 It's 3.30, so I would like to start now. And, uh, Excellencies, ladies and gentlemen, friends of UNU Wider, and the 300 who are following this UNU Wider event by webcast. You may note that there are a couple of missing countries in there, including my own home country that has been rectified during the last couple of days, but this is actually the extent of people who are participating in this event this afternoon. It is indeed an honour for me, on behalf of UNU Wider, to welcome you all to this 16th Wider annual lecture. The Wider annual lecture is delivered each year by a scholar or a policymaker who has made significant contributions to the field of global development and transition. And I'm pleased to say that we are indeed keeping up standards to the highest international level. This year, the lecture will be delivered by Professor Land Pritchett and has been entitled, Folk and the Formula, Pathways to Capable States. As some of you may know, we've begun a tradition in UNU Wider for selecting colourful titles for our annual lectures. Last year, the title was From Flying Geese to Leading Dragons, and the setting was that of Sonny Maputo-Mosambique. This year, we are back at base, in part because we have, over the next couple of days, a major international conference on climate change. Furthering development is a challenge. It's complicated. And development needs a capable state. A state that can carry out the responsibilities that are indispensable for the process of development to take place. Kids must be educated. Effective policies must be pushed in place. Mail must be delivered. Taxes must be collected and spent in an effective way. And when you look out there, there are still major challenges. Countries are struggling and are in many ways and in many places failing to deliver these functions. I believe, and this was behind the choice of the topic for this year, that can there really be any bigger challenge in developed economics in furthering the process through building state capability alongside the challenge of helping secure peace in and among states. I think that's an absolutely core topic and we're most grateful that today's lecturer accepted the challenge to come and present his work and thoughts on this topic. Today's lecturer is an American Development Economist. He was born in Utah in 1959 and he was raised in Idaho. He graduated from MIT in 1988 with a PhD in economics and he has in a number of rounds worked in key positions in the World Bank. He was a team member on a number of publications. I won't list them here all, but they have played a critical role in influencing discussions over the past 10, 15 years. He's a husband and is now a professor at the John F. Kennedy School of Government in the practice of economic development. I know from personal conversations, Will and Pritchett, that he's not quite sure whether he's an aid gunt or an academic who works in the field. I personally think that that's a brilliant combination and in any case, Land Pritchett has made a number of absolutely core contributions to the economics of development and to economics in general, ranging topics from education, democracy, health to growth and the evidence base on which we work. Some of his more recent work includes a monograph on let their people come breaking the gridlock on global labour mobility, a point that has caused and rightly so, a lot of debate. And he was also a co-editor of the World Bank publications on moving out of poverty success from the bottom up. This contribution created a lot of stir among development practitioners because rather than giving statistic after statistic on poverty, actually Land and his colleagues went out and consulted some 60,000 poor people on what they actually think poverty is, how it feels to be poor, what poor people actually think they need and how they actually think that poverty should be defined. And it does reflect Land's long standing commitment to understand what is really at stake. In between, Land Pritid has lived and worked in Indonesia during the economic crisis, he's lived and worked in India and by the way he comes to this lecture today from India where he is now living and in addition to that what is it? What are the other countries from which he has experienced? Land, it is a great pleasure, it's a great honor for us to warmly welcome you today and to invite you to give the 16th wider annual lecture. So it's a pleasure to be here. I have this tennis ball. You might need to throw this to me later. So you hold that. So sometimes it's really clear what we're talking about. When I very first started thinking about this lecture and what I would say I was in New Mexico and stopped to take a picture of this horse. I grew up in Idaho, I have an affinity for horses, they're beautiful creatures and that's a horse. No question about it, it's a horse. And the other picture is a picture of two horses. No question about it, there's two horses. Just behind where this horse is there was another sign that I was in front of the New Mexico Behavioral Health Institute and I thought I know what a horse is what's a behavioral health institute? Well I didn't really know what any of those words meant I didn't know what behavioral health was as opposed to others and moreover the sign we care made me very suspicious maybe I'm just cynical but if you have to say so so I then drove further down the street and it turns out the behavioral health institute has very high fences with rolls of barbed wire across the top and the behavioral health institute has a double locked door with secure single entry injuries so you can only go in one door at a time and when I went to take a picture of the behavioral health institute I was literally threatened with being arrested by a New Mexico policeman now wait a second oh I get it it's that kind of behavioral health institute it's really a mental lockdown facility for the criminally insane but that doesn't sound so good so we'll call it a behavioral health institute and the people with power get away with calling it that it is in fact a behavioral health institute so I want to start thinking about a problem and I want to start with telling you about a joke I won't even tell you this joke because the joke is so poignant but I will tell you about a joke and then I'll follow up with some stories that just motivate kind of the issue I want to talk about that gets under acknowledged so I was doing some research on the conditions of Dalits who were the scheduled caste peoples in India the market reform era and went out with one of my collaborators who himself is a Dalit to visit his villages and the villages where we were doing the research just so I could in some sense feel confident that the results we were seeing I had seen for myself and we were sitting around with maybe 30 people with one of the most respected members of this Dalit community who