POLICY IMPLEMENTATION IN POOR COUNTRIES

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POLICY IMPLEMENTATION IN POOR COUNTRIES
by
Jan-Erik Lane, University of Geneva and National University of Singapore
and
Svante Ersson, Umea University, Sweden
ABSTRACT
During the 1990s several alarming reports have been filed concerning policy failures in Third
World countries. They indicate that globalisation and the structural adjustment policies of the
World Bank and the International Monetary Fund have reduced the capacity of government
to conduct education and social policies that counteract poverty. Here we suggest an
alternative explanation focusing upon internal factors within a Third World country. First,
there is the risk of a poverty trap where a low level of economic output implies a low level of
human development. Second, there is the danger of corruption, where political instability
dissipates any advances in economic growth.
INTRODUCTION
The problems connected with public policy implementation in Third world countries are
intertwined with basic economic and political conditions. Governments conducting public
policies in order to improve the quality of life find they are restricted by the weak extractive
capacity of the state in relation to the economy as well as by the dissipation of any resources
through corruption. Thus, the basic equation that regulates what governments can do to
improve the human predicament includes the negative impact from a low GDP as well as
from political instability.
However, there are a few bright circumstances in an otherwise gloomy picture where many
Third World countries are overwhelmed by poverty and attending social problems like the
aids epidemic. Public policy can make a difference also in a poor country by increasing
quality of life, as for instance when policies in relation to infrastructure, education and health
care work. Whether a top-down or a bottom-up approach to policy implementation is the
optimal route to ameliorating the poverty of Third World countries is an open question,
where the answer depends upon the policy in question and the contingencies. As long as the
country has not embarked on a sustained economic growth path, a top-down approach may be
the only realistic way. The improvement in reducing the poverty predicament depends not
only upon the economy but also on political stability. Economic development is a necessary
condition for policy implementation. Yet, human development, or the improvement of the
quality of life can only occur when there is political stability.
In this article we will present the argument that policy implementation can improve the
quality of life when there is a minimum of both economic development and political stability
meaning that corruption can be restrained. This optimistic argument consist of two parts, one
economic and one political. First, there is a real opportunity for a rapid amelioration of the
situation of poor countries, provided that they can embark upon sustained economic
development. If world poverty were to be reduced, then a larger GDP would have to provide
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the resources that political elites could employ for the improvement of the predicament of
their populations. Second, political stability is a necessary condition for turning the
possibility of economic improvement of a specific country into reality. Otherwise corruption
will dissipate the economic opportunity to raise the quality of life. In order to substantiate this
argument focussing upon the negative impact of corruption upon Third World development
we make an empirical enquiry based upon the findings stated in Appendix 1.
POVERTY AND POOR COUNTRIES
Despite all the pessimism that surrounds the poverty question in the world the possibility of a
better world must be emphasised. The widely accepted so-called gap theory claims that the
differences between the rich and the poor countries keep increasing. This hypothesis is
questionable. Third World countries need both economic development and political
development. One may actually ponder about whether there is not cause for more optimism
in relation to the first part of the argument – that a sustained process of economic growth
would result in significant improvement rather soon – than in relation to the second part.
There is more cause for scepticism about the commitment of many Third world political
elites to implement policies that really improve the situation of the population.
In the debate about world poverty the distinction between economic feasibility and political
commitment is blurred. On the one hand, there is the deterministic argument that nothing can
be done about the poverty predicament. Poverty is essentially structural in the sense that the
international economy must lead to huge differences between rich and poor countries. This is
the position in Marxist theories, including the core-periphery model and in world systems
analysis. The spokesmen of governments that have either failed or not even attempted to
improve the predicament of their poor populations also frequently employ it.
On the other hand, there is the non-deterministic argument that world poverty can be
eradicated by the choice of the correct public policies. It comes in two versions. First, there is
the top-down perspective that assigns a crucial role to government planning, or so-called
development administration. Second, there is the bottom-up perspective that outlines an
alternative public policy approach to the improvement of poverty, based on participatory
mechanisms such as the NGO:s. However, without resources, self-initiative and grass roots
participation will not suffice. Planning too, has failed as the development strategy.
