOs or to leave the country. In such a situation, retention was not an overall problem, although the very best people were likely to have other opportunities and to find them more attractive than working for the government.

    Political Factors

    The framework points to a country's political characteristics as important to capacity, and analysis of the cases indicates that factors such as political stability and legitimacy; the degree of openness, participation, and accountability in the system; political leadership and vision; and support of political leaders have a substantial effect on performance. In Morocco, relatively good performance was in part explained by the stability and effectiveness of the political system--it was widely accepted as legitimate and it provided a stable environment for planning and implementing public actions. In Sri Lanka political stability until the 1980s had acted primarily as a support to capacity development; frequent changes in government, although accompanied by dramatic shifts in policy direction, were institutionalized and regular. The recent government enjoyed less legitimacy and stability, however, partly as a result of its inability to manage the continuing ethnic conflict.

    The Central African Republic was a case of extreme political dysfunction, in which the public sector was not able to build and sustain capacity to perform even the most routine and simple tasks because of instability and illegitimate and ineffective political institutions.

Ghana's years of military rule, marked by numerous coups, also had a negative effect on the capacity that had been built before and just after independence. In both Ghana and the Central African Republic, political repression on top of political unpredictability created an environment that led many skilled people to leave the country. For those who stayed, the political climate discouraged excellent performance, innovation, and risk-taking. Bolivia experienced many years of similar conditions before the installation of democratic government.

    Political stability and legitimacy are necessary to enable the public sector to perform well and to support the building of capacity to do so, but they are not sufficient. Evidence of this point was provided by Tanzania. Under Nyerere, that country had many years of political stability and--despite the political system's lack of openness or participation--a level of legitimacy rare for African regimes. It also experienced one of the first peaceful, legal transfers of power in Africa. Nevertheless, while Tanzania did not manifest the same levels of incapacity as the Central African Republic, its ability to carry out development tasks was extremely limited.

    The openness of a political system and the level of active participation by its citizens turn out to be important for capacity. The Tanzania case study showed that low levels of participation were critical constraints on maternal-child health care delivery becoming a priority or meeting the needs of the community. More surprisingly, it also showed that low participation was a constraint on budget formulation: in Tanzania, a Parliament that was ineffectual at performing oversight; low demand for and supply of information in the system, and a lack of open discussion of allocation priorities and budget issues all conspired to allow continuing abuses such as misallocation, overspending, and corruption. They also prevented budgeting from playing the central role that it should have in development policy. Whereas political liberalization had begun to open avenues of participation, it remained to be seen whether these would, over the longer run, translate into more effective involvement in policy debates and greater accountability. On the other hand, in Bolivia, a higher level of participation took the form of demands from multiple interest groups that made effective budgeting difficult.

    Thus, like stability, an open and participatory political system is part of an action environment that offers possibilities for capacity building. Indeed, without the effective participation of the population, capacity cannot be fully developed, as Tanzania indicated. It does not guarantee, however, that those possibilities will be realized. While these six cases do not permit any definitive conclusions regarding the relationship between democracy and capacity, they suggest that it is somewhat mixed, at least in the short run. In Sri Lanka, broad participation in the political system was consistent with building a capable public

administration, and it even supported capacity building by providing political support for long-term investments in human development. On the other hand, however, Bolivia shows the difficulty of mediating competing demands in a more open system, especially when the expression of demand by interest groups is not balanced by a sustained public debate about overall development goals and the use of resources to pursue them. In addition, Bolivia and the Central African Republic showed that democracy was compatible with patronage systems and was able to adapt or even reinforce them. Still, the potentially positive effects of more open political systems for capacity building will not occur overnight but will only develop over the long haul; and the political liberalization experienced in several of the countries, including the Central African Republic, Ghana, and Tanzania, represented positive changes in the action environment in those countries.

    Political leadership and vision have much to do with whether opportunities for capacity building presented by other positive features in the action environment are seized, or whether constraints are managed in constructive ways. How political power is used and to what ends is critical, especially given the long-term perspective that is necessary for capacity building. If leaders use their position to support long-term development of the country and the capacity to achieve it, there is a good chance that capacity will be developed. If, on the contrary, they use their power for short-term political or personal gain, without any vision for the country's development, capacity building is unlikely. More narrowly, activities on which political leaders place a high priority will have better performance than those with lower priority, as a result of the attention and resources focused on them and the demand from political leaders for good performance.

    Several of the case studies provided evidence of the importance of these factors. Nyerere's leadership provided a vision for Tanzania that clearly shaped policy direction and capacity development in support of policy goals. An emphasis on service delivery to the population resulted in institutions being built to carry out those goals, while budgeting was considered unimportant and neglected. Nyerere's successor, Mwinyi, did not replace that vision with his own, which contributed to policy indirection and a failure to move decisively to create or even to shore up capacity to accomplish essential tasks. In Sri Lanka, some of the weakening of capacity in the last few years, particularly in the macroeconomic/budgeting area, could be attributed to the tendency of the political leadership during those years to use its power for political ends in a way that politicized the administration rather than allowing it to operate professionally. More extremely, Central African leaders, especially Bokassa and Kolingba, used their power to plunder state coffers, enrich themselves and their families, and stay in power, with abysmal--and predictable--consequences for the capacity of the country. Without a major commitment by the newly-elected leaders to long-term development of that country, and to changing existing political patterns, capacity could not be developed.


    Social Factors

    The framework identifies a set of social conditions that can affect capacity and, indeed, the case studies suggest that a low level of overall human resource development and the presence of social conflict are among the most frequent contributors to capacity gaps. It is hard to escape the comparison between Morocco and Sri Lanka, on the one hand--where a long tradition of investing in health and education resulted in strong human development profiles--and Bolivia and the Central African Republic on the other--where there was an equally strong tradition of poorly funded and ineffective investment in human development. Finding good professionals for the public sector was simply easier in the first two countries than in the latter two. Similarly, where human resource development was higher, populations were more able to demand effective performance from the public sector. In Bolivia, by contrast, the extreme disparity between a tiny elite and the impoverished indigenous majority reinforced the low levels of both human development and demand for effective performance.

    A high level of social conflict is extremely detrimental to capacity. Sri Lanka was the clearest example of this, with ethnic conflict between the majority Sinhalese and the minority Tamils expressed through terrorism and repression, along with other means such as language policy. Violence against the Tamils, many of whom were highly educated, skilled professionals, caused large numbers of them to flee the country. Continuing violence on both sides led to a continuing brain drain, while language policies designed to favor one group led to a decline in the quality of education that further sapped public sector capacity. Morocco's conflict with Polisario over the Western Sahara, in contrast, was costly financially and psychologically, but was not central to the social or political system in the same way as the conflict in Sri Lanka and had less impact on capacity.

    Based on the evidence of the six cases, it appears that the factors that contribute to poor and good performance tend to "go together" in the sense that low growth, political instability, and low human resource development are found in those countries with the weakest overall performance and the best performers have much more positive profiles along all these dimensions. Table 4.1 summarizes the characteristics of action environments that are supportive of public sector capacity. Significant deterioration in a key factor, however, can derail positive capacity development, as happened with ethnic conflict in Sri Lanka.

    Equally telling, however, is the evidence that the action environment is much more important as a constraint in some countries than it is in others. In the Central African Republic, for example, the action environment was, at least during a large part of the period after independence, fully counterproductive to the ability of public sector organizations to

carry out their activities. The case left little doubt that until basic conditions of economic, political, and social stability are put in place, little could be done along other dimensions that would contribute to improving performance. In Morocco, on the other hand, the study suggested that capacity building initiatives would not need to pay much attention to improving the action environment because it was generally positive. In the other cases, while the action environment was far from ideal, interventions at other levels could do much to redress the capacity gaps that were identified.

Public Sector Institutional Context

    The framework draws attention to factors such as the rules and regulations for the public service, level of budgetary support, general management practices, concurrent policies, and formal and informal power relations as important for the performance of particular tasks. The case studies assess these factors and their findings provide significant evidence that conditions in the public sector institutional environment set parameters for performance. In some cases, these parameters are so constraining that little can be done unless they are addressed; in other cases, they are wide enough that concerns about capacity can be attacked at other levels, if changing this context is a particularly onerous task.

    Rules and Regulations

    The analysis of the cases suggests that the role played by administrative rules, regulations, and procedures in supporting or constraining the public sector's ability to carry out its functions is complex and can have varying effects. Whereas effective procedures are essential for day-to-day functioning and for being able to confront longer-term development challenges, they can lead to inflexibility and unduly complicated requirements that actually stand in the way of accomplishing important tasks. Indeed, too many or too strict rules and regulations can become the problem. Furthermore, as indicated in a later section of this report, flexible organizations, focused on problem solving, do not easily emerge from rigid structures.

    The case study of Morocco illustrates this dilemma. Of the six cases, Morocco stood out as having highly-developed institutions of public administration, including rules, regulations, and procedures that evolved over the years after independence. This degree of organization provided a basis for effective operation and was one of the factors--along with its wealth of human resources and a generally positive action environment--that set Morocco apart from the other cases in terms of its overall public sector capacity. Nevertheless, the most important constraints on capacity in Morocco were at this level of the framework. The Moroccan public administration was characterized by slow decision making, largely a result

of rules and procedures that were complicated and strict. The structure, procedures, and typical management style were hierarchical: there was little participation in decision making by either the staff or lower levels of the administration and insufficient coordination among different organizations within the system. Incentives for good performance were inadequate, resulting in a pervasive lack of motivation and commitment on the part of public servants. There was also little innovation. The overall picture was of an administration that was "seized up" by its rules, regulations, and hierarchy. It worked, but slowly, ponderously, and not as well as it should have.

    Bolivia provided the opposite extreme. With a much less institutionalized public administration, it did not exhibit the capacity to manage the daily operations of the government or meet long-term development challenges. The contrast was particularly evident with regard to civil service institutions. Whereas Morocco had highly developed systems for management of public personnel, from recruitment to bonuses to promotions and career paths, Bolivia did not have a professional civil service, although a program was introduced to establish the core of such a system in some ministries. Each change of government brought extensive turnover of government personnel, not just top appointees. There was, thus, little continuity, and little sense of a profession of public service. The challenge for Bolivia, then, was to develop a system to provide continuity and effectiveness, without reproducing the inflexibility that stifled innovation and responsiveness in Morocco.
    
    Interestingly, despite the variation, all six countries shared many problems connected with the nature of public sector employment: lack of effective performance standards, inability to fire people, too few rewards for good performance, recruitment procedures that were not effective at getting appropriately trained people, and promotion patterns that were based too much on seniority and too little on performance. While these features showed up at the level of the individual organization and of human resources within organizations, they operated across the public sector as a whole and worked to constrain performance in organizations throughout the public sector. Changing them, as opposed to finding a way to compensate for them or maneuver around them, required action at the level of public sector institutions in general.