had been a school teacher for 25 years and we're sitting around and he said let me tell you a joke said okay you're walking through the jungle and suddenly you come upon a snake and a teacher what do you do jungle by yourself snake and a teacher well obviously you pick up a stick and beat the teacher it's like uproarious laughter just people rolling on the ground at how funny that was and I kind of looked at what and he explained to me the snakes just a brute they don't know what they're doing but the teacher they know what they're doing and knows better so partly one way to frame what I want to talk about is what has the world come to where one of the most dispossessed peoples in the world think a joke about beating a teacher with a stick is hilarious because it represents something very real in their own experience so now let me tell you another story another story a few years earlier I had gone to visit some research that was trying to improve the quality of schooling by providing parents with information about what their kids could actually do very simple things can they read a paragraph can they do a simple sum can they do division and then publicizing that to the village no here's what your kids can do and at the end of this research activity as this is an activist working together with a research group trying to see if this worked to create accountability which we'll get to in a second and I happened to arrive in one village just as they were presenting the results for the village which not uncommonly in this part of India were just disastrous disastrous they actually went with people to assess whether third graders could read and saw third graders that didn't know which way the text ran they would take text and sort of turn it various ways trying to figure out what it was third grade 11 years old been in school for three years at this meeting the headmaster of the school the government school was there the village elected head was there a man stood up about my age you've betrayed me you promised me that if I've worked like a donkey my whole life because I didn't get an education you promised me that if I sent my son to school he would have a different life than mine and now I see he's in fourth grade it's too late he's not learned anything yet it's too late for him now he's going to work like a donkey his whole life just like me I thought this was emotionally just powerful stuff as a development person you see a lot of things you hear a lot of things but to have someone sort of pose so directly the issue that what they thought they were getting out of the government just wasn't happening and then what was even more striking is after some hubbub and some other people sort of hazard in the usual way the British parliament does the headmaster stood up and said you are a donkey and because you're a donkey your kids are donkeys and because your kids are donkeys we can't teach them it's not our fault your kid doesn't know anything it's your fault and your child's fault in front of a hundred people in the village this was his account of the school's performance so what I want to talk today and I use the word account because when we get into questions of state capability and state performance and governance the word accountability is very popular I've written a whole book or helped write a whole book on accountability and getting accountability in government but I'm now thinking and I'm changing my mind about the way into accountability because there's two ways to think about accountability primarily about the accounting do we have records files numbers about performance and the second is to think about the account what's the narrative that people are telling to themselves and to those they care about about what they're doing that justifies what they're doing what is the account that this headmaster tells himself on which his performance is acceptable and he really can cast blame on others and what I'm convinced is that if we don't fix the thick deep accounting the deep thick accounts of how people narrate their performance within organizations and within their context that organization is embedded in society no amount of accountability through accounting can fix the problem so part of the folk versus the formula is the focus about accounts stories narratives what we think of ourselves and what others think of us the formula is about accounting what numbers we provide what reports we fill out how we fill out stories that sort of do something at least I'm told they do something I always resist filling them out so just one more illustration of this difference I'm going to skip some of these stories and tell a story about when I was working in Indonesia when I was working in Indonesia we it was a huge crisis the price of rice had gone up over 50% in real terms in the course of a month country was really on the verge of a breakdown and we worked together with the government to scale up very rapidly a program to sell subsidized rice to mitigate the consequence of the economic crisis on people through selling them subsidized rice terrific idea terrific design and the design was that each eligible household would get 10 kilograms of rice at the subsidized price and the eligible households were determined by a list of who was poor all very plausible and I said to the government as we were designing this and maybe in a slightly more polite way than this but I'm not a very polite person as you maybe already guessed I said this time you can't really lie to us because traditionally the Indonesian government had just completely lied to the world bank about what was really going on and the world bank in the interest of maintaining a cooperative relationship had accepted the lies the Indonesian government told and all was good as long as the economy was growing and we learned about it and I said this time unfortunately given the world's pressure given the crisis situation given we have to give two billion dollars even though your president has just resigned under fire for being corrupt you can't lie to us so let's design a program we can actually implement where you can actually report on what you've done and they said no we're not going to do that we're going to design a program we can't implement and lie to you I said okay but that's going to create problems down the road so two months down the road I do what the world bank we call a supervision mission I fly to a place with the reports amazingly detailed reports of who got the rice here's how many households got the rice in this state here's how many households got the rice in this district in this district here's how many got in this block in this village here's who got the rice and I said to them these reports they say who actually got the rice at the state level you know what they said absolutely I said great let's go to the village so we go down to the next level the