"Poverty" is a world that is used to describe different human predicaments (Chenery, 1986;
Chenery and Srinivasan, 1989: I and II; Behrman, Srinivasan and Chenery, 1995: A and B).
The widely held theory that poverty cannot be removed from the social systems of mankind
emanates from the concept or relative poverty or it focuses upon such miserable states as
famine. Relative poverty cannot be counteracted because there will always be differences
between the rich and poor in whatever social systems that one may conceive. Poverty in this
sense applies even to the welfare states in the OECD-set of countries, and to super rich oilstates.
Similarly, the occurrence of famine, although not related to relative poverty, cannot be
undone. The argument assumes that the world population is at present increasing in such a
manner that in combination with unpredictable food production there has to occur now and
then famines. Famines can only be mitigated by the ad hoc intervention of rich states when it
occurs.
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Here we are looking at absolute poverty as a country feature. This kind of poverty is
measured in the form of an aggregate statistics about how many people live under a certain
descent level standard of living. The poverty line approach entails the same perspective. This
kind of poverty can be counteracted by public policy. Each and every poor state does not
necessarily face famines and what is problematic about poor states is not the occurrence of
relative poverty in that country. By tying the concept of poverty to the country, one
emphasises that government has a responsibility for the overall living standards in a country.
Political stability is a necessary condition if and when the political elites of the Third World
are committed to reducing poverty. At the same time, public policy directed against poverty
can only be effective if the economy of the country is such that governments can draw upon
its physical and human resources. This argument suggests that corruption is one key to the
probability that public policies will work in Third World countries.
A poor country does not necessarily have to stay eternally poor. Let us first show that it is
possible to close the gap between the sets of poor and rich states on the earth today. Then we
will show that even small increments in human development matter crucially for reducing the
negative impact of poverty. But this requires a certain level of economic development in
terms of GDP growth and the containment of political instability in the form of corruption.
THE “GAP”
It has often been claimed that the distance between rich and poor countries is increasing. It is
predicted that the uncontrollable population explosion cannot but result in a declining quality
of life for poor states. Is there no ground for optimism?
When one looks at overall differences between various states the distance between the United
States and Switzerland on the one hand and India and China on the other hand is no doubt
tremendous. Are there any opportunities for states to take actions that decrease this
phenomenal distance? The average country differences in affluence are truly great, as for
example in the GNP figures for Europe and Africa. Yet, sustained economic growth has taken
place outside of the rich world.
The wide-spread belief that the poverty differences between the First World and the Third
World simply increases over time is actually a major stumbling block when searching for
policies against poverty. Country developments with regard to overall affluence cannot be
subsumed under any such simple generalisation.
Although the affluence per capita is generally higher among the OECD countries, the
distance to the Communist countries and the Latin American countries is not that dramatic. It
is almost ten times higher than in Africa and about six times higher than in Asia. After 35
years of unprecedented growth in the world economy the overall picture is somewhat
different.
It is obvious that the distance between the OECD countries and the sets of Communist and
Latin American countries increased between 1950 and 1985. The stagnation of the Spanishspeaking
world is pronounced. But the distance in relation to the African continent has
widened even more. Yet, the gap theory is questioned and even negated by the sharply
shrinking gulf between the OECD countries and the Asian countries. The distance can now
be measured by only a factor of three, and some Asian countries among the newly
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industrialising countries (NICs) and the newly exporting countries (NEC's) are closing in
rapidly. It has become less and less adequate to speak about the First World versus the Third
World (Lane and Ersson, 2001)
The developments in the early 1990s contradict the gap theory. Not only has Southeast Asia
in general become a large growth area, including Mainland China but also the prospects for
an increase in affluence in Latin America are much brighter. Chile is a case in point, but
Argentina has of course fallen far behind in 2002. The levels of affluence in the so-called
Baby Tigers - South Korea, Taiwan, Singapore and Hong Kong – are comparable with levels
in OECD countries (Lane and Ersson, 2001), the last two city-states outperforming several
OECD countries. It is thus possible for Third World countries to close the gap. However, it
requires political stability, we emphasise.