    In several of the cases, public sector employment was based, not on qualifications, but on patronage. This dominated the system in the Central African Republic, where jobs were given out on the basis of family, ethnic, and regional ties, as well as in Bolivia, where political support for and membership in the party in power at any given time were the keys to getting jobs. It also was present to varying degrees in Ghana, Morocco, and Sri Lanka. In Bolivia and especially the Central African Republic, patronage resulted in positions being held by poorly qualified people. Beyond that, it had the more insidious effect of removing

any sense that there were standards of qualifications and performance and that a government position had any purpose other than as a sinecure. This came out most clearly in Central African Republic, where employees saw their salaries as entitlements for simply holding positions and expected to receive further compensation if they actually did any work. In countries where patronage was much less prevalent but still played a role, as in Morocco, such appointments undermined the confidence of other employees that positions would be given to people who deserved them based on their qualifications and performance. The result was a decrease in motivation to perform well. Recruitment systems that were based solely on paper qualifications, such as possession of a degree or a diploma, had similar effects on motivation. Such systems acted as a constraint in Tanzania, Morocco, and-- secondarily to patronage--in the Central African Republic.

    The researchers reported on various programs underway in almost all the countries to try to make the public administration more conducive to good performance. The most ambitious of these were in Sri Lanka and Tanzania, where public sector-wide reviews of all aspects of administrative institutions were undertaken to serve as a basis for a spectrum of reforms. Perhaps not coincidentally, these had not progressed very far toward implementation. Ghana's program, while still ambitious, focused on several goals: improving top management, restructuring ministries to respond more effectively to tasks in a problem-solving way, and targeting key skills and training needs for development. Morocco's major efforts were more targeted toward particular sectors and task areas and combined reorganization, improvement in procedures and technologies, training, and incentives. In both Ghana and Morocco, performance improved as a result of these reforms. As mentioned before, the civil service program in Bolivia was an attempt to lessen the existing constraints of public employment by starting to build a permanent civil service.

    Budgetary support

    The case studies show quite clearly that inadequate budgetary support acted as a serious constraint on public sector performance across the countries and across the task areas. The lack of resources affects capacity primarily through its impact on public sector salary levels and funding for operating expenses and investment. As was seen earlier, the economic crisis was one source of this problem; it worked in tandem with the economic reforms that were adopted to deal with it. Not surprisingly, the budget constraint has been more serious in the last few years than it had been previously.

    In many of our cases--especially Bolivia, Ghana, and Tanzania--low salaries were singled out as particularly important in constraining adequate performance. In Ghana, very low salary differentials between those at the top and those at the bottom added to the salary

problem. Even in Morocco and Sri Lanka, where salaries had not fallen as seriously as in the other cases, researchers noted that salary erosion was important in undermining previously existing capacity.

    Whereas salary levels affect most government activities in the same way, through their impact on the ability and willingness of public employees to perform their jobs, budget austerity for other expenditures reflects choices about allocations. Priority areas are less constrained than others, particularly if they are also donor priorities and as a result receive supplemental funding. In our cases, the vast institutional structures and programs required for service delivery to the grassroots suffered severely from shortages of funds for programs, vehicles, buildings and maintenance, equipment, and supplies of needed materials, along with salaries and incentives for employees. Where donors were involved, there were large discrepancies between regions or tasks that had donor support and ones that had to rely on the government budget. Maternal-child health care was being delivered by the public health care system only to a minimal degree in the three countries where it was studied, largely as a result of a lack of resources; and agricultural extension systems also were hindered in all the cases.

    Economic Reform Programs

    Economic reform programs, under the supervision of the World Bank and the International Monetary Fund, were a major component of the public institutional context for all six countries. Bolivia, Ghana, and Sri Lanka carried out extensive reforms, with the first two often cited as model cases of reform implementation. Tanzania also made major changes in its macroeconomic policy, and the Central African Republic was operating under the conditionality of the financing institutions and countries. While the extent of reforms involved in Morocco was not as extreme as in Bolivia or Ghana, that country was carrying out a structural adjustment program as well.

    The cases showed that the economic reform programs had important implications for capacity. First, the financial stabilization policies that underlay structural adjustment included a combination of budget austerity, which served to hold down public sector salaries, and price and exchange rate policies that tended to lead to an increase in prices for the urban middle class. The adjustment policies, therefore, contributed to low salaries and falling real income for public sector employees. In addition, austerity meant tight budgets for ministries' operating expenses and investment. The researchers repeatedly pointed to inadequate budgetary support as a central problem for public organizations, across the cases.

    Cuts in government employment, primarily to reduce spending on the wage and salary

bill, were also part of the reform programs. All six countries had some experience with such cutbacks. The desired savings were not always realized, however; and, at the same time, implementation of the cuts often weakened the capacity of the public service. Given the political difficulty of implementing such cutbacks, a common means was to make cuts through voluntary programs, offering incentives. The results of such an approach included losing good people and keeping less good ones, as those with best chance of finding good employment on the outside opted for the incentive, and losing people disproportionately from certain areas, either because their skills were marketable or because they had the least to give up. The first happened widely, including in Sri Lanka; the last affected health care delivery in the Central African Republic, because employees in that sector had such poor service conditions and saw the severance incentive as preferable. The Central African Republic also provided an example of civil service cutbacks being subverted for political reasons: Kolingba took advantage of the opportunity to get rid of political opponents, then refilled positions with relatives and members of his ethnic group. Finally, in Tanzania, repeated increases in the numbers of planned lay-offs contributed to a climate of uncertainty that hurt morale. Indeed, in some cases public sectors were too large, the costs of maintaining them could not be met, and the need to raise salary levels necessitated some reduction. The experience reported in the case studies indicates, however, that in such cases, it is important to think carefully about downsizing mechanisms in order that capacity not be weakened or destroyed.

    The substance of the reforms influenced where capacity was most likely to be built. For instance, the emphasis in the programs on controlling spending resulted in improved linkage between fiscal policy and the budget formulation process. This aspect of budget performance clearly improved in most of the cases, especially Morocco and Ghana. On the other hand, the same emphasis meant that budgeting was seen more as a tool of fiscal control than as an instrument for allocating resources, and the policy linkage between broader development strategies and budgeting faltered. Indeed, in the most dramatic case of this, Morocco's Ministry of Finance had its role in and its capacity for carrying out budgeting tasks substantially increased, while the Ministry of Planning, which had played a key role in providing strategic direction, receded to the background. Despite government plans for new ways to link budgeting to development strategy, those mechanisms had not been made functional at the time of the research.
    
    Agricultural extension benefitted in some cases from a boost in attention and priority as a result of the reform programs' emphasis on agricultural production in some settings. This happened in both Ghana and Morocco, two of the three cases in which this task was studied. In both, there were efforts to improve performance that involved joint action by donors and governments.

    The priority given to macroeconomic management, however, reduced the emphasis on government activities such as the delivery of social services, including health care. Spending on service delivery was actively discouraged under earlier reform programs; while more recent attempts to support the social sectors to reduce the social costs of adjustment and to promote human development turned out to be difficult to implement, given continuing economic constraints. In Tanzania, where the state's delivery of services had been a key plank in the Ujamaa platform (although sometimes more in rhetoric than reality), the programs' concern with economic recovery and growth kept policy makers from perceiving health care as a broader development issue related to questions of productivity. As a result, there was little interest or attention to the area.

    There was some difference by country in the effort to build capacity in priority areas and in the extent to which capacity was in fact developed. In some countries there were serious efforts, usually donor-led, to build capacity in macroeconomic management, including budget formulation. From the evidence in the cases, these efforts were making a difference. In Morocco, a program in the Ministry of Finance that combined training, information systems, and improved budgeting procedures resulted in greatly strengthened capacity to formulate the budget. The Ministry of Finance in Ghana and the budget process in Tanzania were also the targets of capacity building efforts. By contrast, in some other countries, the emphasis on performance did not translate into an attempt to build local capacity but relied on donor staff or consultants to perform key tasks. In such cases, including the Central African Republic, the reform programs' emphasis on budgeting did not help to build capacity. Until recently, donors performed key tasks in Ghana, but an effort to build local capacity was later introduced.

    Ironically, capacity was built in the countries where it was already strongest and not built where there was the greatest need for it. In the cases where there was already the greatest capacity, donors contributed to strengthening capacity in priority areas. Where there was little existing capacity, the donors' choice to carry out tasks themselves or to build separate organizations to do so hindered the development of public sector capacity to handle essential tasks.

    Changes in the Role of the State

    The economic reforms being carried out involve changes in the role of the state in the economy, implying a fundamental shift in the institutional context for public action. The cases suggest some effects of that change. There was a new demand for skills such as policy analysis and data processing. The recognition of the lack of such skills in Ghana's Ministry of Finance and the beginning of an attempt to rectify it were an example of the

effects of the changed role on capacity. The major reform program in Morocco's Ministry of Finance and the decline in its Ministry of Planning was a reflection of the same phenomenon. Privatization of marketing of crops and provision of seeds changed the context for agricultural extension and sometimes directly changed the role of the extension service, allowing it to focus more directly on extension activities. In both Ghana and Morocco, these changes and a renewed emphasis on agricultural production strengthened the mission of the government to provide extension services as a means of directly affecting production. In contrast, uncertainty about the appropriate role of the state in providing social services undermined the health care delivery task.

    In most of the countries the institutional framework to support a new role for the state had not progressed as far as the policies that proclaimed that change. The state's role had not been clarified completely, and institutional changes were slow to develop. The uncertainty surrounding this was strongest in the Central African Republic, Ghana, and especially Tanzania, where the policy changes were most recent and where the shift away from statist development models was the most dramatic.

    For the most part, the analysis of the case studies shows that the public sector institutional context involved many constraints for capacity building, although the reform programs also provided important support for building capacity in priority areas in some of the countries. In some countries, factors at this level reinforced the effects of equally problematic action environments; in others, most notably Morocco, the public sector context was the primary source of constraints on performance. In all the cases, action to improve the context at this level was needed. Raising public sector salaries would be helpful everywhere and probably is essential in a number of cases, including Tanzania, Ghana, and Bolivia. Beyond that, the cases point to the overall importance of change that places expectations of performance on the public sector as a whole, so that its organizations and staff know that performance and output count.

    Attitudes and practices of political leaders and donors alike can help to effect change by demanding and supporting performance. In addition, changes in how the public sector operates are essential. The cases demonstrate the difficulty of effecting significant change at this level. System-wide civil service and administrative reforms were introduced in several countries, mostly with incomplete implementation and disappointing results. More promising were programs reported on in Ghana and Morocco, where the emphasis was less on rules and regulations than on improving the quality of management, strengthening incentives for performance of both managers and other personnel, and improving structures and procedures in a way that encouraged problem-solving. These changes get at the real constraints at this

level for effective public sector action and introduce flexibility and the expectation that performance counts. Table 4.2 summarizes conditions found to be important in linking the public sector institutional context to improved performance.

