The PSM Approach
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  • See Paragraphs 7-9
  • See Paragraph 10
  • See paragraphs 12-15
  • See paragraph 23
  • See paragraph 24ARDAgriculture and Rural Development  CIP Competitive Industries Practice  CMP Capital Markets Practice  EPEconomic Policy  EDEducationEMTEnergy and Mining  ENVEnvironment FIP Financial Inclusion Practice  FSY Financial Systems Practice  FMFinancial Management  GEGender and Development  GIA Global Indicators and Analysis GICGlobal Information and Communications Technology  HEHealth, Nutrition and Population  ICP Investment Climate Practice  IEP Innovation, Technology and Entrepreneurship Practice  POPoverty Reduction  PRProcurementPFGProject Finance and Guarantees  PSPublic Sector Governance  RMResource Management   SDVSocial Development  SPSocial Protection  TRTransportUDUrban Development   WATWater
  • See paragraphs 16-21
  • See paragraph 24
  • See paragraph 54
  • See paragraph 54
  • See paragraph 54
  • See paragraph 25
  • See paragraph 26
  • See paragraph 27
  • See paragraph 28
  • See paragraph 29
  • See paragraphs 32- 35
  • See paragraphs 36-40
  • See paragraphs 41-44
  • See paragraphs 46-49
  • See paragraphs 54 and 55
  • See paragraphs 56 to 58
  • See paragraphs 59-61
  • See paragraph 62
  • See paragraph 63
  • See paragraphs 65 and 66
  • See paragraphs 67 and 68
  • See paragraphs 69 and 70
  • See paragraphs 72 - 75
  • See paragraphs 76-83

The PSM Approach The PSM Approach Presentation Transcript

  • The World Bank‘s Approach toPublic Sector Management Reform 2011-2020 Better Results from Public Sector Institutions 29 November 2011
  • Overview1. How did we develop the PSM Approach?2. What is PSM reform and why does it matter?3. What are the Bank’s current strengths and weaknesses in supporting PSM reform?4. What are emerging challenges and opportunities for PSM reform?5. Which strategic directions should the Bank’s PSM Approach for 2011-2020 follow?6. How should we ensure progress?
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuring does it matter? Weaknesses Opportunities Directions Progressthe PSM Approach? A very intensive consultation process… With: • An (external and internal) Advisory Group, including Academics and Government Officials • Academics and Practitioners via Public Blog discussion • The Public Sector Governance Board / Human Development Sector Boards • Regional Public Sector Units • The PSM Thematic Groups / Communities of Practices • Key partners – including DfID, CIDA, UNDP and OECD Govnet no major consultation with client governments (budget constraints). BLOG: http://blogs.worldbank.org/governance/public-sector-management
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuring does it matter? Weaknesses Opportunities Directions Progressthe PSM Approach? …and significant background work • Issues Papers o Defining the public sector o What can PSM reform achieve? o How we learn about what works in PSM reform o Knowledge, products and staffing for PSM reform o Explaining successes and failures o What is the Bank’s mission in PSM reform? o Challenges and opportunities o What should the Bank do? • Econometric Review of the World Bank’s PSM Portfolio • Discussion Papers o “Towards a ‘Theory of Change’ for PSM reform” o The “Diagnostic Protocol” and Country Pilots • Staff Surveys on the PSM Approach • Input Papers o Matt Andrews – “Change Space” and PSM projects o Graham Scott – PSM strategy review
  • How did we develop Strengths and Challenges and Strategic Ensuring What is PSM and whythe PSM Approach? Weaknesses Opportunities Directions Progress does it matter? The public sector delivers key results…
  • How did we develop Strengths and Challenges and Strategic Ensuring What is PSM and whythe PSM Approach? Weaknesses Opportunities Directions Progress does it matter? …and represents a large part of the economy General Government Revenue and Outlay as a Percentage of GDP 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% High income: High income: Low income Lower middle Upper middle nonOECD OECD income income Revenues Outlays Source: IMF Government Finance Statistics and International Financial Statistics
  • How did we develop Strengths and Challenges and Strategic Ensuring What is PSM and whythe PSM Approach? Weaknesses Opportunities Directions Progress does it matter? There are many conceptual challenges… Copyright 2006 by Sidney Harris
  • How did we develop Strengths and Challenges and Strategic Ensuring What is PSM and whythe PSM Approach? Weaknesses Opportunities Directions Progress does it matter? …which the Approach resolves by defining PSM as a problem-solving task The PSM Approach defines PSM reforms… By their purpose: They seek to achieve sustainable improvements to the public sector results chain. Not by assumptions about the right place to start.
