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Governments Should Make Services Work: A Public Responsibility
Governments Should Make Services Work: A Public Responsibility
Governments Should Make Services Work: A Public Responsibility
Governments should
make services work
2
The responsibility that governments take on sic welfare economics arguments for govern-
for basic health and education can be dis- ment intervention, political economy reasons
charged in many ways—among them, foster- for intervention in key social sectors, appeals
chapter ing economic growth, increasing public to fundamental human rights. Governments
spending, and applying technical interven- demonstrate their responsibility by financ-
tions. Each can contribute to better outcomes. ing, providing, or regulating the services that
But if they are not supporting services that contribute to health and education out-
work—services that result from effective insti- comes. The services come in many shapes
tutional arrangements—they will not make a and sizes: building and staffing schools, sub-
large sustainable difference. Making services sidizing hospitals, regulating water and elec-
work requires changing the institutional rela- trical utility companies, building roads, pro-
tionships among key actors. Subsequent chap- viding cash transfers to individuals and
ters of this Report develop and apply a frame- households. Making these services work
work to understand how and why those means that governments are meeting their
relationships play out for different services. responsibility.
Economic growth, though a major
determinant of human development out- Public spending
comes, would need to be substantially faster This responsibility is often reflected in gov-
than it has been in most countries to make ernment spending. Health and education
dramatic improvements through that chan- alone account for about a third of aggregate
nel alone. Public spending makes improve- government spending, with the average
ments possible, but the improvements will slightly lower in poorer countries and regions
fall short if spending fails to reach poor (table 2.1). But there are wide variations
people—either because it goes for things across countries, even within the same
the poor do not use or because it is diverted region. Health and education spending
along the way—or if services are not made accounted for 13 percent of public spending
more productive. Applying technical inter- in Sierra Leone in 1998 but 34 percent in
ventions—combining inputs to produce Kenya—18 percent in Estonia in 1997 but 59
outputs and outcomes more effectively—is percent in Moldova in 1996. Social security
also important. But simply adjusting inputs and welfare spending, much of it directed to
without reforming the institutions that pro- improving health and education, typically
duce inefficiencies will not lead to sustain- makes up another 10–20 percent of aggregate
able improvements. spending.108
Governments contribute a large share of
A public responsibility the financing for schools and clinics. Wages
Governments—and the societies they and salaries on average account for 75 per-
represent—often see improving outcomes in cent of recurrent public spending on educa-
health and education as a public responsibil- tion—and often for almost all the spending
ity. They are supported in this by the interna- (96 percent in Kenya).109 Most teachers and
tional endorsement of the Millennium many health workers are civil service employ-
Development Goals (see Overview). A variety ees. Salaries aside, government subsidies can
of reasons lie behind this responsibility: clas- make up a large share of a facility’s budget.
32
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Public provision Table 2.1 Public expenditures on health and education: large but varied
Education and health spending as a share of government expenditures and as a share of GDP,
In education, health, water, and electricity the in 2000 or latest year available (percent)
public sector is a major provider (if not a Share of public expenditures Share of GDP
monopoly) as well as a funder of services. The Average Minimum Maximum Average Minimum Maximum
Indonesian government operates more than
East Asia and
150,000 primary schools and 10,000 junior Pacific 27 12 53 6 2 11
secondary schools that cover 85 percent and Europe and
60 percent of the respective enrollments.110 Central Asia 31 18 59 10 4 17
The Ugandan government operated 1,400 Latin America
primary level facilities and close to 100 hospi- and Caribbean 33 14 52 8 4 13
tals in 1996.111 The Indian public sector runs Middle East and
North Africa 23 13 39 7 4 12
almost 200,000 primary health facilities and
South Asia 21 16 25 5 4 8
15,000 secondary and tertiary facilities.112 But
wide public provision does not always trans- Sub-Saharan
Africa 25 13 34 7 2 12
late into substantial use. In Uganda govern-
ment health facilities handled just 40 percent
Low-income
of treatments sought in facilities.113 In India, countries 25 12 59 6 2 17
even with the huge organization of public Middle-income
health facilities, the private sector accounts for countries 29 13 53 8 4 14
80 percent of outpatient treatments and High-income
almost 60 percent of inpatient treatments.114 countries 33 20 56 11 3 15
Note: Of the 135 countries included, 52 have data for 2000, 8 for 2001, 30 for 1999, 17 for 1998. The remaining 28 have
data from earlier in the 1990s.
Reasons for public responsibility Source: World Development Indicators database.