Task Network

    Development tasks are rarely performed by one organization in isolation; not only does each public sector organization work within the overall public sector context, but it also works with other organizations in order to accomplish a given task. The framework calls for looking at such task networks to identify possible constraints on performance located at the level of organizational interactions. Indeed, weaknesses in these networks were frequently constraints on performance in the six case studies. Where there are binding constraints at this level, effective capacity building efforts must find ways to address them. Fortunately, interventions are more easily targeted at a single task network than at the public sector as a whole; furthermore, such interventions do not necessarily have to encompass the entire network to make a difference but can target parts of the task network where specific weaknesses have been identified.

    The organizational maps of the task networks in our case studies showed that there were complex networks of organizations for both budget formulation and service delivery. Furthermore, the networks not only encompassed the public sector organizations with responsibility in these areas but, in all the cases, also included international agencies such as the World Bank, the IMF, donors, and donor projects. They sometimes involved private sector organizations and NGOs--both local and foreign. They also included organizations at the center and at lower levels of administration, as well as, in several cases, regional or provincial government organizations that had some autonomy from the central government. For service delivery tasks, clients and other stakeholders were also a part of the network.

    Constraints in the task network tended to come from two different sources: first, weak performance of needed roles by organizations in the network, or even the absence of organizations to play critical roles; and, second, the lack of effective interactions among organizations in the network to provide the various elements required for successful performance. Constraints most often resulted from a combination of weak performance of particular roles and the lack of effective interactions among organizations.

    Addressing the first of these constraints ultimately involves analysis at the level of the individual organization; but, consideration at the wider network level is critical for identifying where such capacity gaps in the network are located and what organizations may need to be targeted for capacity building. Interestingly, the budget formulation task provided

the strongest evidence that weakness of organizations in the network acted as a constraint on performance. Attention to budgeting focused first on the central budget office, which had the primary responsibility for producing the budget. Its ability to do its work effectively, however, was often constrained by the inability, or the varying abilities, of technical ministries or other government units to provide accurate spending information or formulate their own budget proposals, which formed the basis of the overall budget. This was cited as a factor in Bolivia, Ghana, Morocco, and Tanzania. The researcher in Tanzania referred to the budget as a "house of cards" because of the extensiveness of this problem throughout the entire system.
    
    Lack of coordinated interaction among organizations in the task network, the second source of constraints, can occur with regard to many different interactions that are important to performance. Coordination among organizations that set policy and those that implement it is critical if there is to be an adequate policy framework. Conversely, lack of an adequate policy framework can lead to insufficient coordination. In service delivery in particular, coordination is required among the network of organizations, often at different administrative levels, that link the central government with the grassroots, if the service is to reach its intended beneficiaries. This becomes even more difficult when there are lower levels of government with separate responsibility for the tasks. Coordination among different providers, including separate government programs, private organizations, and donor projects, can present challenges. In addition, the quality of human resources can be affected by interactions between the training institutions and the organizations that rely on those personnel to accomplish their mission. Maternal-child health care in Tanzania suffered from lack of coordination in every one of these areas; constraints at the level of the task network, while not the only ones, were particularly strong.

    Extensive involvement in a task by donors, especially numerous donors, presents particular challenges for coordination of the task by government organizations. In Tanzania and Bolivia, maternal-child health services were delivered by different donors in different parts of the country. Often, each donor had its own priority concerns and favored approaches, as well. Even when projects were located in the Ministry of Health, as in Bolivia, they still operated separately. While these resulted in better delivery of services in some areas, lack of coordination contributed to inadequate policy guidance, diminished control over resource allocation and use, and uneven coverage.

    A weakness in the task network that frequently showed up in the cases was one-direction communication and coordination, when two-way interaction was needed. This happened, for example, when a central organization focused on transmitting directions or control to lower-level units and did not allow them any input into decisions about program

design or implementation, as was the case in maternal-child health care programs in the Central African Republic and Tanzania. It was also common in relations between organizations with responsibility for performing a task, on one hand, and the organizations that train and recruit personnel, on the other. This was cited as a constraint on budget formulation in Bolivia and Morocco and maternal-child health in Bolivia and Tanzania, among others. In Morocco, while training institutions trained people in fields relevant to the budget process and supplied personnel for the Ministry of Finance, the ministry had no involvement in designing programs that gave potential recruits the skills they would need and little involvement in specifying what type of person it needed for particular jobs. In contrast, in the Ministry of Agriculture, the training programs were under the ministry itself; and the ministry had a role in shaping what was included in the programs. It also was active in pushing the recruitment office to supply the kinds of people it needed. Thus, in agricultural extension, these two-way interactions resulted in more appropriate training and a better ability to match job openings with qualified recruits.

    Just as weaknesses in the task network can impede performance, effective interactions can support good performance. Furthermore, efforts to improve coordination in areas where it is weak can make a difference in the performance of a task. This was especially clear in Ghana, where inadequate coordination of the agricultural extension task as a whole and lack of effective interactions among various parts of it were identified as a problem and changes made to address them. The Department of Agricultural Extension Services was moved and strengthened to enable it to coordinate the activities of the many providers of extension services. In addition, the Ghana Grains Development Project, operating within the Crops Research Institute, worked closely with the Ministry of Food and Agriculture to link research, training, and extension more fully. It trained extension agents for the ministry and made sure, through regular interactions with farmers and extension agents, that the research and extension services were appropriate. These changes accounted for much of the improvement in performance in agricultural extension in Ghana.

    As with the other levels, there is interplay between constraints at this level and factors at others. Where weaknesses in the task network were especially ubiquitous or strong, as in Tanzania, they often reflected factors in the broader action environment or public sector institutional context that needed addressing if the situation were to be fundamentally changed. Still, action to find ways to improve interactions may improve a particular task network and its performance, even if the overall picture does not change. On the other hand, as pointed out earlier, action at the level of organizations and human resources may be critical for strengthening the task network. Even if that is what is most needed, where to target those efforts needs to be determined through a prior assessment of the task network as a whole. Moreover, the frequency of weaknesses in interaction means that efforts to strengthen

organizations and human resources would in almost all cases be usefully supplemented by attention to improving coordination within the task network where weaknesses have been identified. Table 4.3 indicates a set of conditions that are conducive to well-functioning task networks.

Organizations

    The framework emphasizes the embedded nature of organizations. Their performance is affected by numerous factors in their environments; often these are factors that organizations can do little to alter. In the case studies, the organizational impact of exogenous conditions was clearest in relation to the public sector institutional context. In the majority of cases, for example, salary levels and patterns of recruitment and promotion were set, not by particular organizations, but by regulations and norms of the public sector more generally. Furthermore, there was a clear tendency for "special" organizations that were freed from civil service salary scales and able to give higher remuneration to workers, such as elite units in the budget process or donor-supported units in service provision and budget processes, to perform more effectively. Organizations that were unable to control recruitment, promotion, and firing of personnel because of civil service regulations were also singled out for the difficulties they encountered in improving their performance. When the Bolivian Central Bank lost its autonomy to hire and fire personnel in 1987, for example, performance suffered. The capacity enhancement that occurred at the organizational level in Ghana and Morocco as a result of the structural adjustment programs was a more positive outcome of the embeddedness of organizations in the public sector institutional context.
In Bolivia and Tanzania, the devastation of the public sector by economic crises encouraged considerable innovation and capacity development in NGO organizations.

    Because of the impact of factors like these, exogenous to individual organizations, failures in their performance cannot always be laid squarely on their doorsteps. Organizations that perform relatively well, however, can often claim credit for introducing practices or standards that motivate people to perform at above-average levels, particularly in contexts that are not highly supportive of good performance. Below-average performers might also be to blame for their poor record. See footnote 50 For this reason, it is important to look inside organizations to assess how they operate on a day-to-day basis, how they organize to perform particular tasks, and how they motivate their personnel.

    The case studies offer a rich source for this kind of organizational analysis. Across

the six countries, 29 different organizations or organizational units were studied to assess such factors as their goals, structures, incentive systems, management practices, physical resources, communication styles, culture, and history of donor assistance. These organizations are listed by country in Table 4.4. The results of the studies of these 29 organizations indicate wide variation in capacity. Some organizations performed relatively well, while others clearly suffered from significant incapacities. Interestingly, relatively good performers and relatively poor performers were frequently found operating in the same public sector and action environments, suggesting that performance can be significantly affected by intra-organizational conditions and dynamics.

    In what follows, we look for factors internal to organizations that help explain differences between relatively good performers and relatively poor performers that cannot be explained by extra-organizational factors. In doing so, it is difficult to separate organizational characteristics from human resources, the fifth dimension of capacity, because characteristics associated with better and poorer performance relate to how individuals behave in work environments. Therefore, we often discuss organizational characteristics in terms of their influence on individuals and how they behave within the organization.

    Several factors laid out in the framework appear to be particularly important in explaining why some organizations perform better than others. In each case, a dynamic interaction between the human resources available to an institution and how those resources are oriented, deployed, and rewarded is important. For example, generalizing on the basis of the 29 cases, the content of organizational goals appear to be less important than how organizations do or do not encourage personnel to internalize those goals and commit themselves to its mission. Similarly, while some deficiencies can be traced to how organizations are structured, the structure of work is less important than whether work is assigned appropriately, equitably, and participatively by managers.

    Organizational Goals

    Without exception, the organizations that performed well were able to inculcate a sense of mission and commitment to organizational goals among staff, while those that were poor performers did not provide the same sense of mission. In several of the technical units involved in the budget process in Bolivia, Ghana, Morocco, and Sri Lanka, for example, professionals and staff shared a sense of elite status, pride in how hard and professionally they worked, and commitment to the importance of the task they were performing. In the agricultural research institutes in Ghana, Morocco, and Sri Lanka, a sense of elite status as scientists was coupled with links to international communities of scientists to enhance their own commitment to their jobs. The Crops Research Institute in Ghana was imbued with

professional pride because staff believed the work they were doing was relevant to their country's future. In Morocco's extension services, the importance of moral motivation, professional pride, and sense of mission was obvious. In Bolivia, a clear difference between the non-donor supported public sector agencies involved in health care delivery and the NGO programs was commitment to and internalization of an organizational mission that characterized the latter but not the former. In the donor-supported public sector organization, a sense of elite status encouraged higher levels of performance. Across the board, a sense of professional integrity among middle and upper level staff--a clear sense that they were being treated respectfully and seriously as professionals and performing their tasks according to professional norms--was associated with higher levels of performance. This sense of mission in Bolivia and Sri Lanka helped some organizations resist the politicization of public sector activities such as hiring, promotion, and allocation decisions. In contrast, Tanzania's budget department was accorded less prestige than other parts of the Treasury and performance suffered.