district these are the people that got the rice absolutely we go down we finally pitch up in this tiny little village eight land cruisers you know because each level we go through we acquire more and more people I'm sure the village chief is thinking what in God's name have I done to bring this on me I don't need all these people coming down on my head but here we were he rides up on his little motor scooter after somebody's traced him down and you know he's clearly thinking okay this just shouldn't have happened to me so we said you know these people it says these exact people got this amount of rice is that really what happened he said oh yeah of course and then I said no no but in lots of other villages the village chief has decided that other people are suffering from the crisis too and they've decided to share this rice more broadly than just the people on the list did you do that he says yeah of course I did that it's like you realize that what you just said contradicts he says of course I didn't give it to just the eligible households the other households would have strung me up it was the first time the government's ever done anything actually for us so it has to be spread equally among all people I can't possibly just give it to these eligible's on this list so we just sort of divided it up and we actually divided up so where every month the eligible poor people got got half the rice and so they got more rice than the rest of the village and then the rest of the village kind of divided up what was left over and I thought that's actually pretty good kind of not a formula I might not have come up with myself had I been confronted with the position the village chief was in and then I turned to the guys from the state government they had been systematically telling me that these reports were saying exactly what was having on the ground all the way from the capital each subsequent Land Cruiser ride they're telling me all the way and I said now why did you tell me that and they said we thought you were from the world bank that's what you've always wanted to hear before so they were just telling us what we wanted to hear we wanted reports saying the households got the rice they gave us reports saying the households got the rice there was a complete divergence between what was actually happening in practice and what was recorded on paper complete divergence and the problem is by becoming invisible by the formula not actually being applied there was a certain amount of reasonable folk behavior in which they accommodated the needs of the whole village to get the rice and there was a substantial amount of theft and since you're not reporting exactly what happens and there's slippage possible there's going to be slippage and some of the slippage is going to be decent and motivated but some of the slippage is going to be off the truck not everything gets there and by our estimates roughly 30% of the rice was disappearing before it ever got to the village but that was very hard to know because perfectly clean there was no trail following every grain of rice right down to the individual household so this is a roadmap to the presentation which I am now going to go through very quickly and basically the points are illustrated state capability is actually I'm going to skip this slide so this is the roadmap to the presentation if this were an academic audience here's a pithier a little bit of a recap in more plain language which is what I mean by state capability is can you get stuff done right let's think about what it takes to get stuff done and do state second most states in the world actually can't do stuff but say they do so there's a huge kind of administrative fact that's pure fiction in the way that the state is representing itself as having done all kinds of things and doing all kinds of things it actually has no capability to do and because it lacks the capability to do it but it does have the capability to say it did it this so which means this low level of capability is in spite of the fact that governments around the world and others have been engaged in this process called development trying to promote capability so now the question is is the guest just late or are they just not coming at all and kind of if we're 50 years from the development experience and we got the capability we got it's time to sort of think maybe they're not coming maybe we're really in some deep and general way just really on the wrong thinking and strategy about how state capability is going to be built the fourth point is there's a statement that I learned is attributed to the prime minister David Lord George is that you can't cross a chasm which makes common sense in part because if you try and cross a chasm in two jumps and miss on the first jump well then your second jump isn't so much of a jump as a hobble because you're at the bottom of the canyon and your legs are broken from having missed on the first jump so we are now not just in the situation in which our theories of state capability haven't been working but we're in the situation where the theories of capability have failed so it's not like we have a blank slate on which there is no state capability we have a situation in which people are pretending to have capability they don't have which is actually a much more difficult situation to deal with and then finally I think and this is my positive component I think if I had to phrase in one way what the mistake has been the mistake has been to think that organizations institutions build success so if we're going to have success in doing something we need to build the organization that does it whereas in fact I think the story is exactly the opposite success builds organizations but organizations can either promote or inhibit success and our efforts in some times to build successful organizations have prevented us from seeing and doing what is necessary for building success so we're caught in a vicious circle because we're caught in the wrong side of the causal link we keep trying to build successful organizations to have success and in the doing so ignore the fact that we have to have success to build the organization so that's the roadmap and here's the roadmap in a metaphor trees produce fruit lots of trees out there producing any fruit once a tree is dead getting fruit from it's really hard but it's still taking up place in the orchard and trees have to generate root systems to produce fruit it's the top of the half of the tree where the fruit is it's the bottom half of the tree from which the tree had to grow and if you pay all your attention to the top half of the tree you're not going to get successful trees so the first point I want to make and I'm going to make a series of sort of and then some empirical points the analytical point is that what capability consists of at the organizational level is inducing agents who work for