Economics gives two rationales for public
responsibility. First, because of market fail-
ures, the amount of services produced and These market failures call for government
consumed would be less than optimal from intervention, but they do not necessarily call
society’s standpoint without government for public provision: it could well be that the
intervention. Market failures can be external- proper role is financing, regulation, or infor-
ities. The fact that an immunized child mation dissemination.
reduces the spread of disease in society is an The second economics justification for
incentive to immunize more children. Basic public responsibility is equity. Improving
education might benefit others besides the health and education outcomes for poor peo-
graduate, another externality. Individuals ple, or reducing the gaps in outcomes between
have little incentive to build and maintain the poor people and those who are better off, is
roads that are crucial to promoting access to often considered a responsibility of govern-
services, but communities and societies do. ment. There are a variety of social justice rea-
“Public goods” (goods that, once produced, sons behind this. Some see this responsibility
cannot be denied to anyone else and whose as rooted in the belief that basic education
consumption by one person does not dimin- and basic health are fundamental human
ish consumption by others) are an extreme rights (box 2.1). The United Nations Univer-
form of market failure. Mosquito control in a sal Declaration of Human Rights asserts an
malaria-endemic area is an example. There is individual’s right to “a standard of living ade-
no market incentive to produce public goods, quate for the health and well-being of himself
so government intervention is required. and of his family, including food, clothing,
Other market failures relate to imperfect housing and medical care” and a right to edu-
information. Different information about cation that is compulsory and “free, at least in
individuals’ risk of illness can lead to a break- the elementary and fundamental stages.”116
down in the market for health insurance. Subsequent international accords have
Lack of knowledge about the benefits of hand expanded the set of health and education
washing or of education can lead to less than rights.117 Many national constitutions have
desirable investment and consumption.115 guarantees for health and education.
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BOX 2.1 Most governments take responsibility for health and education—often appealing
to human rights
Debates on health care and education in devel- practical implications of approaches based on More generally, the approaches overlap on
oping countries often appeal to human rights. rights complement welfare economics. many of their practical policy consequences.
Rooted in the broader context of social justice, An approach based on rights emphasizes Both are skeptical that electoral politics and the
these rights are set forth in the Universal Decla- equality in dignity and equality of opportunity. market provide enough accountability for effec-
ration of Human Rights (1948) as well as other It highlights the need to look at outcomes for all tive and equitable provision of health and edu-
international conventions, such as the Interna- individuals and groups, especially the legally cation services—so there is a need for govern-
tional Covenant on Economic and Social Rights and socially disadvantaged. It makes explicit a ment and community involvement. An
(1966). Several international and bilateral agen- consideration that economics incorporates with economics approach to making services work—
cies have endorsed a human rights orientation. difficulty: many psychological repercussions to such as the one in this Report—is informed by
In addition, the constitutions and laws of many poverty result in poor people’s inability to avail the guidance on participation and
countries include references to rights to educa- themselves of health care and education empowerment that international human rights
tion and health care (a review of constitutional services, even when such services are available. instruments provide. In addition, rights reinforce
rights in 165 countries with written Welfare economics provides tools for assess- poor people’s claims on resources overall and
constitutions found that 116 referenced a right ing priorities and possibilities for intervening on those allocated for basic services in particu-
to education and 73 a right to health care; 95 when budgets are limited —and offers a metric lar—key elements of the effective “voice” of
stipulated free education and 29 free health for doing so. Several aspects of economic analy- poor people discussed here.
care for at least some services to some groups). sis provide instruments for implementing rights,
With education and health central to rights, the complementing a rights-based approach. Source: Gauri (2003).
The notion of health and education as public education system focused on national-
basic human rights provides a strong basis for ism after the Meiji restoration in Japan.120
public responsibility, but ambiguities remain. Much of this involvement is high-minded:
Does a right to medical care imply that gov- a coherent public education system probably
ernment must provide it or even finance it? contributes to social cohesion, particularly
The human rights to “periodic holidays with important in fractionalized societies.121 Post-
pay” or “equal work for equal pay,” as men- colonial states embraced public provision of
tioned in the United Nations declaration, are education as a strategy for nation building.
generally not interpreted to imply govern- But public provision can also be the rational
ment subsidies.118 Although free elementary manifestation of a state’s desire to inculcate a
education is asserted as a right, parents also particular set of beliefs. Tanzania’s 1967 edu-
have a right “to choose the kind of education cation reforms were wrapped up with Ujama
that shall be given to their children”—sug- and African Socialism. Indonesia’s mass edu-
gesting that universal public provision is not cation campaign was closely tied to nation-
required.119 Social equity and fundamental building and national ideology codified in
human rights suggest a responsibility for gov- pancasila—principles whose teaching was
ernment but leave open the ways of discharg- enforced in every school until the fall of the
ing that responsibility. Importantly, enshrin- New Order government.