    Interestingly, commitment to organizational goals was frequently independent of salary levels. In the case of Bolivia, salaries of public sector and NGO health professionals were quite similar, although commitment varied significantly. In Morocco, salary levels among agricultural extension professionals had deteriorated, but mission commitment had not suffered to the same degree. In the economic agencies involved in the budget process in several of the countries, elite units more often benefitted from higher salaries than other parts of the civil service. Just as frequently, however, being part of an elite organization, sharing a sense of importance to national development, and sharing a tradition of prestige associated with a particular organization, such as the Central Bank in Sri Lanka, was a major factor in encouraging better performance, even when salary levels declined. This suggests that concern for organizational prestige, professional integrity, and organizational mission can compensate for some of the constraining factors introduced by an economically strapped or rigid public sector institutional context.

    Organizations that demonstrated both good performance and clear commitment to organizational goals actively encouraged the identification of professional staff with the mission of the organization. Frequently, in-service training immediately following recruitment was used to inculcate the organizational mission, as well as to familiarize new employees with procedures and standard practices. Among the case studies, this was well-presented in the case of PROSALUD in Bolivia, a program that went to great lengths to ensure that employees adopted and maintained a service orientation toward clients. In other cases, more material factors such as access to computers, vehicles, or decently equipped offices helped professionals share a sense of elite status and the importance of the jobs they were asked to do.


    Work, Authority, and Communications

    The structure of work, authority relationships, and formal and informal communications and behavioral norms also emerged as factors that differentiated good performers from poor performers at the organizational level. For each of these factors, the better performers demonstrated characteristics of equity, participation, and flexibility. In several of the budget units, for example, work was structured according to an annual cycle that required different kinds of work at different periods of the year and long hours under great pressure periodically, in conformance with an annual budget cycle. The better performers demonstrated an ability to structure activities and demands on workers so that professionals believed the they were being treated equitably. They were willing to work under extreme pressure to meet budget deadlines as long as they perceived that everyone was working equally hard and that there was sharing of more and less popular tasks that had to be performed. Politicization of assignments and favoritism were singled out as counterproductive to effective performance in the less productive organizations.

    Similarly, participation in decision making was encouraged in some organizations while rigid hierarchical systems were in place in others. Better performers were characterized by greater participation. In Morocco, the rigidity of a strongly hierarchical system was singled out as a factor that constrained more effective performance, and staff in several units indicated their dissatisfaction with top-down management styles. In Bolivia's NGO health organizations and Sri Lanka's agricultural research institutes, professionals clearly valued and responded to the opportunity to have some input into organizational decisions. In Ghana's Crops Research Institute, informal dialogue about policies and problem-solving teamwork enhanced effectiveness. In the severely disadvantaged Asuansi Farm Institute in Ghana, regular consultation, shared responsibilities, and participation in decision making was helpful in encouraging staff to keep old and deteriorated facilities in working order. Flexibility in designing work, assigning tasks, and generating solutions to problems was also associated with better performers, as long as flexibility did not conflict with concerns about equity.

    Management Capacity

    Overall, management capacity was a significant factor that emerged in explaining organizational performance. In the service delivery sectors of agriculture and health, in particular, management was singled out as problematic, particularly where sectoral specialists--agricultural scientists or medical doctors, for example--held leadership positions in organizations. In both Bolivia and Tanzania, the management of health services by medical doctors with no management training was an important factor in explaining why

limited services were not more effectively delivered. In other cases, as well, the failure of managers to be familiar with standards of modern management was closely connected to inefficiency, confusion, and lack of morale within an organization. In many organizations, skilled professional and technical personnel existed, but were poorly deployed or directed because managerial skills were lacking among the leaders of the organization. In contrast, management style, including factors such as setting a good example, collegiality, openness to participation in decision making, consultation, and encouragement were often in evidence in better performing organizations. More basic problems could be resolved with better management practices in some of the cases, such as the poor structure, supervision, and inventory control that characterized Tanzania's health centers. Recognizing the importance of management skills, Ghana's adjustment program encouraged developing or up-grading skills in policy analysis and management among public officials.

    Incentive Systems

    Organizational incentive systems emerged as critically important in the field studies of specific organizations. As indicated above, some incentives are not within the power of an organization to alter. This is the case where salary levels are set by a civil service or where recruitment and promotion are centrally managed. There was a clear difference in the performance of organizations that set their own salary scales and recruited and promoted people according to their own criteria. Characteristically, central banks, research institutes, and technical advisory units often fell into this category, and their performance was stronger than the performance of organizations in the ministries of finance, agriculture, and health that were bound by government-wide salary scales and promotion schemes. Often, donor assistance was important in providing funds for remunerating valued personnel. Ability (and resources) to affect salary levels appears to be a strong correlate of effective performance.

    In the case study research, however, non-monetary incentives played a very strong role in explaining good performance. Opportunities to study abroad, a sense of organizational mission, promotion for good performance, being singled out for excellent performance--as in employee of the month programs, for example--friendly competitions to achieve performance goals, involvement in teamwork, and a series of other benefits were adopted as practices in the better performers. In agricultural extension in Morocco, for example, those selected as "best agricultural extension worker" in a region received special prizes and bonuses, as did those who worked in areas where the "best farmer" was named.

    In contrast, in poorly performing organizations, there were few incentives for professional staff to work or to strive for improved output. In Sri Lanka, when staff were asked to take on more work than others but promotion continued to be based on seniority, resentment undermined motivation to do well. Similarly, in Bolivia, hard working, committed, and goal-oriented staff of the ministry of health were not rewarded, nor were slackers punished. As a result, the more motivated and better workers were easily attracted away to organizations or programs that provided such non-monetary rewards. Even within organizations, when some programs were provided with increased attention or donor-provided benefits such as new equipment and vehicles, performance was better than in the same organization without such benefits. Organizations that focused on motivating staff, even in the absence of monetary rewards, consistently had better performance.

    In the stronger performers, incentives for good performance were often matched by disincentives for poor performance. The ability to fire personnel for low performance was particularly important. In Bolivia's NGO health programs and Ghana's Crops Research Institute, an important aspect of personnel management was a probationary period followed by a review of the performance of the new recruit. Poor performance was dealt with by dismissal. In some of the organizations studied in Bolivia, Ghana, Morocco, and Sri Lanka, annual performance reviews were part of normal procedure. In cases in which these performance reviews were taken seriously and personnel rewarded or punished on the basis of successive reports, performance was stronger than in cases in which it was not possible to punish poor performance. Promotions linked to seniority rather than performance were demonstrated to depress the level of commitment and performance of professional staff.

    Physical Resources

    Physical resources were considered in all of the case studies and appear to have some impact on performance, although probably less than is often supposed. Among the poorest performers were organizations that were located in old, run-down, and abused buildings, with little access to modern technology or transportation, and with deficiencies in basic office amenities such as desks, pencils, and light bulbs. Better performers, particularly in the macroeconomic sector, tended to have much more pleasant and convenient offices in which to work. Lack of physical resources helped explain declining agricultural research capacity in Sri Lanka. As physical conditions in remote locations deteriorated along with salary levels, scientists were less willing to take up residence far from urban areas, especially when they had to be concerned about the educational and health needs of their families and when they were no longer provided with vehicles or salary levels that allowed them to own a car or maintain an urban residence. Similarly in Tanzania, village health workers, whose salaries were about $12 a month, also lacked transportation facilities. They responded with

only minimal performance. Even in the relatively good extension services in Morocco, factors such as scarce housing and transport interfered with more effective delivery of services. Lack of facilities and equipment were also constraining on the agricultural extension units in Ghana.

    However, it is difficult to know how much physical environments and resources directly contribute to poor performance or simply reflect low status, poor management, and low morale. There is some suggestion in the Bolivia case of PROSALUD, for example, that staff who were performing well and finding their work psychologically rewarding were likely to contribute to preserving and even up-grading their physical environment as part of their job definitions. As a result, the condition of PROSALUD's clinics was higher than that of the public sector clinics. Highly motivated staff worked as well as could be expected in other organizations, such as the Asuansi Farm Institute in Ghana, despite often serious lack of organizational amenities. Clearly, organizations cannot perform at optimum level if they do not have equipment or necessary vehicles. Nevertheless, some highly motivated organizations found ways to compensate for poorly provided physical resources.

    In this section, we have used the case studies to consider a series of factors that help explain the differences between better performing and poorer performing organizations. Table 4.5 provides a summary of factors that were consistently associated with good performance. It is important to note also that all of the organizations studied could benefit from capacity building interventions. Even in the Central Bank of Sri Lanka, the Crops Research Institute in Ghana, and the Budget Directorate in Morocco--among the strongest organizations in the studies--there were areas that could be improved. In Sri Lanka, for example, there needed to be better linkage between professional performance and incentives, upgrading of English language skills, and relief from some of the rigidities of being part of a civil service system. In Ghana's research institute, positive performance could easily be eroded by ending the donor support that enabled the organization to introduce many positive incentives. In Morocco, better job definitions, more efficient recruitment procedures, and better targeted training programs would improve performance.

Human Resources

    The availability and quality of human resources for public sector organizations figure in all of the case studies in important ways. In the most basic sense, the level of literacy, educational institution development, and access to university and technical training are important in explaining why public sector organizations generally perform poorly in the Central African Republic and Tanzania and much better in Morocco and Sri Lanka. Beyond the basic importance of investing in human resource development as a means of building

capacity more generally in a society, there is much evidence in the cases linking the availability and quality of human resources to organizational performance. In Figure 2.1, the interconnectedness of organizational performance and human resources is indicated graphically. Table 4.6 provides a summary of conditions that link good organizational performance to effective human resource training, recruitment, utilization, and retention.

    Training

    Training varied widely across the case studies. One significant difference among countries was whether universities and technical training prepared people well for the kinds of jobs they were going to undertake. Medical doctors in Bolivia, for example, received little training in public health or orientation toward preventive medicine and diseases linked to poverty. In Tanzania and the Central African Republic, training for many public sector responsibilities was inadequate, often woefully so. Declining standards in Sri Lanka's universities, and particularly the replacement of English by Sinhalese, lowered the quality of trained people available to the government. Ghana's universities suffered greatly because of prolonged economic crisis and stagnation, affecting the quality of recruits available to the government. In Morocco, university and technical institute training was generally of good quality, but it was not always appropriate for the particular tasks that professionals were asked to do in their jobs. Nevertheless, the public sector in general benefitted from the dense network of training institutions that existed in the country.

    In some cases, low or inappropriate professional training led organizations to compensate for it with in-house training programs. Sri Lanka's Department of National Planning introduced English language training to compensate for the low proficiency of university graduates. Morocco introduced preplacement training in agricultural extension programs to compensate for a failure of agricultural training institutes to develop skills relevant for extension. Similarly, some institutions were able to respond to changing organizational missions with new and appropriate training schemes.