the organization to do the right thing that's pretty that, it's kind of that simple and the right thing in implementation of policy depends on what the facts are you have to say what's the fact of the situation what does the policy formula tell me I should do in this situation and therefore what should I do if you can do that repeatedly then your organization has capability to implement the policy the problem and this is illustrated with simple examples let's take the program of subsidized rice the fact of the world was whether the eligible household was on it the policy was intended to be to sell that household some rice with an expressed objective of mitigating the consequences of the poor so there was a facts about the world actions to take contingent on those facts that resulted in the policy objective the problem is is there's many a slip twist cup and lip and that the real action of the publicly authorized agents depend both on the capacity of the agents and the intrinsic and intrinsic motivation of those agents to actually carry out the policy so this is kind of a very abstract thing it goes back to your high school algebra which I'm sure you all loved where you had to learn about domains and ranges but the the benefit of sort of thinking abstractly about policy implementation is it creates the needed distinction between the facts the policy formula and the actions so first of all you're able to map what the agent should have been doing second organizations that are in which agents are not doing what the real facts they say should do create a different set of facts that rationalize their actions so basically if you're not doing what the facts say you should do what do you do you could change your behavior or you could change the facts and the beauty of being the state is you get to say what the facts are and finally the analytical character of the facts turns out to be very important so let me skip to let me just give an example of what this might mean so let's say we wanted to know whether our doctors that were working for the public sector were doing a good job what would we have to know to know whether the doctors were doing a good job well doctors have to map from states of the world which are patient conditions to actions they should take prescribe diagnose and prescribe the appropriate treatment so to know whether a doctor is doing a good job we kind of have to know whether what the condition of the patient was so we actually have to have sophisticated knowledge about the state of the world itself to know whether he's doing the right thing we can't just say the doctor is doing a good job without in some sense having some expertise now this illustrates the sort of problem and I'm using lots of stories from India because I live there not because India is particularly terrible or unique in its lack of capability matter of fact by most measures of capability we look at India's in the top half of countries so when we look at these stories of India we should think in lots of the rest of the world is much worse than this but some friends of mine did a study where they examined the actual behavior of a variety of providers of health care in a state of India Madhya Pradesh by having actors trained to present as if they were patients right now this is what happened in the this is the ratio of what the public doctors did to what the private doctors were doing so they only spent 38% as much time which means the typical visit last 2.4 minutes now I've been talking about 30 minutes so 2.4 minutes is very fast they act only 12% even bothered to check the pulse of the person who presented as having asthma just kind of a necessary and usual diagnostic thing and only 2.6% of these visits resulted in the doctor giving the right diagnosis so the mapping of the agents of the state who had been hired and paid in order to provide health care services completely diverged from what you might have hoped which is they would actually respond to the patient conditions diagnosed correctly and prescribe the right treatment and moreover this is all the ratio of what the private providers in the same place were doing so the public doctors were only getting to 28% as often the right diagnosis as the private sector doctors they actually looked at what the public doctors did when they were in their own private practice and it turns out they behaved exactly like the private doctors in their own private practice so it really was the capability of the state not the capacity of the doctor that was producing these results wasn't the ability of the doctors it was their effort so now second section of this presentation which second section of the presentation is when we have this weak implementation when the state doesn't really have the ability where the agents aren't systematically doing what they're scheduled to do by the policy formula that is they're not mapping from the state of the world to the action they should one choice is to change the behavior of the agents the other choice is to just change the facts so there was this very good study done where some researchers from MIT and got together with a very competent NGO to try and increase the motivation and attendance of nurses in the low level clinics in India now at the time attendance was running in the baseline was running at a little bit less than 50% so this was a massive problem because who's going to show up to a clinic if the odds are 50-50 that anyone will even be there so you were caught in this vicious circle in which nurses weren't going, patients weren't going the whole system was breaking down so they designed this wonderful scheme where they would pay the nurses their full salary if they were there more than half the days and their pay would get docked if they weren't there more than half the days and they combined it with NGO involvement and improved technology and time clocks and better specification of their attendance it was a whiz bang none of us in the room could have thought of a better program what was the impact of this program well given that they were research from MIT of course they did a control group and a treatment group and they followed what happened well what happened was the absences went way down absences went down from 25% to under 10% so you might think wow terrific program we reduced absences and their presence went way down too so actually way fewer of the nurses were actually there in the treatment group exposed to this fancy program by the end of 16 months of being part of this program only a third of the nurses were there versus 45% at the baseline so now you might think well wait a second they're either present or they're absent right ah ha ha ha you've not worked long enough in a bureaucracy you can be exempt from being there and obviously if you're exempted from being there then you're neither there nor not there you're exempted from being