ing these notions as rights legitimizes the Beyond nation building and social cohe-
demands of citizens—especially poor citi- sion, services operate fully in the political
zens—that government take responsibility realm: free education and free health care are
for making services work. electoral rallying cries in many countries,
Market failures and social justice are nor- popular with many voters. In 1997 Uganda’s
mative justifications for public responsibility— President Museveni campaigned on a plat-
they describe why governments should be form of free universal primary education.
involved. They do not always give much guid- The message was extremely popular—he
ance on how. Why governments actually get won—and within a short time official enroll-
involved provides insight on how public ments nearly doubled (see spotlight).122
responsibility is discharged. Education has long Uganda is not unique: many politicians iden-
been a battleground for beliefs, ideas, and val- tify themselves with their stance toward pub-
ues. The late 19th and early 20th centuries offer lic provision of services. But success is hard:
many stories of this battle, from the movement few politicians have been able to transform
for secular primary education in France to a these political platforms into outcomes. Ser-
05_WDR_Ch02.qxd 8/14/03 7:48 AM Page 35
vices operate in the political realm in yet Figure 2.1 National income and outcomes are strongly associated, especially in low-income
countries
another way. Many politicians use jobs in the
large bureaucracies associated with services Under-five mortality rate, 2000 (log) Primary school completion rate, 1999 (log)
6 6
to reward supporters or to build power. Malawi Cambodia
BOX 2.2 The Fast-Track Initiative—providing assistance for credible national education strategies
With more than 100 million children not in pri- tries.With impressive speed countries have Some problems for donors
mary school, the “Fast-Track Initiative” (FTI) was ensured that their sector plans meet the new tests Despite some progress donor procedures are
launched in June 2002 to accelerate progress for credibility and sustainability. And the donors not yet harmonized, and much financing
toward Education for All in low-income have increased resources for FTI countries, remains fragmented. Some donor assistance
countries. Under the FTI national education seconded staff to an international secretariat for under the FTI continues to be input-driven, sub-
plans are assessed against an indicative frame- the initiative (in the World Bank), and agreed on ject to a “donor discount,” with resources
work of policy benchmarks, prospects for scal- FTI operating principles and guidelines. earmarked for contractors in donor countries
ing up, and allowances for flexibility and learn- More generally, the FTI has: rather than providing flexible support for core
ing by doing.To ensure that education goals are expenditures.
• Raised the political profile of Education for
embedded in an overall national strategy and Too much aid still flows to historically
All, and increased awareness of the need for
consistent with countries’ medium-term expen- preferred countries, rather than good perform-
faster progress to reach education goals.
diture framework, a criterion for FTI eligibility is ers. Although the donors have mobilized addi-
a national commitment to a formal Poverty • Sharpened developing countries’ focus on tional funding for FTI countries case by case,
Reduction Strategy. primary school completion and quality (not there remain some “donor orphans.”Without
The FTI supports countries in addressing key just coverage) and on the importance of get- pooled funding to support these countries, the
policy, capacity, data, and financing constraints ting policies right. FTI will not be able to deliver on the donors’
to universal primary completion by 2015, net • Brought field-based donors into a unified pol- commitment that “no country with a credible
intake into first grade of 100 percent of girls and icy dialogue with governments, improving plan for Education for All will be thwarted for
boys by 2010, and improved learning outcomes. coordination. lack of external support.”The momentum of FTI
An initial group of 23 countries was invited to • Mobilized more resources for primary educa- could easily be lost if a fundamental principle of
join the initiative, and all accepted. tion (a 60 percent increase in official develop- the compact—assistance supporting effective
The FTI was inspired by the Monterrey Con- ment assistance commitments to the first FTI policies—is not honored.