    In-service training was also widely in evidence in the case studies, with the exception of the Central African Republic and Tanzania. Its effectiveness varied significantly, however. Induction training, particularly when it was task-specific and clearly linked to inculcating an organizational mystique, was usually a successful method of preparing people for their responsibilities. The Bolivian cases of maternal-child health care offers some good examples of the effectiveness of induction training. In the case of PSCM, initial training was very mission-focused and helped build the organization's strong ethic of hard work and camaraderie among staff.

    On-going and programmed professional up-grading was also generally successful as a form of in-service training. There were well-developed programs of this sort in Morocco and Sri Lanka in the agricultural sector. In Sri Lanka, in-service training was linked to the agricultural seasons so that agents had timely knowledge about particular crops to share with farmers. The creation of CENCAP, a public sector training institution in Bolivia, was linked to the introduction of a major public service law, SAFCO, which helped provide prominence, direction, and mission to the programs carried out by the training institution. Specialized training, such as computer training for Central Bank officials in Sri Lanka, was effective when it was linked to a clear need.

    There were mixed results with in-service training seminars and workshops scheduled on an ad hoc basis. In Bolivia's Ministry of Health, such activities interfered with getting the job done on a routine basis. In UDAPE, however, workshops and seminars, especially those presented by consultants working with the organization, were important substantively and also helped build a sense of professional identity among staff. The usefulness of study leaves varied by organization and country. It was most successful when individuals were awarded study leaves for good performance and when it was closely connected to professional career development and obligation to return to the organization.
    
    A common feature of many organizations was that organizational leaders had little training in management. In Bolivia and Tanzania, hospitals and health centers were inefficient and ineffective in part because they lacked resources but also because their top managers were badly equipped to run such organizations or make appropriate decisions. Where good management was in place, as in the CRI in Ghana and the NGO health programs in Bolivia, it could be credited to the leadership characteristics and management instincts of organizational leaders rather than to their training in organizational management, decision making, program analysis, or communications. In the case of SAFCO/ILACO in Bolivia, however, professionals who had management experience were consciously sought for important posts within the organization.

    Recruitment

    One of the clearest patterns to emerge in the case studies is the relationship between open and competitive recruitment procedures and performance. Without exception, the organizations that were best able to recruit appropriate talent were those that had public announcements and competitions for applicants, rigorous examinations and/or interviews, and

some kind of review board to ensure objectivity. See footnote 51 This was the case with UDAPE, PSCM, and PROISS in Bolivia; CRI in Ghana; the civil service generally in Morocco; and the Central Bank in Sri Lanka. In these cases, new recruits were most likely to be eager to share in the organization's mission and to participate effectively in its culture and work toward its goals.

    In addition, recruitment worked best to improve performance when it was managed by the organization rather than by the civil service or some other public sector entity. Ghana's CRI recruited its own scientists, but the Asuansi Farm Institute had to rely on the Public Service Institute for its recruiting. Morocco's organizations suffered because a time-consuming and complex recruitment process placed considerable distance between their needs and the ability of the civil service to respond to them. In the public health sector in Bolivia, hiring was carried out in a highly centralized way that generally failed to respond to local health center needs. Organizations that were able to set standards about recruitment criteria and probationary periods were far in advance of others in encouraging good performance. In part, such recruitment procedures allowed them to attract the most appropriate personnel for particular activities.

    Utilization

    Researchers in Bolivia, Morocco, and Sri Lanka reported that often the problem was not so much the availability of well-prepared personnel, but how they were utilized once they are recruited into an organization. Such a statement refocuses attention on issues previously discussed, such as the structure of work, management systems and styles, and incentive systems within the organization. It is clear in several of the cases that professionals were very sensitive to whether their jobs were meaningful and appropriate to their level of training. In cases in which well-trained professionals--economists, doctors, or agricultural scientists, for example--spent considerable amounts of time in administrative activities and "pushing paper," they believed they were not being used well by their organization. To the extent they were using their expertise to accomplish tasks they believed to be meaningful, they were more motivated to contribute to the organization.

    Thus, organizations that wish to build capacity need to consider carefully how professional personnel can be utilized most effectively. When agricultural extension agents in Sri Lanka were assigned to general poverty alleviation tasks, their performance was poor. When the extension service was refocused on extension, bureaucratic requirements for

reports ate into the amount of time agents could devote to farmers. Tanzania's budget and health officials could have been more productive if they had clearer and more appropriate job responsibilities. In Bolivia, national health programs could be adequately staffed in some categories, but staff were generally poorly deployed and utilized. Morocco's extension workers were underutilized, given their level of training. In their case, clear specification of job responsibilities and organizational relationships would have led to higher performance. Researchers indicated the desire of professionals to draw on their expertise and be involved meaningfully in an organizational mission. When they were idle or tied down with routine administrative tasks or kept from their activities because of lack of vehicles or computers, they lost motivation.

    Retention

    Retention of qualified personnel was a major issue in some of the cases and not in others. Again, salary levels were important, but more important was the sense of organizational mission and involvement, job satisfaction, professional identity, and recognition for good performance. In fact, these factors made it possible for some organizations to retain staff even when salary levels declined or job security was uncertain. In one of the NGO health programs in Bolivia, many employees had ten or more years of service despite very low salaries. Institutional loyalty and job satisfaction, promoted by teamwork, equity in distributing perquisites, rewards for good performance, and consultation in decision making also helped ensure good retention in the Department of National Planning in Sri Lanka even though salaries were low. In the Central Administration Budget Office in Bolivia, on the other hand, it was possible to attract well-trained officials but not to retain them because of the availability of more rewarding jobs elsewhere, particularly for the most effective professionals. More generally, the low prestige associated with working for government in Bolivia made it difficult to retain effective professionals. In the health ministry, for example, there was a clear pattern in which professionals joined, benefitted from training programs, and then left government service.

    Length of contract was related to retention of well-qualified personnel in interesting ways. One-year renewable contracts clearly linked to annual performance reviews led consistently to good retention records. On the other hand, civil service employment guarantees, often coupled with promotion practices based on seniority rather than performance, often meant that only poor performers were retained, while good performers moved on to more rewarding or interesting responsibilities. Bonding for foreign training experiences was useful in retaining well-trained officials in Sri Lanka, even when salary levels declined. Highly politicized environments, in which non-merit considerations affected hiring and firing decisions, diminished the link between employment and performance and

therefore had deleterious impacts on retention. This was the case generally in Bolivia and the Central African Republic. Overall, then, retention appeared to be highly sensitive to performance rewards and job satisfaction. This is a useful finding because it suggests that, even where financial resources for salaries are very constrained, retention can be improved through improvements in management practices within organizations.

Technical Assistance: Help or Hindrance

    In recent years, considerable criticism has been leveled against donor-supported technical assistance programs. Donors have been called to account for not being more effective in building capacity, for spending large amounts of money with little tangible evidence of achievement, and for weakening indigenous capacity by excessive use of foreign experts or by hiring away the best qualified people in the countries they work in. Donor technical assistance in Africa has been most extensively questioned. Donors have been extremely concerned about such questions and attacks because they are leveled against the central missions claimed by these organizations.

    Indeed, our case studies indicate that there are situations in which donors are more likely to be part of the problem than to be part of the solution. In the Central African Republic, it is unlikely that national capacity to manage the macroeconomy could develop while the international financial institutions continued to hold technical analysis and decision making captive to their programs and conditionalities. Tanzania became increasingly dependent on donor financing, even for routine functions of government, and uncertainty about the future availability of funds permeated all decision making within government. In several countries, a multiplicity of donors and objectives often contributed to confusion, cross-purposes, duplication of effort, and distraction of public officials and organizations from their central responsibilities.

    On the other hand, our cases indicate that often, donor assistance played a major role in building local capacity, particularly at the organizational level. If, as we have indicated, the better performers were strong, focused, mission-driven organizations, donors were central in providing the funding and the technical assistance to develop them. Donors added considerably by providing appropriate technical training and technical infrastructure to organizations, and they spearheaded focused training around the performance of specific tasks. They aided in organizational design to enhance the links between incentive systems and performance. They provided a number of organizations with important sheltering and on-going support in very hostile environments. And they were present in most of our cases

of innovative approaches to the solution of public problems. In the cases of the better performers, donor assistance was regularly singled out by the researchers as having been timely, appropriate, focused, and supportive of organizational development.

    In almost every case, technical assistance was associated with improved performance, whether in the guise of training courses, computer technology, or project management. In Bolivia's UDAPE, the prestige associated with a high profile government program and assistance from Harvard University were important in engendering a mystique of hard work and elite status. In central banks in Ghana, Morocco, and Sri Lanka, donor technical assistance was important in improving the capacity of budget offices to contribute to structural adjustment programs. Health programs supported by donor agencies were also among the better performers in Tanzania and Bolivia. In Ghana, donors played an important role in sustaining reforms through their willingness to provide support for good performance. In only a couple of cases was donor assistance mentioned as not resulting in improved performance: training for health care workers in hospitals in Bolivia, and training programs generally in the Central African Republic. In the former, the number of seminars, workshops, and lectures by specialists actually interfered with getting the job done and did not add systematically to organizational or professional capacity. In the latter, the people who benefitted were chosen for patronage reasons and there was no attempt to use their training constructively within organizations.
    
    The best examples of donor-assisted capacity building, however, are also ones that confront technical assistance planners with major dilemmas. One set of dilemmas has to do with the assisted organizations, which are frequently very dependent on donor funding. In some cases, funding dependence translates into donor guidance or control over mission, direction, and focus. This was a problem faced by the secretariat of health in Bolivia, which had become extremely dependent on international funding. PROISS, strongly supported by donor assistance, became virtually a parallel health secretariat in that country, even while Bolivians had little control over its destiny. Funding dependency also translates into uncertainty about the future. In the OTP and UDAPE in Bolivia and CRI in Ghana, for example, the positive performance of these organizations could not be ensured after donor support was ended. Salary levels, computer up-grading and repairs, training, and office supplies could all disappear when the donors withdrew.

    In addition, the strong performers, generally able to perform well in large part because of the assistance they acquired from donors, create problems for other organizations and at times for the public sector more generally. In the case studies, donor-supported capacity building initiatives often had undesirable consequences for organizations that were not receiving such assistance. A generalized characteristic of donor-supported initiatives was

higher salaries that tended to attract the best and brightest away from non-funded organizations. Access to computers, better office space, and vehicles also increased the differences among organizations that had support and those that did not. In the case of agricultural extension and maternal-child health services, these differences frequently meant that some areas of the country, some target groups, or some crops or diseases received priority attention, while others languished. Brain drain and organizational resentments were noted to result from focused technical assistance programs. In addition, when numerous donors compete to build capacity in "their" projects, division, confusion, and distraction can result.

    The underside of donor assistance revealed in our cases is not a reason to abandon such funding, but to anticipate such problems and attempt to plan around them. Part of the problem is that donor officials are driven by their organizations to produce results and to produce successes. For them, it may be much easier to achieve such goals if they create a new organization which they can design, fund, staff, and motivate outside of the problematic context of public sector problems in many countries. Indeed, it is relatively easy to build a new organization in which salary levels can attract the best people, and that can be a focus of attention and demands for excellence by government and international institutions alike, provided with adequate equipment, and embued with a professional prestige and mission-oriented mystique. The reservations noted above serve to question the wisdom of promoting capacity building in this way, however.     