there so what really happened was as you put high powered pressure on the nurses to show up that created high powered incentives for them to have a paper saying I don't need to be there so even though I'm not there it doesn't count as an absence so exemptions went from 13% to over 40% of all days so what really happened was you just had a standing exemption form signed by a higher up and if it looked like you were otherwise going to be monitored you just filed your exemption from duty so did we solve the problem or make the problem worse we just made the problem much worse because now the government claims they've solved the absence problem and they have the documentation to prove it we have absence rates at the world best practice only 10% of our nurses are absent on any given day and here's the records here's the paper trail so administrative fact becomes complete fiction and I can show you example after example of that but I'm going to skip through this even though this is my own research and I would love to show it to you is that clock really right? maybe I'm going faster than I thought oh well I'm going to go back so so what this does is it creates a world in which what's on the books, what's on the law what's said to be the de jure practice has nothing to do with the life as the citizens of the place are actually encountering it nothing to do with it so the world bank did a study of how long it would take a business to get a construction permit if it followed the law so they hired some lawyers and they hired some technical people and they went out and they looked through and they talked to people who did this and they said in this country it would take you 282 days to get a construction permit and in this day it would take you 152 days to get a construction permit now the beauty of the bank, the world bank organization in which people do directly contradictory things so fortunately a different group in the world bank went out and actually asked firms how long it took them to get a construction permit and they asked lots of firms so you had a distribution so some firms said it took them a little time and some firms said it took them a long time so we can compare the fast firms and the slow firms and what does it look like well what it looks like is the law basically has no impact on the fast firms some firms say it takes them 10 days to get a construction permit they say it takes them 10 days in countries where it's 90 days on the law 120 days on the law 220 days on the law it doesn't matter what the law says the firms that get permits fast get permits fast right now I'll leave it to your imagination why this might be so because we don't actually have a lot of direct evidence but my analogy is if you look hard on the surface you become a submarine right once you're a submarine and somebody says how hard is the wind blowing I don't really care I'm a submarine I have adapted my business to the needs so I call this for my friends anything but for my enemies the law there are some firms that took a year to get a construction permit in exactly the same countries so the law did create a mechanism in which firms could be substantially delayed in their getting of a construction permit now in all of these cases I am sure that no one ever says the law has been violated or not followed you've just exempted or this doesn't apply or we've found some way in which your particular business can get a construction permit on an expedited basis but what that means is the reality of what the law says is the regime for getting the construction permit in this country has nothing to do with what real businessmen are actually doing and nothing to do with what the real implementers of these policies are actually doing it's a very much more so third section which is if somebody were coming to the party it would be here by now it's not stuck in traffic this isn't like a minor delay oops we thought it would be here but it's 15 minutes late because traffic was bad there's something deeply wrong with our theory and our fundamental notions of how we thought we were going to get to capable states so in the sort of opening eras of development thinking people thought hard and they thought about state capability they realized you needed post offices that work they realized you needed schools that work they realized you needed tax collectors but the assumption was this was the easy part of development what can be easier than making a post office run what could be easier than taking the established models that we have in the rest of the world and making those work in these countries that already have the incipient forms of tax collection agencies so there was this idea of accelerated modernization it's got to be easier to catch up than it was to lead it's got to be easier to adapt a wheel than invent a wheel right the powerful intuition was that this process of building capable states was going to be easy because people ahead of us had already done well where did we actually end up what do the data say about what the capability of states is if we use the horse as a metaphor what does your horse look like that's your government this is a Belgian horse big strong capable willing Belgian has a high level state capability they can pull lots of stuff and then the world consists of everything in between we got some really strong and capable states we got some really cute but kind of tiny and not very capable states and then we got things that aren't really horses at all they don't pretend they're horses so if you look at just a basic function of government recent study just said how well the states deliver the mail and all they did was they mailed 10 letters to fake addresses from an international address the International Customs Postal Union says those should be returned to the country of origin if you can't find the address within 30 days and they just said how many of these letters came back within 90 days we've come three times what the code we've all agreed to as the standard for which we'll turn letters well in the lowest 25% none of the letters came back it was as if the letters just fell into a black hole and we might say well of course Somalia you mailed a letter to Somalia you don't expect it to come back but this included countries like Ghana Egypt Honduras you know none of the letters came back the lowest quintile lowest quartile of income countries only 9% of the letters came back in Finland 90% of the letters were back within 90 days Finland is a high capability country and other countries like Columbia and Uruguay had similar high levels of performance so this is just one just one measure but it's a nice concrete measure because a post office has never been a huge geological dispute everybody agreed that countries should have a post office everybody's agreed we should build the capability of the post office but we're 50 years into it and we