sensus—that better results accrue when devel- countries). The FTI is a major part of international
opment support is targeted to countries that responses—including the G8 process, the Mon-
But the experience with FTI has also high-
accept clear accountability for results and adopt terrey Consensus, and the New Economic Part-
lighted some obstacles. At the country level
appropriate policy reforms.The FTI was nership for African Development—to provide
these include difficulties in ensuring that
conceived as a process for countries with sound momentum for universal primary completion by
resources reach the service delivery level; a need
education policies, embedded in an agreed-on 2015, perhaps the most achievable of the Mil-
to consider a variety of service delivery
macroeconomic framework, to receive added lennium Development Goals. Success will
modes—including community-run schools,
support from donors. require that developing countries pay attention
NGO-run schools, and faith-based schools—and
to policy reform and human and financial
Clear impacts—and obstacles the complexities of public support to this range
resources. It will also require that donors coordi-
Less than a year into the process the FTI has had of providers; the need to make difficult reforms
nate better and honor their side of the bargain
some clear positive impacts. First, it has demon- to increase efficiency and ensure sustainability;
by assisting performing countries.
strated that the new framework of mutual and the need for better data systems to support
accountability is accepted by developing coun- “real-time” tracking of education results. Source: FTI secretariat.
spending can be a critical part of promoting Malawi increased by $8 per child of pri-
improvements in health and education. For mary school age.128 In Ethiopia primary
example, it may be necessary to spend more school completion stagnated, going from
on interventions to reduce mortality or on 22 percent in 1990 to 24 percent in 1999,
education reforms that underpin increases while in Malawi it rose from 30 percent
in primary completion rates—and part of to 50 percent (figure 2.2).
this spending might require international • Per capita public spending on health fell
assistance (box 2.2). But the large variation between $1 and $5 in Côte d’Ivoire and
in the effectiveness of using funds makes it Haiti from the 1980s to the 1990s: child
hard to find a consistent relationship mortality worsened substantially in Côte
between changes in spending and out- d’Ivoire but improved in Haiti—though
comes—highlighting the importance of remaining high (figure 2.3).
spending money well.
Just how variable is the association
• Thailand increased public spending on
primary schooling more than Peru did,
between public spending and outcomes? A yet primary school completions fell in
glimpse at a handful of countries provides an Thailand and increased in Peru.
indication.
• Public spending on health diverged in
• Between the 1980s and 1990s total public Mexico and Jordan, yet reductions in
spending on education in Ethiopia and child mortality were similar.
05_WDR_Ch02.qxd 8/14/03 7:49 AM Page 37
Figure 2.2 Changes in public spending and income, public spending and outcomes are
outcomes are only weakly related: schooling
only weakly associated (figure 2.4)—both
Public spending on education Primary school completion substantively (in the sense that the correla-
Dollars Percent tion is small) and statistically (in the sense
25 60
Malawi
Malawi
that the correlation is indistinguishable from
20 zero).133 With similar changes in spending
15
40 associated with different changes in out-
Ethiopia
comes, it should come as no surprise that the
10 Ethiopia
20 cross-country association is so weak.
5
Why does public spending
0 0 have different impacts?
1000 100 Peru
Deeper analysis of the relation between
Thailand
public spending and child mortality finds
800 90
Thailand results varying from statistical significance
600 80 to insignificance—for four main reasons.
Peru First, some countries might spend more
400 70
because they need to spend more to remedy
200 60 urgent underlying health problems. The
0 50
resulting cross-sectional association would
1980s 1990s 1990 1999 be uninformative since more spending
would appear to be associated with worse
Note: “Spending” refers to total annual public spending on educa-
tion per child of primary school age, in 1995 U.S. dollars averaged outcomes. Using statistical techniques that
for the 1980s and the 1990s. Primary school completion rates are
calculated on the basis of 6 years in Ethiopia (primary plus two
exploit the variation in spending that
years lower secondary), 8 years in Malawi, 6 years in Thailand, depends on factors unrelated to mortality
and 6 years in Peru.
Source: Spending data from World Development Indicators data-
base; primary school completion data from Bruns, Mingat, and
Rakatomalala (2003).
Figure 2.3 Changes in public spending and
outcomes are only weakly related: child mortality
For each country there is a story about
Public spending on health Under-five mortality
why public spending contributed to improv-
Dollars Per thousand
ing outcomes or why it did not. That is the 60 200
crux: the effectiveness of public spending
180
varies tremendously.129 In-depth studies con- Côte d‘Ivoire
40
firm this variability—for example, an analysis 160
of Malaysia over the late 1980s found little
140
association between public spending on doc- 20 Côte d‘Ivoire
tors and infant or maternal mortality.130 A Haiti
120 Haiti
major improvement in the incidence of pub-
0 100
lic education spending on poor people in
South Africa has been slow to translate into 100 100
better outcomes.131 But an impact evaluation 80
of the expansion of public school places in 80 Mexico
Indonesia in the 1970s found a significant 60
positive impact on school enrollments.132 40 Jordan
Another way to look at the impact of pub- 60
Mexico
lic spending is in a cross-section of countries. Jordan 20
Figure 2.4 The association between outcomes and public spending is weak, when controlling sample might yield no association. The num-
for national income
ber of countries in studies that have
Under-five mortality rate*, 2000 Primary school completion rate*, 1999 addressed this question varies dramatically—
150 150
from 22 to 116—so different results should
100 100 not be surprising.138
Second, the specification in the analysis
50 50
can change the assessment of the result. For
0 0
example, controlling for adult literacy in
addition to income in the associations illus-
–50 –50 trated in figure 2.4 yields an association and a
significance level that are even closer to zero.