Conclusions

    Our studies demonstrate the extent to which performance can be constrained by a wide variety of factors. They also indicate the extent to which the five dimensions of capacity laid out in the framework are interdependent. Causes of poor performance can be linked to any and all of the dimensions we have considered. In general, interventions to improve performance are most difficult to make and take the longest time horizon to demonstrate results at the broadest level of the action environment. Constraints that occur at the level of the organizational network or the organization itself are likely to be much more tractable and remedied more quickly. Nevertheless, as indicated previously, remedies introduced at the organizational or interorganizational level may not produce improvements if constraints along other dimensions of capacity are more binding.

    To design effective capacity building interventions, capacity gaps need to be identified and their causes sorted out in terms of the relative importance of various kinds and levels of constraints. Having done this, capacity builders must then decide what to do to ameliorate binding constraints on performance. In the next chapter, we provide a series of guidelines

that can help them figure out what to do.


CHAPTER 5

Building Capacity: Guidelines for Interventions

    A significant contribution of the case study research findings is the clear evidence that the weight of constraining factors varies across countries. In consequence, intervention strategies to build capacity will need to vary. They will need to respond to the particular gaps identified in particular cases and to focus on those constraints that are most important in limiting the ability to improve performance.

    As we have noted about the Central African Republic, for example, there are cases in which the political and economic situation is so adverse that little capacity exists. Moreover, the legacy of many years of political instability, predatory political leaders, and economic underdevelopment, such as low levels of human resource development and economic growth, continues to constrain capacity building in that country. Improving those conditions may be a precondition for sustainable public sector effectiveness. Tanzania faces a severe resource shortage that will have a negative impact on any focused capacity building initiative. However, if this constraint can be ameliorated, there is much that can be done within the public sector to improve performance. In Bolivia, Ghana, and Sri Lanka, the institutional context for public action places severe constraints in the path of better organizational performance. Any intervention in those countries would have to address this level as well as a number of interorganizational and organizational factors. The public sector institutional context in Morocco also would require some attention, but interventions along other dimensions of capacity could then provide significant payoffs in terms of improved performance.

    In what follows, we build on the case studies to present a series of guidelines about the focus of capacity building interventions at each level. Our analysis and guidelines presuppose an assessment of performance, identification of capacity gaps, and ordering of constraints. If interventions along various dimensions are found to be warranted, the guidelines suggest possible courses of action.

    To be successful, efforts to build capacity in the public sector must be undertaken by governments themselves. Because many of the actions required to develop capacity require political decisions, the commitment of political leaders and other public sector decision makers is essential if progress is to be made. Governments alone are in a position to take many of the actions, especially those at the broadest levels; and more focused interventions still require the active involvement and commitment of local decision makers and managers. Donors and others concerned about capacity development can play a supportive role in the process. The guidelines for action are intended to be useful to public sector decision makers and managers, as well as to assist donors and other groups in their efforts to support capacity building efforts.


Managing Constraints in the Action Environment

    In Chapter 4, we identified conditions in the action environment that constrain capacity development, as well as those that are supportive of it. Of all the levels, however, the action environment is the farthest removed from control of actors in the public sector or elsewhere. In the short run at least, conditions at this level are given and there is little possibility of designing actions to change the constraints. Because they can have an enormous impact on capacity and the potential for developing capacity, however, it is essential that constraints in the action environment be identified and their severity assessed as part of any capacity building effort.

    Taking a longer-term perspective, there are actions that have the potential of strengthening the action environment. These go beyond concerns with capacity building and there are other compelling reasons for carrying them out, but many of them have implications for creating a supportive environment for capacity. A development perspective that includes a conscious concern for creating and strengthening sustainable capacity, along with other development goals, is important to realizing potential benefits. The first set of recommendations is related to these broad long-term actions.

*    Support long-term improvement in the environment for public sector capacity building.

             .    Promote sustained investment in human development, especially by supporting basic education and health care, as well as by investing in training at higher levels to create a skilled workforce.

             .    Promote policies for broad-based and sustainable economic growth.

             .    Build political institutions that are effective at mediating economic and social conflict and providing opportunities for participation.

             .    Work to build political support and public demand for effective performance by the public sector.

     The environment for capacity building in all countries can be improved by strengthening supportive conditions and reducing constraints at this level, even though the main focus of attention may be at a different level. There are some countries, however, in which the action environment is so negative that little can be done at any level to build capacity. Long-term efforts to improve the environment are particularly important in these cases.


    For more focused capacity building efforts, these highly constrained cases present difficult challenges. Understanding the action environment allows capacity builders to be aware of what factors will affect the program. It may offer the possibility of finding ways to lessen or manage their effects, such as dealing with more immediate constraints--lack of financial resources, for example--that often stem from adverse conditions in the action environment. There is a risk in treating the symptoms, however; and capacity that is built by providing temporary budgetary support and higher salaries to get around these constraints will disappear with the end of the extraordinary funding. If capacity development is to be supported by providing shelter from a hostile environment, primary emphasis must be placed on sustaining that shelter. Long-lasting and renewable sources of financing need to be developed, either by allocating adequate funding through the budget or by finding ways to generate income. Building political support for a task or an organization is particularly important. If political leaders are committed to having a task done well, that support may not only translate into access to greater resources, but may lessen the degree to which politicization is allowed to undermine its effectiveness. Public demand for tasks to be performed well will reinforce those effects.

    Working with the private sector or with local NGOs is a possibility that holds promise for both improving the action environment and building capacity to perform essential development tasks. First, a strong civil society that can act on its own to meet development needs and to exert pressure for more effective government, along with a private sector that contributes to economic growth, helps to create economic, political, and social conditions that are supportive of capacity building and under which development challenges can be confronted. Secondly, working with private sector and non-governmental organizations to perform critical tasks both gets the job done and is an alternative way to build local capacity to meet development challenges effectively.
    
    Therefore, if the action environment is highly constraining:

*    Support capacity development in the public sector by providing some shelter from the adverse environment.

             .    Place high priority on developing sustainable sources of funding and qualified personnel.
    
             .    Build political support for the task for which capacity is to be strengthened.

*    Work with NGOs and the private sector and create space for them to operate.

*    Be willing to make a long-term commitment to the capacity building effort.

    In many places, despite some constraints in the action environment, there is much that can be done at other levels to build public sector capacity. In the following sections we present guidelines for interventions at those other levels.

Managing Constraints in the Public Sector Institutional Context

    Our analysis showed that constraints at this level were found across the cases, implying that action at this level is likely to be important. Indeed, for several of the cases, including Tanzania and Morocco, it is an essential part in any serious attempt to build sustainable capacity. Furthermore, a clear pattern emerged of problems with the public sector institutional context, especially concerning the utilization of human resources. As a result, it is possible to identify types of changes that are especially important. The consequences of these problems appeared primarily in individual organizations; but to the extent that they are determined by the overall public sector institutional context, action to reduce constraints at that level needs to precede or accompany interventions at the lower levels of the framework.
    
    The connection between the public sector institutional context and the individual organizations also indicates what types of changes are most often needed in the public sector context: changes that support good performance at the organizational level. Several broad principles serve as the critical guidelines for such changes, starting with salary that will allow the public sector to attract, retain, and effectively utilize qualified personnel; a level of budgetary support that will enable public sector organizations to function; and basic organizational structures and procedures.

    In many countries, the public sector salary level need not be as high as that in the private sector, but it must be at least high enough to ensure that public officials can put food on their tables. At reasonable levels of remuneration, people are attracted to public sector professional and technical positions for reasons beyond compensation, such as professional prestige, opportunities to work on important issues, and non-salary benefits.

     *    Ensure that public sector salary levels are high enough to attract capable professional and technical staff to public service and to allow them to commit themselves to their organizations.

*    Provide a level of budgetary support that allows salaries to be paid consistently and at

decent levels and that covers necessary operating expenses and investments, and ensure that organizations actually get the funds allocated to them.

*    Ensure that basic organizational structures, job descriptions, hiring procedures, reporting relationships, supply lines, and information systems are in place.

These are such fundamental necessities that, when they are not met, other changes in the public sector institutional context will have little effect. Yet inadequacies in these basics showed up repeatedly in the cases; and they demand attention.

    Given the reality of limited resources, however, governments may confront choices about what tasks are the most important for them to do. Making such choices allows a better use of financial and human resources, permits adequate budgetary support, and allows the government to give the political support needed. In addition, it helps the government to define its goals in ways that permit it to interact more positively with non-governmental groups.

*    Make choices about what activities are important for the government to carry out and focus on building capacity for them.
         
    Most other actions at the level of the public sector institutional context involve reforms in the civil service or other administrative systems. Too often such reform programs have failed to get at the issues that really make a difference for capacity. Again, what is essential is that changes be designed to create systems that empower organizations to perform effectively. This becomes particularly important with regard to reforms involving civil service cutbacks, which have the potential for either destroying capacity, if done without regard for needs and priorities, or focusing and supporting capacity, if carried out as part of a more positively defined program to improve performance.

    Low levels of expectation regarding performance are frequently built into public sector institutions, and organizations and employees are not judged on how well they perform. Public administrations also tend to emphasize conformity to rules, along with controls to ensure that the rules are followed. Designing systems that create effective expectations of good performance and that emphasize results is critical.

    Furthermore, a focus on results implies active management of resources to reach goals. As pointed out in Chapter 4, rigid rules and regulations stand in the way of effective performance, and they also stand in the way of active management. Managers must have room to maneuver and to make decisions. While a set of rules that are straightforward and

consistent is important in the interests of transparency and fairness, they should incorporate enough flexibility that managers can utilize personnel and other resources in a problem-solving way; and they should support, rather than constrain, performance.

*    Focus civil service reform programs on achieving positive goals of improving essential performance, rather than achieving set numerical targets of size or cost savings. Even if downsizing is needed, that action should be taken as a part of a results-oriented reform program.

*    Create an effective expectation of good performance from public sector workers and organizations.

             .    Establish performance standards that demand good performance and use them consistently as an instrument of personnel management.

             .    Move away from recruitment patterns that are based on either patronage or formalistic qualifications toward recruitment based on merit, fit of the candidate with the job, and management capabilities.

*    Center attention on producing results rather than on conformity to rules.

             .    Set performance standards that focus on results.

             .     Give managers a central role and establish management systems that can produce results.

             .    Evaluate managers on the basis of their effectiveness in producing results.

*    Introduce flexibility into rules and regulations so that managers can use them effectively and can apply problem-solving approaches.
         