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator The Bank has a large PSM lending portfolio… Total Committed Amounts to Public Finance Management Projects by Donor (2005-2008, worldwide) IBRD IDA IDB AsDB United Kingdom EU Institutions United States Australia AfDB Netherlands Sweden AsDF IDB Sp.Fund Norway Denmark 0 500 1000 1500 2000 2500 3000 3500 Source: OECD Development Database on Aid Activities (Creditor Reporting System)
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator …but with a mixed track record Average Investment Lending Project success rates by Sector Board 1 0.9 0.92 0.8 0.88 0.81 0.79 0.79 0.78 0.7 0.75 0.75 0.74 0.73 0.73 0.71 0.7 0.69 0.6 0.63 0.63 0.5 0.4 0.3 0.2 0.1 0 GIC TR SP SDV WAT ED EP UD Total ARD FSP EMT ENV PS FPD HE Source: PSM portfolio review, 2011
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Despite significant advances in understanding, everyone faces problems with PSM reforms…• Little explicit evidence about what matters most in improving PS performance• Significant uncertainty about the institutional forms that are suited• Changing the actual behavior of public agents deep inside the public sector is hard• Even if implemented, PSM reforms may not make the intended difference for development outcomes• Political economy factors may not be fully evident until the reform process plays out
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator …but the Bank faces some distinctive problems We tend to downplay, not manage, risk The Bank yet has to put “best fit” fully into practice – persistent pressures towards “best practice” Dialogue with client governments on PSM reform is sometimes discontinuous, undermining trust-building and familiarity with client country context: • Lending engagement can be episodic • Even when continuous, there are diverse areas of focus for lending • Where lending dialogue is discontinuous, analytical work and TA often fill the gaps – but not always • The challenge is to ensure that the client experiences Bank engagement on PSM as a unified program
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuring the PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Lending engagement can be episodicExample: Lending Engagement on PFM in ECA, Albania Armenia Azerbaijan Belarus Bulgaria Georgia Hungary Kazakhstan Latvia Lithuania Moldovaselected countries Poland Romania Russian Federation Slovak Republic Tajikistan Turkey Ukraine 1994 1996 1998 2000 2002 2004 2006 2008 2010 No Engagement Engagement Source: World Bank Business Warehouse data
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Even when continuous, there are diverse areas of focus to Georgia by Institutional Area Example: PFM Lending for lending Taxpolicy and administration Budget preparation MTEF Treasury management Procurement Internal auditAccounting and financial reporting External Audit Legislative oversight Public investment management Fiscal transparency Information technology Quasi fiscal activities and… No Engagement PFM education Engagement 1993199419951996199719981999200020012002200320042005200620072008200920102011 Source: World Bank Business Warehouse data
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Where lending is discontinuous, analytical work and TA may fill the gaps Example: World Bank PFM Activity in Azerbaijan 10 9 8 # of Active Projects 7 6 5 4 3 2 1 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year Lending - Adjustment Lending - Investment AAA - ESW AAA - NLTA IDF Source: World Bank Business Warehouse data
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator The field has a weak knowledge base Extensive tacit “practitioner” …but explicit research is lagging… knowledge on PSM reform… Some promising work is emerging: • Detailed and high quality case studies… • Impact Evaluations on “downstream” PSM reform (e.g. school-based management)… • Emerging work on the Political Economy of Public Sector Reforms… • Some promising studies using comparative data on institutional strength…
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuring the PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Need to make more progress in country systems …but indicators of the strength of country We have PEFA… systems are still lacking for key PSM areas: Number of PEFA assessments conducted 2005-2010 • Civil Service • Tax Policy and Administration • Decentralization / Governance across levels of governmentSource: Stocktaking of PEFA Assessments by the World Bank.