–100 –100
The message from these studies is not that
–150 –150 public funding cannot be successful. It is that
–150 –100 –50 0 50 100 150 –150 –100 –50 0 50 100 150 commitment and appropriate policies,
Public spending per capita on Public spending per child on backed by public spending, can achieve a lot.
health, 1990s average* education, 1990s average* Infant mortality was high in Thailand in 1970
* Public spending, child mortality rate, and primary school completion are given as the percent deviation from rate pre- at 74 per 1,000 births, and the use of commu-
dicted by GDP per capita.
Note: For the under-five mortality regression, the coefficient is –0.148 and the t-statistic is 1.45. For the primary comple- nity hospitals and health centers was low, in
tion regression, the coefficient is 0.157 and the t-statistic is 1.70. part because quality was low. But the govern-
Source: GDP per capita and public spending data, World Development Indicators database; under-five mortality,
UNICEF; primary completion rate, Bruns, Mingat, and Rakatomalala (2003). ment’s commitment to reduce infant mortal-
ity was strong. Health planners took stock,
outcomes still produces an insignificant rela- analyzing information on service use and
tionship.134 Those techniques are not univer- from household surveys. Thailand doubled
sally accepted, however, and it is possible that real per capita public spending on health
governments are adjusting what they spend in between the early 1970s and the mid-1980s.
response to underlying health conditions. But it also did more. It built facilities in
Second, spending may affect different remote areas, directed more services to poor
groups in society differently. Public spending areas and poor people, improved staff train-
could affect child mortality among poor fam- ing, provided incentives for doctors to locate
ilies without having a large overall impact. in remote areas, and promoted community
Studies allowing for this effect have found a involvement in managing health care deliv-
stronger association between spending and ery. The oversight of doctors was strength-
outcomes for poor people—but the result is ened. And the authority for various programs
only weakly significant and not robust.135 was devolved to the provincial level, freeing
A third strand of the research on this issue the central Ministry of Public Health to con-
focuses on the composition of spending: does centrate on planning, coordination, and tech-
more spending on primary rather than ter- nical support. By 1985 infant mortality had
tiary health activities have a different impact fallen to 42 per 1,000 births, and today it is 28
on mortality? The cross-national statistical per 1,000.139 Similar stories are playing out 20
evidence is weak.136 A fourth strand investi- years later in other parts of the developing
gates factors that might modulate the effec- world.
tiveness of public spending. It finds that cor-
ruption, governance, or urbanization might Public spending on services fails
play a role, but the results are inconsistent to reach poor people
from one analysis to another.137 Most poor people do not get their fair share
Two methodological issues are important of public spending on services, let alone the
for interpreting these analyses. First, the sam- larger share that might be justified on
ple of countries in a study affects the results. equity grounds. Public expenditure inci-
A sample of a few countries that have spent a dence analysis—matching who uses pub-
lot and achieved a lot—and a few countries licly financed services with how much gov-
that have spent little and achieved little—will ernments spend per user—provides a
yield a significant association between more snapshot of who benefits from government
spending and lower mortality. A different spending. Results typically show that the
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Figure 2.5 Richer people often benefit more from public spending on health and education
Share of public spending on health and education going to the richest and poorest fifths
All health spending Primary health only All education spending Primary education only
Guinea 1994 Nepal 1996 Richest fifth
India (UP) 1996 Guinea 1994
Armenia 1999 Madagascar 1994 Poorest fifth
0 20 40 Vietnam 1998
0 20 40
Mexico 1996
Percent Percent
Panama 1997
Note: Figure reports most recent available data.