Managing Constraints in the Task Network

    Organizations in task networks need to be able to work together effectively to accomplish a task, and interventions need to improve the ability of organizations to work together in a problem-solving way. Because networks are made up of many organizations and many separate interactions, a program to build capacity to perform a particular task will probably include a package of measures.

*    Target efforts to improve parts of the task network that act as the most important constraints on performance.

    Constraints arise both from the inability of organizations to do their part of the task and from weaknesses in interactions among organizations. The different sources imply different types of interventions. If an organization critical for the performance of the task is not able to function effectively, a capacity building effort would need to focus on strengthening the organization, following the guidelines in the next section. On the other hand, if the constraint lies in the interaction among organizations, attention must be directed at improving coordination.

    Addressing interaction problems may require some adjustment in the structure of organizations to allow them to work together more effectively. While getting the structure right may aid coordination, however, it is not enough to ensure that linkages are effective. There must be mechanisms that bring together personnel from the organizations involved and that have clearly established purposes and goals related to coordination. Any procedures or groups that have the goal of coordinating the work of different organizations should be oriented toward facilitating joint problem-solving actions. It is important to set up formal means of coordination, in order to ensure clearly defined goals and to give recognition to coordination as an important role in task performance. In addition, informal interactions help to strengthen linkages and add flexibility that aids in problem-solving.
    
*    Where weak organizations are identified as problems for the task network, focus on strengthening their effectiveness.

*    Where weaknesses are identified in the interactions among organizations, target those interactions for strengthening.

             .    Revise structural relationships of organizations if the structure creates barriers to linkages that are critical for effective performance.

             .    Actively pursue coordination and create or strengthen mechanisms for it.

             .    Set up formal mechanisms, but also encourage informal interactions.

    One often neglected area of task network interaction that is crucial to tasks such as service delivery, is developing ways to encourage interaction with intended beneficiaries and other stakeholders and actively utilizing those mechanisms to involve them in the task network.


*    Develop effective ways to bring beneficiaries and other stakeholders into the task network.

             .    These must be two-way linkages: they must go beyond the typical means of delivering services to bring the beneficiaries and stakeholders into decisions about how the task is performed. It is also important to link beneficiary involvement at the grassroots level with policy making groups at higher levels.

             .    Establish regular mechanisms of interaction so that they will be sustained.

Managing Constraints within Organizations

    Courses of action to improve performance by focusing on what occurs within organizations can be reduced to a few relatively simple guidelines. They summarize actions that are often overlooked in institution strengthening interventions, however, because many approaches to capacity building focus primarily on creating structures and control systems. The findings of the case studies suggest instead that interventions to improve performance at the organizational level should be based on a management-oriented strategy.

    The cases indicate that the constraints that organizations face often have less to do with structuring work, defining missions, and describing jobs--the focus of many public administration strengthening projects--than they do with providing meaningful jobs and incentives for goal-focused performance, inculcating an organizational mystique among professional staff, and encouraging a problem-solving orientation toward work.

    Of course, before organizations can do much to improve performance through a management-focused strategy, they must have a some fundamentals in place. As discussed earlier, they must provide at least a minimum level of compensation for professional and technical staff and at least the beginning of a stable set of systems and procedures for accomplishing work. The cases of Tanzania and the Central African Republic emphasize the extent to which improved performance cannot be expected when salaries are below subsistence level or there are no systems or standards in place to guide organizational activities. If these are set at the broader public sector institutional level, initial attention needs to be paid to that level; if there is room for establishing these basics within the organization, they must be the first concern there.

*    Attend to the basics.

             .    Ensure salary levels that allow professional and technical staff to commit

themselves to the organization.

             .    Ensure that basic systems and procedures are in place so that staff will know what must be done, when, and how. Basic job descriptions, hiring procedures, reporting relationships, supply lines, and information systems are among the systems and procedures that must be in place before other kinds of interventions will "pay off" in terms of improved performance.

    When the basics are attended to, capacity builders can consider more management-focused interventions to increase performance. A second step in working to build organizational performance is based on the principle that good performance must be valued by an organization. The cases indicate that the effective performance of staff is stimulated when they receive consistent messages about the value of performance.

*    Improve the capacity of organizations to send messages that performance counts.

             .    Open and competitive recruitment procedures emphasize that those selected for employment will have "won" a competition on the basis of their merit; they will understand that the organization uses performance as a measure of professional merit.

             .    Recruitment procedures should emphasize the appropriateness of those selected for particular jobs so that performance expectations can be communicated clearly.

             .    Job descriptions and rules about recruitment, remuneration, and promotion should send messages about performance expectations; they should indicate what must be done in order to be retained, promoted, or given salary increases.

             .    Focused induction training should be used to inculcate desirable organizational norms and performance expectations.

             .    A probationary period for newly hired personnel--usually three months--emphasizes that effective performance is expected. A full review at the end of this period, followed by dismissal when individuals fail to measure up to expectations, emphasizes that the probationary period needs to be taken seriously by inductees. This period can help implant norms for behavior that become standards for on-going career development.

             .    Timed and renewable contracts linked to performance reviews send messages about the need to maintain good performance levels. One year contracts, linked to seriously assessed performance reviews, are widely used with positive results. The problem that is often perceived to be one of job security, should be defined instead as one about certainty of tenure for a given amount of time, assuming good performance.

             .    Good performance must be acknowledged and rewarded. Promotions, recognition, and monetary and non-monetary incentives are important ways to reward good performance. In addition, excellent performance should be singled out for recognition and reward.

             .    Poor performance must be acknowledged and punished. Employees need to be informed of their failure to achieve expected standards and fired after several warnings.
                 
             .    Managers who demonstrate high performance encourage high performance among their subordinates. Those placed in managerial positions should be people whose prior performance indicates that they value good work and are able to set reasonable and effective standards for their subordinates.

    The case studies also suggest that staff, particularly those in professional and technical positions, respond with improved performance when they are assigned jobs that are appropriate for their training and when they believe they are doing meaningful work. Job satisfaction is important, particularly when combined with a sense of organizational or professional commitment to work. A third step in building capacity at the organizational level, then, is to increase job satisfaction and commitment.

*    Improve the capacity of organizations to provide professional and technical personnel with meaningful work and to share commitment to professional norms of behavior.

             .    Ensure that trained staff are assigned to jobs that are appropriate for their skills and that allow them to use the skills they have developed through their professional development.

             .    Build professional identities and encourage professional norms of behavior and integrity. In many developing countries, being a professional is an important source of identity and elite status that can be reinforced in job-related activities and drawn on to improve how well jobs are accomplished. Professional

identities and norms also serve to encourage ethical behavior among staff.

             .    Professional and technical staff should be encouraged to join or create professional associations and to develop professional networks domestically and internationally. Strong professional identities within an organization build commitment to mission-driven activities.

             .    Linking professional and technical staff to international reference groups encourages a strong sense of professional identity and the importance of the work of the organization.

    Equally important in the cases in which performance was rated relatively strong was the presence of an organizational mystique or sense of mission that was widely and deeply shared by staff. As indicated, the cases indicated that the sense of mission was more important than the substance of the mystique. The critical factor was that staff believed that the organization they worked in had an important role to play in their countries and that their activities contributed to that role. A sense of mission was particularly important among professional staff. Capacity builders should therefore consider how a sense of mission can be developed and inculcated.

*    Build a sense of mystique about the mission of the organization and develop ways to inculcate that mystique among staff.

             .    Induction training should have a strong component of mission-focused curriculum and discussion.

             .    Managers should stress the importance of contributing to organizational missions in performance reviews and in evaluations of team, office, and project activities.

             .    Work carried out in teams can help build and promote an organizational mystique.

             .    Participation of clients in service-oriented organizations reinforces a sense of mission and commitment to it.

    Organizations that performed well in the case study research were problem-solving organizations. They were structured in ways that allowed staff to redefine tasks and take on new responsibilities in response to new situations or conditions. This is an important

characteristic because the tasks and the environment within which they are carried out are always changing and problems continuously arise and need focused attention during the life of an organization. The ability to overcome problems and meet new challenges is a critical component of the ability to sustain good performance over time.

*    Develop a problem-solving orientation within organizations and among staff.    
         
             .    Work to ensure that organizations have sufficient autonomy or "room for maneuver" that they can respond to changing circumstances.

             .    Define organizational missions in ways that encourage creative adjustment to changing circumstances.

             .    Train staff in analytic methods that encourage problem identification and assessment of options for resolving them.

             .    Build an organizational culture that encourages innovative responses to changing circumstances. Working in teams to identify problems and solutions is often used as a means of encouraging this kind of culture.

             .    Recognize and reward staff for successful problem-solving.

    The case studies also focused attention on the importance of managers in organizations. Management styles were as important as management systems; the best managers were leaders who had the capacity to inspire confidence, find solutions to incentive problems even in very difficult contexts, build and reinforce professional commitment to work, and listen effectively to the ideas and needs of professional staff. Thus, another guideline for capacity building in organizations focuses on management skills.

     *    Develop management skills among those who lead organizations or organizational units.

             .    Managers must be oriented toward finding solutions to problems rather than toward exercising authority by applying rules and regulations.

             .    Managers must understand the relationship between incentive systems and performance and should work to develop this relationship as a norm for organizational activities.

             .    Managers must have analytic skills to help them define problems and sort out options for action.

             .    Managers must have the skills to negotiate effectively within the organization and between the organization and its environment.

             .    Managers must be able to encourage participation in decision making and responsiveness to client needs.

             .    Managers must develop skills and mechanisms to shield their organizations from some of the negative influences of very unsupportive environments (for example, the ability to resist politicization of hiring and promotion practices in the organization).
        
             .    Managers must orient their organizations toward meeting performance standards rather than focusing on close monitoring of staff behavior and activities.    

             .    Managers must work to develop organizational traditions and prestige that focus on excellence in performance.

    The case studies also indicate that organizations often perform more effectively when they are in the limelight of importance to government or when they are under extensive pressure from outside the organization to perform well. This was evident in the organizations that were expected to play an important role in carrying out a structural adjustment program and in those that were pressured by other organizations or by their clients to deliver services.

*    Create external demand for effective performance.

             .    Link the pursuit of organizational tasks to broad and important goals of government. Organizations need to be told by those outside the organizations that their performance will be monitored in terms of taking credit for success or sharing blame for failures to achieve these larger goals.

             .    Mobilize clients to put pressure on organizations to provide effective and timely services. Organizations should know that clients have means to communicate to important "others" when they encounter good and poor performance or when individual public officials are responsive or unresponsive to their needs.

             .    Mobilize demand for information and demand for good service in particular.

These are two areas that are particularly sensitive to constituency pressure.

             .    Publicize successes so that organizations are aware that they are valued and that there are high expectations for what they are able to accomplish.

Managing Human Resource Constraints

    Many of the constraints related to human resources and organizational performance are reviewed above. It is worth emphasizing that much of the "problem" of human resources is a problem of utilization--what jobs individuals are assigned and what kinds of incentives shape their behavior in those jobs. In addition to the guidelines that focus attention on performance, incentive systems, job satisfaction, problem-solving, management, and demand creation, several additional guidelines are related to how capacity builders can overcome human resource constraints.