Table 1 lists the Third World countries that were at the top and at the bottom respectively in
terms of the index of human development at two points in time, 1980 and 1999.
Table 1. Human Development Index in 1980 and 2000
COUNTRY HDI 1980 COUNTRY HDI 1999
Top: Top:
Argentina 0,798 Singapore 0,876
Uruguay 0,775Korea, Rep. 0,875
Costa Rica 0,769 Argentina 0,842
Singapore 0,753 Uruguay 0,828
Trinidad and Tobago 0,752 Chile 0,825
Chile 0,735Costa Rica 0,821
Mexico 0,732 Kuwait 0,818
Panama 0,73 United Arab Emirates 0,809
Venezuela, RB 0,73 Trinidad and Tobago 0,798
Korea, Rep. 0,729 Mexico 0,79
Bottom: Bottom:
Malawi 0,343 Rwanda 0,395
Nepal 0,329Mali 0,378
Senegal 0,329 Central African Republic 0,372
Benin 0,323Chad 0,359
Burundi 0,308 Mozambique 0,323
Mozambique 0,303 Ethiopia 0,321
Mali 0,277 Burkina Faso 0,32
Burkina Faso 0,263 Burundi 0,309
Chad 0,255 Niger 0,274
Niger 0,253 Sierra Leone 0,258
Source: UNDP (2001) Human Development Report 2001
The Human Development Index, used by the United Nations, reveals not only the immense
difference between the First World and Third World countries on the earth, but also that
several Third World countries have succeeded in improving their quality of life. Actually, the
variation among Third World countries is now such that it is no longer meaningful to talk
about a definitive and unbridgeable gap between rich and poor countries. What is more
important for a Third Country than to position itself in relation to a First World country is to
see to that it does not fall into the poverty trap. Let us explain.
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THE “TRAP”
Although adherents of the pessimistic theory may admit that there are a few exceptional cases
in the form of countries that have managed to make it from poverty to affluence they would
probably still maintain that the overall predicament for poor nations is hopeless. The
pessimistic theory claims that the distance between the few rich and the many poor is so
overwhelming that little can be done, except counteracting sudden famines. Looking at the
gap, one certainly notes the sharp difference between the levels of affluence in the OECD
countries and those of countries in Latin America, Asia and especially Africa.
It is true that the step between the rich and the poor in terms of country level affluence is
immense, if it is possible to trust the very complicated calculations that are needed in order to
make the measuring rod – an international US dollar – a true quantitative indicator. However,
poverty is not a strict function of purchasing power. What matters for the policy of
eradicating global poverty is not a specific measure of GDP per capita but the quality of life
situation. What the pessimistic theory of world poverty on a country by country basis
overlooks is the fact that the quality of life is not a strict proportional function of the
economic indicator on affluence.
Most importantly, there is a sharp curve linearity in the connection between economic
affluence and general quality of life – see Figure 1. Very low levels of country affluence
result in truly miserable social conditions, but as the GDP scores ascend towards higher
levels, the quality of life indicator at first rises proportionately but then the curve evens out.
Given the relationship between GDP per capita and the quality of life predicament, one must
be aware that rapid processes of economic growth will most likely be beneficial quickly for
the broad masses in the country population. The most significant steps out of poverty are
taken in the early stages of economic development.
Figure 1. GDP and Human Development Index 1999
GDP per capita in US $ PPP 1998
0 10000 20000 30000
HDI 1999
1,0
,9
,8
,7
,6
,5
,4
,3
,2
,1
0,0
Sierra Leone
Angola
Botswana
South Africa
Saudi Arabia
Costa Rica United Arab Emirates
Korea, Rep. Singapore
Sources: World Bank (2000) World development indicators 2000 (GDP per capita) and UNDP (2001) Human
development report 2001.
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The policy implication is that growth considerations matter more than distributional
deliberations. If the national income of many Third World Countries could reach a level
above 2,000 international US dollars, then that would help tremendously for the removal of
the most dismal features of poverty in those countries.