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator Need to learn more from our portfolio We do not reap the potential for learning from the Bank’s portfolio:• Project ratings are an uncertain measure of reform success (success might reflect lack of ambition)• Project indicators are very idiosyncratic – hard to aggregate• Research rarely built into project design=> Much project knowledge remains implicit / in the minds of project leaders
  • How did we developSource: World Bank. What is PSM and why Strengths and Challenges and Strategic Ensuring the PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator PSM reforms are led by diverse specialists… 1995-2010 World Bank Projects showing the % led by different disciplines within the Bank …but that poses challenges for integration.
  • How did we develop What is PSM and why Strengths and Challenges and Strategic Ensuringthe PSM Approach? does it matter? Opportunities Directions Progress Weaknesses As a development actor As a knowledge generator As an integrator The Bank has a highly qualified body of staff working on PSM reform… …but it is facing problems in attracting and retaining senior professionals with higher level integrative skills with specialized skills (e.g. ICT) Source: http://farm6.static.flickr.com/5270/5569465778_dfd99246e3.jpg Source: http://jayshriram.com/wp-content/themes/twentyeleven/images/obj.png
  • How did we develop What is PSM and why Strengths and Strategic Ensuring Challenges andthe PSM Approach? does it matter? Weaknesses Directions Progress OpportunitiesIn the Bank’s external environment Within the Bank In how we understand institutional reform Major changes in the Bank’s external environment • Demand from countries for: • more flexible problem-solving • help in solving different problems • Technological change – social media and back office functions • Competitive pressures from other suppliers of TA and finance
  • How did we develop What is PSM and why Strengths and Strategic Ensuring Challenges andthe PSM Approach? does it matter? Weaknesses Directions Progress OpportunitiesIn the Bank’s external environment Within the Bank In how we understand institutional reform Major changes within the Bank • A flat budget environment • Increasing pressures to demonstrate results • A general push towards open data • Growing corporate emphasis on explicit risk management • New Program for Results Lending Instrument
  • How did we develop What is PSM and why Strengths and Strategic Ensuring Challenges andthe PSM Approach? does it matter? Weaknesses Directions Progress OpportunitiesIn the Bank’s external environment Within the Bank In how we understand institutional reform And major changes within the PSM field contents • The best practice to good fit journey has begun (but not ended) • A shift in emphasis from contents (technical A shift in emphasis recommendations) to context (country circumstances) to process (how are actors engaged in problem and solution context identification) • The process concerns are about how we identify problems and solutions jointly with counterparts, and how we ensure active feedback during implementation process
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress Directions Which strategic directions should the Bank’s PSM Approach for 2011-2020 follow?1. How should we pursue agility in our operational work?2. How should we balance tacit understanding of PSM with more “scientific” knowledge?3. How can we encourage a “whole Bank” Approach?