Source: Filmer 2003b. Kenya 1992
Ghana 1992
Costa Rica 2001
Romania 1994
Jamaica 1998
Colombia 1992
Mauritania 1996
0 20 40 0 20 40
Percent Percent
poorest fifth of the populace receives less Armenians got almost 30 percent of the
than a fifth of education or health expendi- benefit of public spending on primary edu-
tures, while the richest fifth receives more. cation in 1999. But not all spending on pri-
In Ghana for example, the poorest fifth mary services is pro-poor. While public
received only 12 percent of public expendi- spending on primary health care tends to be
tures on health in 1994, whereas the richest more pro-poor than overall spending, it
fifth received 33 percent (figure 2.5). does not always disproportionately reach
One reason for this imbalance is that the poor. The poorest fifth of the populace
spending is skewed to services dispropor- in Côte d’Ivoire benefited from only 14 per-
tionately used by richer people. Public cent of public spending on primary health
spending on primary education tends to facilities in 1995 (compared with 11 percent
reach poor people. The poorest fifth of from all health spending).140
05_WDR_Ch02.qxd 8/14/03 7:50 AM Page 40
Orienting public spending toward services hard to associate a cost with achieving any
used by poor people helps, but it does not target improvement in outcomes, as with the
help unless the spending reaches the frontline, Millennium Development Goals (box 2.3).
where it benefits poor people. A study in
Uganda found that in the early 1990s only 13
percent of government primary education Technical adjustments
capitation grants made it to the intended des- without changes in incentives
tination, primary schools. The rest went to are not enough
purposes unrelated to education or to private If more public money is spent on services—
gain. Poor students suffered disproportion- and more of that money is spent on services
ately, as schools catering to them received even used by poor people and makes it to the
smaller shares of the grants (see spotlight).141 intended school or clinic—how the money is
The story in health is the same. Drugs used still determines its efficacy. Consider
intended for health clinics often never get recurrent spending on education in Sub-
there. In the mid-1980s more than 70 percent Saharan Africa. Of 18 populous Sub-Saharan
of the government’s supply of drugs disap- African countries with data, most spend sub-
peared in Guinea.142 Studies in Cameroon, stantially more than the recommended 66
Tanzania, and Uganda estimated that 30 per- percent on teachers (figure 2.6).146 And this
cent of publicly supplied drugs were misap- isn’t just a central government phenomenon.
propriated—in one case as much as 40 per- In Nigeria wages account for about 90 per-
cent were “withdrawn for private use.”143 cent of local government recurrent expendi-
tures on primary education. No one would
Private and public sectors interact deny that teachers are a key part of the
Public spending has trouble creating quality schooling process and that paying them ade-
services and reaching poor people. So why be quately is important. But if there is no money
surprised that spending is only weakly associ- left to pay for other important inputs, such as
ated with outcomes? But there is another rea- textbooks, learning will suffer.
son for the weak association: private and Why does such a large share of education
public sectors interact, and what matters is spending go to teachers? Spending on teach-
Figure 2.6 The dominant share of the net impact on the use of services. Increas- ers is the result of balancing technical issues
recurrent spending on education goes
to teachers (selected Sub-Saharan ing public provision may simply crowd out, with political jockeying by parents, teachers,
countries) in whole or in part, equally effective services the rest of the civil service, and advocates of
obtained from nongovernment providers. spending priorities outside of the education
Kenya 96% This works through two channels. First, sector. Spending on other inputs often loses
D.R. Congo 90%
Tanzania 89% individual demand in both public and pri- out to spending on teachers—who are often
Between vate sectors will respond to a change in the vocal, organized, connected, and contractu-
68% and public sector. A review of the impact of price ally obligated to be paid. It happens where
86% increases in public health clinics in seven spending is fairly high—Kenya spends more
Malawi
Ghana countries found that a substantial percentage than 6 percent of GDP on education—and
Angola of visits to public providers deterred by price fairly low—Tanzania spends less than 2 per-
Madagascar 58% Ethiopia
Zambia increases are redirected to private ones— cent of GDP on education. The purpose is
Côte d‘Ivoire although the magnitude of the effect varies not to single out Sub-Saharan Africa—the
Sudan
Zimbabwe
across settings.144 Second, private providers phenomenon is widespread—or to pick on
Niger may respond to changes in public provision. teachers. It is to suggest that fixing the prob-
Mozambique An experiment in increasing fees in public lem requires dealing not just with technical
Uganda
Burkina Faso facilities in Indonesia in the early 1990s or managerial questions of how much to
Mali found that the number of private dispen- spend on one input relative to others, but
Cameroon
saries and hospitals increased substantially, with the institutional and political contexts
and that this resulted in only small changes in that generate these decisions in the first place.
health outcomes.145 Identifying what contributes to an effec-
Unless resources support services that tive classroom or appropriate medical treat-
Note: Data refer to primary school–level work for poor people, they will be ineffective. ment is important for decisionmaking. In
spending and primary school teachers.