have a huge number of post offices that are essentially dysfunctional it's not like this is like we've only been at it five years we've only added ten years it's not like we just decided to do this seven years ago and this is our new initiative it's a basic core function of government functional governments have been doing successfully for 200 years and we have half of the countries in the world at just incredibly low levels of capability and if we look at the trajectories that our countries are on how fast do their capabilities appear to be growing they're growing at levels that are not just not accelerated modernization they're decelerated modernization we calculated in a paper long it would take Haiti at it's apparent rate of progress to get to the same level of capability as Singapore and our calculation turned out that they will reach Singapore's level of capability in the year 4168 which is of course facetious I don't mean that as a precise maybe it'll be 4150 maybe 4175 but Haiti's been an independent country since 1806 and it's gotten to where it's gotten through whatever process and dynamic that's under way only as far as it's gotten so if it has the dysfunction it has after 200 years of trying another 200 years of trying the same may well produce the same results so if we look at another measure that actually has reasonable time series information on progress what we find is that the success countries are few and far between if we look at the countries that in 2008 are either above the level of Portugal in terms of their current capability and I chose Portugal because it's the kind of least capable state that you play soccer with so Portugal's kind of in the club of people you play soccer against and call it the European Cup so it's kind of a developed country but it's kind of a developed country you go on a vacation it's not like super in the club so that's the level at which government capability how many developing countries have made it to above that level you would have thought if our theories of promoting state capability were working and we really had accelerated modernization that would be most of them instead there's only 8 countries that have made it above that level and only 4 so progress at a rate that would take them across the spectrum of capability in less than 200 years so we have exactly 12 successes 8 that are at a high level 4 that are growing rapidly and by rapidly it's just a growth in capability on a 0 to then scale greater than .05 which means to take you from 0 to 10 which is Somalia to Singapore would take you 200 years which is hardly accelerated modernization then the rest either of these F states failed flailing fractured fragile we keep having to change F words as each new one becomes sort of overused where they're just at very low levels of capability and so the process of acquiring capability has failed and then most of the it's what I call the model in the middle 42 countries in the last 10 years have actually had according to this major negative progress in getting state capability if you get negative progress in state capability and your child says how long till we get there dad well the answer is forever because we're in reverse we're going the wrong damn way we're not going to get there anytime soon if we keep going that direction so the problem is that what we thought was obvious what we thought was easy what we thought we could ignore turns out to be really hard and the building of capability has by and large not been successful had much less success and countries are today going backwards or still making very slow progress for the most part so what's my hypothesis my hypothesis is that in order to have successful organizations that exhibit high capability in carrying out functions you need two things one you need successful internal folk culture of performance what do I mean by that I mean that people have to do their job because they want to do their job and it's part of their identity that their job gets done so we have members of the Finnish government here right there are lots of reasons why they might or might not do the job but I think probably the main reason they do the job is that's what they do that sounds circular but it isn't they're embedded in a folk culture in which it would be unthinkable for them to not behave in the ways that they're supposed to behave and the folk culture is a culture of performance inside doctors doctor because they're doctors teachers teach because they're teachers what does that mean there's an internal folk culture of what it means to be a teacher that you conform your behavior to a strong part of what drives performance but those organizations are also embedded in an external folk culture of accountability and by folk culture again I mean that it's not what's the rules aren't what matters it's the process and the way in which the rules are arrived at that matters and that happens behind the scenes so it isn't getting so so it isn't getting to the right rules it's how you got to the right rules and the only way to get to the rules that are right is to actually have the struggle of producing those rules through struggle okay and I'm trying to and there's two very different reasons why you might not be able to transplant institutions and I want to be very clear what I'm not saying what I'm not saying is one size doesn't fit all that's not what I'm saying this has become a cliche in development to say one size doesn't fit all well that's really not that true I mean look at this shoe of mine right now this shoe is about every person in this room but it had come pretty close right because first of all a lot of you are probably I don't know what a European size is this 40 what does it seem like no American 9 okay so it's not and second the shoe that fits you isn't going to be twice this big nobody in the room wears a shoe twice this big and it's not going to be half as big so the problem isn't actually coming to a knowledge I grew up until I had two older brothers so until I was 16 I never had to take the tag off any piece of clothing I wore hand-me-downs my whole life I mean I knew that lots of sizes could fit me because they said it's time to go to third grade here's your brother's third grade clothes I was complaining about this to somebody who then pointed out that at least I had older brothers he had older sisters so so part of the theory and the paradigm that led to the strategy that led to the tactics we have been pursuing and promoting state capability is the theory that it was institutions and organizations that would produce success so our strategy was to build organizations and institutions and the tactics therefore were derived of let's train individuals, let's pass laws let's create budgets, let's create the mechanisms of thin accountability the kinds of things you can count through accounting whereas our theory is that