Thus, positive economic development is a necessary condition for improving life in the poor
countries of the world. Small increments in GDP per capita would give large increases in the
quality of life for the average citizen. However, economic resources are not sufficient for
eradicating world poverty. There must be political stability in the country that attempts to
implement policies that ameliorate poverty.
Public policy in a poor country should target those policies which help the country move out
of the poverty trap, which is located at the left end of Table 2, where a low level of GDP
implies a dismal human condition. Public policy can help a Third World country embark
upon a sustained level of economic development, which brings it out of the trap. Small
improvements in GDP mean huge increases in quality of life at the left end of Table 2. Here
policies improving infrastructure, education and health care may pay off handsomely in terms
of sustained economic growth. Yet, there must be political stability in order for a Third
World country to leave the poverty trap.
POLITICAL STABILITY
Policy implementation in a poor country requires state stability. Political elites in the Third
World often confess a willingness to conduct policies, which would improve the living
conditions of their populations. However, the policy ambition becomes dissipated due the
profound political instability that prevails in many Third World countries. Political instability
takes many expressions, but the most damaging one is the massive occurrence of corruption,
because it is common, daily and encompassing.
First, the recurrent occurrence of civil wars in third world countries stops effectively any
attempts to improve the predicament of the population. Second, there must be political
stability in a more general sense of the enforcement of one political regime over time. State
stability measured by looking at the average duration of regimes since 1945 shows the
immense political instability in the poor continents of the earth.
The average duration of a political regime is sharply lower in Africa, America and Asia than
in Oceania and Europe in spite of the fact that the extensive regime transformations in
Eastern Europe are included in the figures. Typical of the third world state is the transition
from one regime to another.
One way to tap regime longevity is to look at when the present constitution of a state was
introduced. Both indices employed here – the Hudson and Taylor index referring to the
situation about 1968/70 versus the Encyclopaedia Britannica index which deals with the
situation in 1990 – display the large variation in constitutional longevity. The current
constitution of a state is of much less age than the state itself meaning that regime changes
tend to take place frequently. In Europe with some old states there have occurred numerous
constitutional changes, but most recent regime changes have occurred in Africa, America and
Asia.
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Constitutions in the world are of rather short age meaning that constitutional changes are
frequent. Political life is hazardous in many countries, to say the least. The present
constitutions among the states of the world have on an average been adopted or changed after
1945. This applies in particular to Africa and Asia where colonial rule received its final blow
after the Second World War. Third world countries are characterised by many major
constitutional changes.
Regime stability is related to the transitions between two major types of regimes, that is,
democracy versus dictatorship. Although the number of stable democracies does not count
for more than one sixth of the total number of states, the variation over time in the stability of
democratic and non-democratic regimes may be mapped.
Low regime change scores would be found in the set of states, which are either stable
democracies or stable dictatorships, mainly the democracies among the OECD set of
countries as well as a few stable authoritarian regimes, mainly right-wing ones. A
measurement of regime fluctuations can be based on the standard indices of democracy. High
values indicate change over time between democracy and dictatorship, the standard deviation
expressing fluctuation between high and low democracy scores.
Regime reshuffling has occurred since the end of World War II on all the continents with the
exception of very stable Oceania. It is particularly pronounced in Latin America and Africa
but it also occurs in several Asian states. Regime instability is pronounced in Latin America
and Africa. The movement back and forth between democracy and dictatorship has been
strongest first and foremost in Latin America. In Africa there is also a general regime
instability, but it refers more to the competition between more or less authoritarian civil rule
on the one hand and military government on the other. Part of but certainly not all of the
regime instability in Asia stands for the difficulties in introducing stable democracy, whereas
the late regime transition to democracy makes Europe score very high around 1990. The
various measures of political instability correlate with each other to a considerable degree.
Strictly speaking, regime survival is not a sufficient condition for the making and
implementation of policies that reduce poverty, as an authoritarian regime may intentionally
neglect the predicament of the poor. However, it could remain stable for a long period of time
only by the employment of massive resources for repression. In the short run political
instability certainly exacerbates poverty.
Governments in the Third World may engage in a variety of social policies that alleviate the
harshness of the human condition in these countries. One thinks first and foremost upon
education and health care policies. However, also other policies such as law and order and
infrastructure benefit the masses. Political instability makes any policy consistency or
coherence virtually impossible.