Source: Bruns, Mingat, and Rakatomalala (2003). The efficacy of spending is so varied that it is well-functioning systems service provision
05_WDR_Ch02.qxd 8/14/03 7:51 AM Page 41
BOX 2.3 Why it’s so hard to “cost” the Millennium Development Goals
How much will it cost to reach the Millennium or failure of turning that spending into outcomes.
Development Goals? That question, crucial for gov- This does not mean “if this amount of money were
ernments and donors who have committed to the spent, the Millennium Development Goals will be
goals, is extremely difficult to answer. met.” It means “if the goals are met, here is what it
will have cost.”
What cost? For universal primary education
completion, does “costing” mean putting a price tag Financing transitional costs. If institutional
on enrolling all primary-age children in public reforms are necessary for sustainable improvements
schools? With more than 100 million children of pri- in outcomes, the costs of those reforms should be
mary school age not in school, multiplying the num- counted: for example, the cost of repurposing physi-
ber in each country by average public spending per cal infrastructure or compensating redundant staff.
primary student yields a total “cost” of about $10 bil- These costs are determined by country conditions.
lion. But this number overlooks a simple point: chil- For example, the cost of a severance package will
dren not in school might be harder to induce to depend on a country’s labor market, civil service reg-
come to school, so the marginal cost of enrolling a ulations and norms, and other local factors. Given
child could be higher than the average cost.These the uncertainty surrounding costs, it makes little
children might have higher opportunity costs, so it sense to estimate transitional costs on a global basis.
might require a larger subsidy to get them into
school. Or they might live in remote areas, where it Interdependence and double counting.
would cost more to build schools or to compensate Progress on each Millennium Development Goal
them for traveling to more central locations. In addi- feeds back into the others. Safe water and good sani-
tion, this approach implicitly assumes that spending tation contribute to better health. Good health
on a particular target can be earmarked separately enhances the productivity of schooling. Education
from other spending in the sector.Though that is promotes better health. Interventions that promote
possible, it is not easy. one goal promote all of them. If the cost of reaching
each goal is assessed independently, and the results
Efficiency gains. The average cost calculation are totaled across goals, there is double counting.149
also ignores the weak overall association between
spending and outcomes. Additional spending will be Multiple determinants. But the goals do not
associated with only small increases in outcomes if just depend on each other—their determinants are
the additional funds are spent with the average multiple, cutting across many sectors. Little is known
observed efficiency (figure 2.4).That means it will about the relative contribution of each factor to out-
take astronomically high amounts to achieve the comes or about the magnitude of potential interac-
goals. But what if the money is “well spent”? tion effects (see crate 1.1 in chapter 1). For example,
A country-by-country simulation of spending in the impact of sanitation on mortality depends on
47 low-income countries adjusted the proximate access to safe water.The effectiveness of vaccines,
determinants of primary completion success—pub- and thus their contribution to lowering mortality,
lic spending as a share of GDP, the share of spending depend on preserving the “cold chain,” which
that goes to teachers, the level of teacher salaries, depends on roads, other transport, and energy infra-
pupil-teacher ratio, average repetition rate. It found structure. Precise estimates of these independent
that average external resources of about $2.8 billion and interactive effects are not easy to come by.
a year would be needed. (Since the simulation
included domestically mobilized resources as a pol- In sum, costing the goals requires an estimate
icy lever, the model yields the amount of external that distinguishes between marginal and average
resources required).147 The average-cost approach to cost, incorporates the policy and institutional
enrolling out-of-school children in these 47 changes required to make this additional expendi-
countries yields a total incremental cost of $3.1 bil- ture effective, does not double- or triple-count given
lion a year.148 the interdependence of the goals, and takes into
“Costing” a change in proximate determinants is account the multiple determinants of each goal. No
useful for identifying the fiscal implications of a wonder that coming up with costs of reaching the
change in policy, but it says little about the success goals is so difficult.
can be improved through better teaching incompetent doctors or corrupt police. But
materials, more reliable availability of drugs, trying to make services work in weak systems
better training of health workers—that is, by an effective and least-cost solution—
through technical improvements in the prox- applying a codified set of actions or simply
imate determinants of successful service pro- training providers—will end in frustration if
vision. And management reforms may politicians do not listen to citizens or if
reduce the frequency of shirking teachers or providers have no incentive to perform well.