             *    Build links between institutions that train professional and technical resources and the organizations that recruit and use such talents.

             .    Officials of universities and training institutes should meet regularly with managers of organizations that recruit from their institutions. If appropriate, positions on the boards of training institutions can be filled by prominent leaders of the recruiting organizations. Capacity builders should seek ways of developing opportunities for interaction between organizations using skilled talent and training institutions.

             .    Graduates of training institutions who are recruited into the public sector should be provided with channels to provide feedback to leaders and faculty about the adequacy of their training.

             .    Curriculum development in training institutions should emphasize employment-relevant skills. Emphasis on analytic techniques, management development, and problem-solving skills should be emphasized.

*    Assess how and when additional training for professional and technical staff is most appropriately offered.

             .    Opportunities for domestic and study leaves should be clearly linked to organizational needs as well as to individual needs.

             .    Professional and technical personnel must develop or upgrade their management skills as well as--and in some cases instead of--their profession-related skills.

             .    Additional training must be linked to job performance.

             .    High prestige training opportunities, such as overseas training, should be linked to an effective bonding system or other way of ensuring commitment to return to the sponsoring organization.

What Can Donors Do?

    Donor supported capacity building efforts can be important means to assist in developing more capable states, able to respond more adequately to the economic, political, and social challenges facing many countries now and in the future. The case studies indicate that donor initiatives in capacity building were the source of improvement and innovation at the organizational and human resource level of our framework. But donor initiatives were also at times detrimental to building sustainable public sector capacity when they were poorly designed and erratically implemented or when they substituted for rather than created capacity. Moreover, some donor interventions created undue dependency and uncertainty, they frequently exacerbated resource and morale problems in programs that did not receive funding, and they contributed to coordination and communication problems, and they contributed to coordination and communication problems.

    To avoid such problems, donor-supported capacity building efforts must be demand-driven. Just as the best development projects and economic reform programs are demand driven, technical assistance for capacity building initiatives should also be undertaken only when a clear need is articulated by policy makers, program managers, or other stakeholders. Recipient governments need to be able to articulate what is needed, why it is needed, and for how long it is expected to be needed. Only in this way is it possible to ensure that ownership of capacity building initiatives will be assumed by the country. Only in this way will government be committed to making good use of assistance.

    There are a number of activities that help build greater demand for and ownership of capacity building initiatives.

*    National development strategies should include a discussion of priority needs for capacity building initiatives. Donors can
                 
             .    Support national dialogues, workshops, seminars, and other fora for discussions

of national development strategies and their relation to existing and needed capacity in the public sector.

             .    Support capacity assessments that feed into discussions of national strategies.

             .    Support discussions of priorities among capacity building needs.

             .    Promote dialogue between governments and NGOs about the strengths and weaknesses of particular organizations for engaging in development tasks.

             .    Provide fora for discussing innovative approaches to capacity building and for considering the experiences of other countries.

             .    Support training activities that enable countries and organizations to identify capacity gaps linked to national development.

    Donors can also assist governments to design specific interventions along the various dimensions of capacity that are laid out in the framework. Among the activities that can assist in designing and implementing capacity building initiatives are the following.

     *    Help governments and organizations identify a range of options for capacity building initiatives and encourage the ability to assess their feasibility and benefits within country and public sector contexts.

*    Encourage review of on-going initiatives to assess what is working well and what is not working well. Help develop insight into ways the factors that contribute to effective performance can be borrowed across organizations.
    
*    Provide focused assistance when required in promoting technological change or in adopting appropriate management techniques to the accomplishment of particular tasks.

    Donors can also promote public sector capacity by supporting a range of training and professional networking activities.

*    Support applied professional education in local universities and technical institutes.

*    Support the development of local capacity in management training. This training should emphasize developing skills in applied problem-solving, applied economic analysis, financial and human resource management, communications, and leadership

and negotiations.

*    Invest in local and overseas training in public sector management for particularly effective professionals in the public service.

*    Help build networks and links among professionals within government, private and NGO sectors, and international reference groups.

*    Assist in the development of professional identities and sense of organizational mission.

    As important as what donors can do is what they should not do. They should resist the temptation to define objectives in terms of "getting the job done" or "getting the money spent." They should equally strongly resist the temptation to create a new organization in order to avoid the difficult task of transforming an existing organization or a problematic public sector institutional context. They should avoid the temptation to pursue their own visions of capacity or national development when they encounter particularly difficult environments. Equally, they should avoid creating programs that compete with those of other donors in ideology, focus, or objective.

    Finally, donors and governments must recognize that capacity is built only "over the long haul." Donors must be willing to commit resources and time to assisting in the development of public sector capacity for extended periods of time. As with much else in the course of development, there are no quick fixes for building sustainable capacity.


Footnote: 1       See United Nations Development Programme (1993a) and (1993b).
Footnote: 2      World Bank (1989:4-10)
Footnote: 3      See Tobelem (1992).
Footnote: 4      See Picard and Garrity (1994).
Footnote: 5      See, for example, Cohen (1993a); Chew (1990).
Footnote: 6      See Berg (1993); Jaycox (1993).
Footnote: 7      See Cohen (1993a) and (1993b).
Footnote: 8      See the review of technical assistance evaluations by Berg (1993:18-32).
Footnote: 9      Merquior (1993:1265).
Footnote: 10      See, in particular, Bhagwati (1978); Colander (1984); Krueger (1974); Lal (1984); Srinivasan (1985); and World Bank (1984).
Footnote: 11      See Grindle (1994:304)
Footnote: 12      See Kahler (1990:55).
Footnote: 13      Streeten (1993:1291).
Footnote: 14      See especially Killick (1989). Esman (1991) presents a useful overview of the discussion of states and markets and their relationship to development management.
Footnote: 15      See Wade (1990).
Footnote: 16      See Ruggie (1982); and Callaghy (1989).
Footnote: 17      See, for examples, North and Thomas (1973); and Williamson (1985).
Footnote: 18      Streeten (1993:1282).
Footnote: 19      See Grindle (forthcoming) for a discussion of four dimensions of state capacity. See also Callaghy (1989).
Footnote: 20      See the UNDP's Human Development Reports for 1990-1993 and the World Bank's World Development Reports for 1990 (on poverty) and 1993 (on health).
Footnote: 21      See Birdsall, Ross, and Sabot (1994).
Footnote: 22      See World Development Report (1992), which focuses on the environment. See also Brundtland Commission Report (1987); Sandbrook (1991); and Strong (1991).
Footnote: 23      See Porter (1990); Haggard (1990).
Footnote: 24      See Grindle (forthcoming) for a discussion of this experience.
Footnote: 25      See, for examples, Boeninger (1991); Ndulu (1986).
Footnote: 26      For discussions of these trends, see Fowler (1991); Fuentes and Frank (1989); Herbst (1990); Huntington (1991); and O'Donnell, Schmitter, and Whitehead (1986).
Footnote: 27      See World Development Report (1991:Ch.1).
Footnote: 28      See the discussion in Laishley (1993).
Footnote: 29      See Grindle (forthcoming: Ch.5).
Footnote: 30      For an interesting case study of this capacity, see Haggard and Moon (1983).
Footnote: 31      This is particularly clear in the account by Rondinelli (1987) of the evolution of these approaches in USAID.
Footnote: 32      See Morgan (1993:1-9). See also Esman (1991).
Footnote: 33      Morgan (1993:2).
Footnote: 34      These criticisms, applied to UNDP technical assistance efforts, are discussed in UNDP (1993b:4-6, 8-13).
Footnote: 35      For many UNDP projects, "The press of deadlines, the call for tangible evidence of activity progress, and the need to meet performance standards have caused managers to concentrate on short-term production and technical outputs to the neglect of longer-term capacity and sustainability issues" (UNDP 1993b:5).
Footnote: 36      Morgan (1992:5-9).
Footnote: 37      Morgan (1993:5). See also Berg (1993); North (1992).
Footnote: 38      Cohen (1993b) reviews and assesses much of the literature on this topic. The Dictionary of Public Administration (Shafritz 1986:79) adopts this narrow definition of capacity building. It is "...any system, effort, or process...which includes among its major objectives strengthening the capability of elected chief executive officers, chief administrative officers, department and agency heads, and program managers in general purpose government to plan, implement, manage or evaluate policies, strategies, or programs designed to impact on social conditions in the community."
Footnote: 39      In recent documents representing the UNDP's efforts to make sense of capacity building, sometimes a broad definition is adopted, with attention to national capacity building, much in the Morgan sense. At other times the focus is on strengthening human resources and organizations. They are consistent, however, in the argument that the contextual factors are an important part of the picture and that attention to human resources (or even organizations) without a view of the context is too narrow and has been a factor in the disappointing capacity building results up to now. See United Nations Development Programme (1993a) and (1993b).
Footnote: 40      Berg (1993:14)
Footnote: 41      Aberbach and Rockman (1992) present a useful discussion of the relationships between performance and outcome.
Footnote: 42      This is an important point. As Picard (1994:2) points out in a recent analysis of economic policy reform and capacity in Africa, "As time and experiences accumulate, economic "miracles" are being increasingly understood in terms of an interwoven series of complex activities carried out by both the public sector and the private sector."
Footnote: 43      In some instances there may be a trade-off between income levels and local capacity building, where technical assistance is reduced or redirected in order to facilitate the development of local capacity. We are grateful to Michael Roemer for this observation.
Footnote: 44      See Berg (1993:4-15).
Footnote: 45      The research design is a structured, focused comparison of case studies. On case study research design see Yin (1989). On structured, focused comparison of case studies, see George (1979).
Footnote: 46      See Bryant and White (1984); White (1987:159-86); Brinkerhoff (n.d.);. and Leonard, (1977).
Footnote: 47      That the type of activity is an important distinction in connection with organization performance is strongly made by Israel (1987). His concept of specificity, which he argued is an important factor in relation to organizational effectiveness, is relevant here. Delivering services is a very low specificity activity, while budget formulation is higher in specificity.
Footnote: 48      This is in line with Israel's arguments on characteristics of different types of activities. See Israel (1987).
Footnote: 49      Extension for plantation crops, other export crops, and livestock were all handled separately. They were affected differently by budgetary allocations and provincialization. Only the food crop extension service was considered here. The division of responsibilities in fact affected all of them, since farming in Sri Lanka was integrated--most farmers produced several types of crops. With extension agents only dealing with one type, the system was not able to deal with larger questions of the relationship among them. There were also issues of efficiency raised by the division of responsibility.
Footnote: 50      Above-average and below-average would, of course, refer to level of performance among organizations within a particular country.
Footnote: 51      This is a major finding of Tendler and Freedheim (1995) in their study of development projects in the state of Ceará in Northeast Brazil.


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