institutions and organizations are the result of successes and successful formal organizations are usually the consolidation of already successful folk practices so the institution doesn't create the success it formalizes the success which means what's our strategy if that's the right theory our strategy has to be to create success so I'm now going to skip this whole bunch of interesting slides that they'll all be posted those of you watching on the web and here the slides will be posted so if you feel like seeing those slides and believe me if you see them and understand them it'll change your life completely but I'm skipping them because I'm trying to finish at 4.30 so we can have a half an hour of questions and if the first question is what was on those slides wouldn't that be fun anyway I'm going to skip now to no I'm going to skip this whole section too in spite of pictures of snakes and stuff so I'm going to skip to kind of what this is just why the problem is even harder this is sort of going through why having a failed post office is in some sense even harder problem than not having had a post office at all in terms of building a new post office because the existing post office is taking up the space for a post office right even if it's not a post office or acting as a post office so okay now I've skipped lots of slides what I'm going to do is I'm going to juggle and I have because I think juggling partly I've always wanted to juggle and I've always wanted to juggle in the pretext of an economics talk and I thought that if I could have just learned to ride the unicycle I could have had a different career but if you watch somebody juggle think about how juggling happens right the first thing is you have to build up the components such that you become successful at one skill at a time until that skill becomes a routinized pattern and you can move on to the next skill so one skill you have to have to juggle is to successfully toss the ball from one hand to another that skill has to be learned produced and routinized before it can be combined with the skill of tossing another ball and that ball is in the air right so you have to routinize the catch and toss such that I can now talk to you while catching and tossing because I gave him a ball in case I dropped one and needed one but it looks like I don't even need one so part of the process of now if we said to fin can you juggle come on up here oh yeah sorry nope so the question is if I were going to transfer to him the skill of juggling how would we do it well the problem is if I just give him the balls and ask him to juggle in spite of the fact that he's now seen me juggle this should be easy right go there you go one at a time ok but you can't skip the struggle to juggle wow I didn't realize that rhyme until just now meaning even if everybody who juggles is going to end up juggling in roughly exactly the same way that doesn't mean I can transplant juggling skills the juggling skills have to be built up by the person who then has them and unless you have personally built up juggling you can't juggle so how would organizations who are now by the way well into the process of dysfunction how would we think about turning around the process of dysfunction to get them on a different dynamic so that they were building their capability and we think there's four steps to this the first is that you've got to start with locally nominated problems for which people want solutions now I know that that sounds trivial of course how would you start otherwise than locally nominated problems most of development practice starts exactly the opposite you start with solutions that you want people to implement you don't come and ask what's your problem you come and say here's the solution without asking what exactly the problem in the context was that they felt like solving so A it has to be a problem not a solution and B it has to be locally nominated now I don't want to get into criticizing the MDGs but the MDGs were not locally nominated problems those were internationally agreed upon goals targets they didn't necessarily pass into what the people in the country at the time really wanted to solve so within your organization you've got to have local people you've got to set the agenda such that people are going to be able to create an internal folk culture of caring about getting the problem solved which can't get there if you start with solutions can't get there if you start with external problems second you've got to have what we call positive deviation and this what I'm going to say next is going to sound crazy and what I want to emphasize is don't think is it crazy think is it crazy enough because after all we're talking about places like Pakistan like Haiti like Afghanistan like Nepal where there's been 50 years of trying to fix capability so if I what I tell you sounds like the conventional wisdom you should be very suspicious because the conventional wisdoms had a lot of time to work so what's crazy is I'm going to say that we need in environments in which organizations aren't functioning we need to allow people more space to deviate not less space crazy so what I want to say is this is a very busy slide lots of organizations particular ones that are dysfunctional have three kinds of kind of intrinsic people in them they have rent seekers people who given their own druthers would take advantage of the system they have bureaucrats that are willing to be policy and compliant and doing what they're told and then we have innovators and the danger is they've set up process control barriers to prevent the rent seekers from doing what the rent seekers would do the problem is those process controls are symmetric they also prevent innovators from undertaking innovations that might lead to solutions that aren't in the established repertoire of the organization that isn't what we do here you can't do that you can't choose that so you actually create a space for achievable practice that has narrowed the range and frustrated precisely the people you want driving your internal folk culture who do you want driving your folk culture who do you want respected within your folk culture you want these people so what you want to think of instead is how do we create a system of feedback of outcomes on a positively defined problem such that we can create space into which the policy deviators can move in the interest of finding solutions to that problem we're going to allow you to do things we wouldn't have otherwise allowed you to do because we have a well specified problem and if you can solve that problem we'll let you do it again every bureaucrat in the room knows just how hard this is and just how crazy this is but what this actually said what we're saying is that rather than focusing on fixing the problem by strengthening the process controls when you know that the rent seekers can defeat the