We single out corruption as especially damaging to policy implementation in Third World
countries as it dissipates the few resources available and creates cynicism in the political
elite. Figure 2 shows the macro relation between the quality of life and corruption where we
have excluded the First World (24 OECD countries).
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Figure 2. Corruption and Human Development (Third World)
Absence of perceived corruption around 2000
0 2 4 6 8 10
HDI 1999
1,0
,9
,8
,7
,6
,5
,4
,3
,2
,1
0,0
Singapore
Paraguay
Pakistan
Mozambique
Korea, Rep.
Indonesia
Ghana
Chile
Botswana
Bangladesh
Argentina
Sources: Transparency International (2001) Corruption index, and UNDP (2001) Human development report
2001: HDI.
Figure 2 shows the positive interaction between human development and political stability in
the form of lack of corruption. Here we have circular causation meaning that corruption
defeats human development which in turn increases corruption – the vicious circle which
prevents public policy and policy implementation to be effective in poor countries.
CONCLUSIONS
The implementation of policies that improve upon poverty in Third World countries require
both one economic and one political condition: a degree of positive economic development
and political stability. Economic growth is only possible through new investments in capital
(Jones, 1998) besides the depreciation of already existing capital. But how could there be
hope for countries where there is civil war or major regime upheavals such as military coups
resulting in capital destruction? The poor countries of the world need not only economic
development through investments but also, we underline, political stability. The crux of the
matter is that political stability and affluence are closely interrelated. In this article we have
focussed upon the risk for dissipation of economic benefits through economic growth by
corruption in government.
The correlation between lack of corruption and affluence (GDP) is as high as .75. A low level
of affluence leads to political instability and political instability worsens poverty. If world
poverty is to be counteracted, then more attention has to be focused upon basic political
matters, in particular regime stability. It is mainly with regard to the prospects for the
political elites in the Third world to arrive at an agreement about basic constitutional
questions that one has reason to be sceptical about world poverty. As long as there is
fundamental uncertainty about the basic rules of the state, then policies cannot be initiated
that reduce poverty. And, one may add, the lower the average level of affluence, the more
precarious is political stability.
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Corruption is a general illness of the state, which crushes the hope for economic
improvement. It dissipates the economic gains from sustained economic development and the
rumour of massive corruption in a country acts as a warning signal dissuading foreign direct
investments. The level of corruption in several Latin American, African and Asian countries
is a major cause of their underdevelopment. Policies against poverty are extremely vulnerable
in a general climate of corruption.
REFERENCES
Behrman, J, Srinivasan, T.N. and Chenery, H (Eds) (1995) Handbook of Development
Economics Volumes 3A and 3B.Amsterdam: North-Holland.
Chenery, H. (1986). Industrialization and Growth: A Comparative Study. Washington: World
Bank.
Chenery, H. and Srinivasan, T.N. (eds.) (1989) Handbook of Development Economics
Volumes I and II Amsterdam:North-Holland.
Jones, C.I. (1998) Introduction to Economic Growth. New York: Norton.
Lane,J-E and Ersson, S. (2001) Government and the Economy: A Global Perspective.
London: Continuum Books.
Transparency International (2001) Corruption perceptions indices. Available at:
http://www.transparency.org/cpi/index.html
UNDP (2001) Human Development Report 2001. New York: Oxford University Press.
World Bank (2000) World Development Indicators – Cdrom. Washington, DC: The World
Bank.
Appendix 1. Correlations among variables
Hdi versus corruption Hdi versus gdp GDP versus corruption
Total R= .715 .783 .895
Sig= .000 .000 .000
N= 104 135 104
Third World R= .520 .717 .750
Sig= .000 .000 .000
N= 59 90 59
Note: GDP = World Bank (2000) World Development Indicators – Cdrom. Washington, DC:
The World Bank; HDI = UNDP (2001) Human Development Report 2001. New York:
Oxford University Press; Corruption: Transparency International (2001) Corruption
perceptions indices. Available at: http://www.transparency.org/cpi/index.html.