The second plenary session of the ERF 17th Annual Conference addressed today the question “Do Institutional Constraints on Policymakers work?”. Given the nature of the political regimes in the Arab region and the recent political uprisings in Tunisia and Egypt, this session appears to be very relevant to understand the importance of institutional reforms and their potential impact on policy.
Ibrahim Elbadawi, Macroeconomic Research Department Director at the Economic Policy & Research Institute (EPRI) addressed the relation between fiscal rules, political checks and balances and democracy. In his presentation, he underlined how rule based policies are designed to protect and shield government fiscal policies from external economic shocks. However, the preliminary findings of his research suggest that, while democracy is very important for the MENA region and it has many virtues, it is also not enough to restrain governments. In this sense, checks and balances are needed as well.
Gary Milante, World Bank, presented the main findings of the “World Development Report 2011: Conflict, Security and Development”, to be published on April the 11th. The report looks at the effects of violence on development. This is the first report of this kind to address the interaction between the economic, political and security spheres.
Milante pointed out that 1.5 billion people live in countries affected by violence, which is significantly diminishing their capacity for economic and social development. The report argues that institutions can help to develop resilience against violence in these environments, especially by helping in insolating and protecting people living in such societies.
The process of moving from experiencing violence to developing resilience is a long one. Reforms and changes take place, restoring confidence, and transforming institutions. However, institutions’ transformation is not enough. There is need for a mechanism to prove a new social order has formed.
Finally, Lant Pritchett from Harvard University discussed what he called the “Administrative capability of the state” or the ability of the state to shape the behavior of “implementing agents”, thus ensuring its stated objectives are met.
Pritchett showed that policy is both divided into policy mapping and formulation and policy implementation. Policies that are formulated do not necessarily get put into practice because the real world context creates different norms and the people at the implementation level are shaped by these.
Pritchett underlined the divergence of de jure and de facto policy by providing the example of attaining a driver’s license in Delhi. Despite having rules, regulations and policies in place, these are not always followed directly. This example indicated more broadly how social norms can be more powerful than legislation.