05_WDR_Ch02.qxd 8/14/03 7:51 AM Page 42
ing in Uganda, citywide reform in Johan- and what makes some other innovations
nesburg, South Africa, cash transfers to fail? Can they be replicated? To examine
households in Mexico, statewide reform of these questions systematically—that is, to
health services in Ceará, Brazil (see spot- learn from such examples—the Report
lights). Only one of these innovations was develops a framework that incorporates the
evaluated using an experimental design main actors—service beneficiaries, the
(Mexico’s Progresa). And not all have clear state, and providers—and describes how
measures of change in outputs or out- each is linked by relationships of account-
comes. But all hint at ways forward. ability (chapters 3 to 6). It then applies
The various stories raise questions. Why these principles to specific reform agendas,
were the innovations implemented? Whom exploring how those relationships play out
did they affect? What made them work— in different sectors (chapters 7 to 11).
06_pgs 44-45_Ch02Spotlight.qxd 8/14/03 1:48 PM Page 44
to be well supplied, adequately maintained, in India, Kerala already led in human devel-
food distribution, and social security By contrast, in Uttar Pradesh caste and action, especially by the politically weak.
differ sharply in scope, access, quality, class-based divisions, and the absence of And private action loops back to influence
and equitable incidence. In Uttar compelling political alternatives to tran- public action. One set of reforms can lead
Pradesh these services appear to have scend these divisions, led to poor political to further institutional evolution. A society
been widely neglected and there has incentives for effective provision of univer- can be caught in a vicious cycle, as in Uttar
been no particular effort to ensure sal, basic services. Political competition Pradesh, or be propelled by a virtuous one,
results, particularly in schools. revolved around access to instruments of as in Kerala. As Dreze and Gazdar note: “In
the state to deliver patronage and public Uttar Pradesh, the social failures of the state
• A more literate and better informed
employment to specific clients. Public are quite daunting, but the potential
public in Kerala was active in politics
and public affairs in a way that did not expenditures in the early years were accord- rewards of action are correspondingly high,
appear to have happened in Uttar ingly concentrated in state administration and the costs of continued inertia even
Pradesh. and remained well above expenditures on higher.”160
health and education. More recently, politi- As for Kerala, despite the many eco-
• Informed citizen action and political
cal parties have tended to underplay the nomic problems that linger and the new
activism in Kerala—building partly on
program or policy content of their plat- ones that have appeared, the remarkable
mass literacy and the emphasis placed
forms, and instead have publicized the eth- rescript issued in 1817 by Gowri Parvathi
on universal services by early commu-
nic profile of their candidate lists to Bai, the 15-year-old queen of the erstwhile
nist and subsequent coalition govern-
demonstrate commitment to proportional state of Tranvancore, certainly seems to
ments—seem to have been crucial in
representation of ethnic groups in the have come true in its bold aspirations for
organizing poor people. In Uttar
bureaucratic institutions of the state.159 the human development of her subjects.
Pradesh traditional caste and power
The rescript read:
divisions, particularly in rural areas,
Breaking out of vicious cycles “The state should defray the entire cost
have persisted through more than 50
Public action can build on history, break of the education of its people in order that
years of electoral politics—and such
from it, or perpetuate it. Individuals’ abili- there might be no backwardness in the
divisions have come to form the core
ties to press their demands depend on their spread of enlightenment among them, that
of political discourse and clientelist
information, perceived rights, and literacy. by diffusion of education they might
politics.
Public action—by influencing information become better subjects and public servants
Political incentives matter for service that citizens have, their legal protections, and that the reputation of the state might
delivery and actual development out- and their schooling—influences private be enhanced thereby.”161
comes.158 Delivering broad, universal basic
services has remained a credible political Figure 1 Kerala spent more on education and health, Uttar Pradesh on state administration
platform in Kerala in contrast to the clien-
telist, caste, and class-driven politics of Uttar Percent of total public expenditures
50
Pradesh.
In Kerala, early governments with eco-
nomic platforms emphasizing the provi- 40
State administration (Uttar Pradesh)
sion of universal basic services established Education and health (Kerala)
a political agenda that remained important 30
Education and health (Uttar Pradesh)
in the coalition politics that followed.
Political competition conditioned on State administration (Kerala)
20
promises to deliver better basic services
showed up in early budget allocations (fig-
ure 1): education and health services 10
accounted for a much higher share of pub- 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999
lic expenditures as compared to what was Note: Public spending on state administration does not include interest payments.
spent on state administration. Source: Reserve Bank of India Bulletins, 1955–1998.