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategic the PSM Approach? does it matter? Weaknesses Opportunities Progress Directions Pursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (1) Ensure continuous engagement on PSM1. Regular reviews of country PSM developments led by PSM specialists and country PSM counterparts help ensure that disparate Bank actions are understood as part of a continuing dialogueImage source: http://www.thomasgroup.com/getfile/3d4a2910-486d-4ebc-bde0-d3adc1c3af56/strategic-alignment.aspx2. Work more closely with development partners concerning pooled fundingImage source: http://www.globalhumanitarianassistance.org/wp-content/uploads/2010/07/Article-finmechs-thumb.jpg
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (2) Emphasize a “diagnostic” approach in project design and selectionA. Promote 4 diagnostic principles: 1. Focus on the functional problem, rather than the solution 2. Engage stakeholders in identifying functional problems and binding constraints 3. Use political economy analysis prospectively • Why is the current dysfunction in equilibrium? • What does this imply for the feasibility of reform approaches? 4. Use available evidence and accepted theory on whether a reform will fix the problemB. Promote HD-PREM “Public Sector Management Clinics
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (3) Take advantage of the Program for Results InstrumentDoes the increase in DPL lending indicate a movement towards more flexible lending instruments?45 We need to:403530 • Genuinely work in multi-25 sector teams2015 • Develop robust10 indicators that can be 5 linked to disbursements 0 • Take change 1999 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 management processes Investment Lending DPL into account Other Development Policy Lending Structural Adjustment Loans Source: World Bank Business Warehouse Data
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (4) Incorporate stakeholder feedback more systematically into PSM projects Examples: • India: Mobile Phone hotline for reporting corruption in land administration • Mozambique: Regular surveys of public officials to monitor actual usage of IFMIS systems • Philippines “tax watch”: Company monitoring of corruption in tax administration
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategic the PSM Approach? does it matter? Weaknesses Opportunities Progress Directions Pursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (5) Be more honest about the risks at the project and portfolio level1. Define portfolio risk tolerances (what percentage of ineffective projects is reasonable?)Image source: http://www.debtfreeadventure.com/wp-content/uploads/2009/07/highwire.jpg2. Better approximate economic and social returns of PSM reformImage source: www.flickr.com
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (1) Push ahead with metrics of the strength of country systems The PEFA success story is not easy to replicate… Number of PEFA assessments conducted 2005-2010 We need to: • Push ahead, even without the urgency that drove the development of PEFA • Build demand for better information through open source data Source: Stocktaking of PEFA Assessments by the World Bank.
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (2) Enable better learning from projects A potentially rich source of learning, that could better be exploited through:1. More standardized groupings of project progress indicators2. More in-depth quality evaluations that capture de facto change processes
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach (3) Stimulate and lead a multi-agency research agenda on PSM reform 1. Research on frontier issues • PSM reforms in highly aid-dependent countries • Political economy of PSM reform • Measuring public sector productivity 2. More rigorous evaluations of PSM reforms 3. High quality case studies and theory development on the political dynamics of PSM reform
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress DirectionsPursue Agility in Operational Work Balance tacit with “scientific” knowledge Encourage a “whole Bank” approach Three recommendations:1. Strengthen a shared understanding of the public sector • Strengthen professional communities • Develop common training and analytic frameworks • Reward “influence” on other projects2. Strengthens shared competencies • Develop a consistent, cross-sectoral PSM Competency Framework3. Strengthen a shared determination to remain at the cutting edge of research • Training and skill building
  • How did we develop What is PSM and why Strengths and Challenges and Ensuring Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Progress Directions Which strategic directions should the Bank’s PSM Approach for 2011-2020 follow? In sum • Doing better: continuity, diagnostics & experimentation, focus on results and risks • Knowing better: metrics of the strength of country systems, learning from projects, leading a research agenda • Integrating better: shared understanding, competencies and determination to remain at the cutting edge
  • How did we develop What is PSM and why Strengths and Challenges and Strategicthe PSM Approach? does it matter? Weaknesses Opportunities Directions Ensuring Progress How should we ensure progress? Monitoring implementation (inputs) is necessary • A rolling annual action plan; • With SMART targets; • Monitored by the Public Sector Governance Board; …but not enough! Monitoring outcomes (in the long run) is crucial…Project-level indicators are not enough either… …but monitoring country-level change is hard • They are clearly attributable, but… • Disagreement about what is “good” • They do not capture relevance • Lack of measures of what is “good” • If the Bank takes risks, they should not (indicators of the strength of country systems) go up! • Attribution to the Bank will be difficult (what is the counterfactual?)
  • Thank you!