process controls that you have and so the only people that will be affected by the process controls you implement will that be precisely the people you didn't want to piss off since the rent seekers can control the declaration of the state of the world and hence the administrative fact they struggle on administrative facts with the rent seekers and win they've won already is everybody get this right if they can say what the state of the world is which they can because they have the juridical authority to do it you can't win by fighting on thin accountability with them they've already won the battle against thin accountability what you have to create is the thick accountability of an account of what the organization does that can motivate people to act well who's going to be motivated first these people then you have feedback that this is working ha your PowerPoint slide can move that's a minor achievement I know but for a guy my age I was very impressed so second thing you got to create space for positive deviation around a problem that's defined third thing you got to have real-time feedback loops that feed into decisions of the organization about your problem and I won't go into this because we can come back to it but what I don't mean is monitoring and what I don't mean is impact evaluation impact evaluation is roughly worthless in this situation because impact evaluation is what the right policy formula is but nobody is implementing the policy formulas we have we can't solve the problem with better policy formulas if that's not the problem and nobody inside the organization is actually interested in improving performance anyway so second thing is try learn and rate adapt because only learning is learning if the agents of the organization didn't learn it they didn't learn it you are not going to beat doctors into being better doctors you are not going to beat teachers into being better teachers you're not going to beat policemen into being better policemen and you're not going to go to policemen with the results of a study that shows that things would be better if they behaved in this way or that way and expect them to change their behavior unless they themselves felt part of the learning such that they felt that they knew what you now know in a way that they can act on it wow these are long sentences fortunately they are very long papers to go with these long sentences so I'll go ahead and the fourth thing is what's the fourth thing oh it's how learning is diffused so problem driven locally nominated problems positive deviation feedback loops learning diffused laterally horizontally as part of a folk culture of learning and performance in an organization not as part of a top down culture of policy implementation because in the kinds of problems we have which is what the slides I skipped called implementation intensive service delivery sophisticated thing governments do actually requires the agents to behave in ways that are very difficult to motivate unless they believe that what they're doing is effective so those are the four things again this might seem like common sense but it's the exact opposite of how nearly every development project is structured nearly every development project is the action is driven by solutions the planning is lots of advanced planning on which implementation is expected to follow without any hiccups the feedback loops are mainly around process controls and only over the very long term and they're not linked to decision loops and the plans for scaling and diffusion of learning are top down we'll learn they'll implement design is for geniuses implementations for dummies so I'm going to skip that so I'm really in an ideal situation for me because I have a solution you don't want for a problem you won't admit you have so governments around the world won't even admit to having this problem because they've created a set of administrative facts that are fiction in order to defend themselves from precisely on having to act on the problems we're talking about so and to some extent governments who work with governments are in a very difficult position of not accepting as fact the administrative fiction other governments tell them so it's a problem no one wants to admit to having you don't want to admit that your government isn't in fact doing what it's saying it's a very difficult conversation for a government to have to say all those records we had about nurses being there they weren't really there all those people we said were getting the rice they weren't really getting the rice they weren't really getting the building third of the money was going missing all those the leasemen who are on the books they're really organized crime that's a very difficult conversation to have then the solutions people do want are the solutions that fit the existing paradigm more inputs if we just gave another X million dollars more training if these doctors just knew more they'd do better build up these organizations let's adapt best practice we haven't just been doing the latest thing if we just did this thing versus that thing all of these are easy and convenient and they're the solutions that the world wants but they're just not going to work because if they were going to work they would have worked by now and they say and I'm going to stop in two minutes there are these two sayings that are folk sayings one is if at first you don't succeed try try again that's a very motivating statement first you don't succeed try try again the second statement is the definition of crazy is doing the same thing and expecting a different result so when you try try again it means try something different it doesn't mean try the same thing again and again that's crazy and yet we're trapped in a structural crazy so at the world bank I remember going to a meeting that was reviewing a world bank project to give hundreds of millions of dollars to the education ministry in Kenya a huge component of the project was called institutional strengthening all these wonderful plans for strengthening the capability of the ministry of education in Kenya and I was the peer reviewer invited inside the organization of comments and guess what the name of the project was Kenyan primary education so from the title I preserved there had been five before and yet the project document for Kenya primary education 6 started by telling how the Kenyan ministry of education had no capability so the obvious question was if one didn't work and two didn't work and three didn't work and four didn't work and five didn't work when do we get to crazy when do we admit that we're really on a fundamentally wrong strategy and have to try a solution we don't want which is to actually unleash the power that exists in the folk cultures inside the organizations in the countries around the world so that they can find their way to their own solutions thank you very much