6 Good Governance After 1990 In Nepal


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6 Good Governance After 1990 In Nepal

  1. 1. Issues in Governance Presented by Dr. M Rijal Supported by R Pandey
  2. 2. Organization of the Talk <ul><li>Common Definitions </li></ul><ul><li>Democratic Governance </li></ul><ul><li>The WB Indicators </li></ul><ul><li>How Does Nepal Fare? </li></ul><ul><li>Global Perspective </li></ul><ul><li>Global Positives & Negatives </li></ul><ul><li>Governance in Nepal </li></ul><ul><li>What Went Wrong </li></ul>
  3. 3. Common Definitions <ul><li>UNDP </li></ul><ul><li>Exercise of economic, political & administrative authority to manage a country’s affairs at all level </li></ul><ul><li>Comprises mechanisms, process & institutions through which citizens & groups articulate their interests, exercise their legal rights, meet their obligations, & mediate their differences </li></ul>
  4. 4. Common Definitions, contd <ul><li>World Bank </li></ul><ul><li>Three aspects of governance </li></ul><ul><ul><li>Form of political regime </li></ul></ul><ul><ul><li>Process by which authority is exercised in the management of a country’s economic & social resources for development </li></ul></ul><ul><ul><li>Capacity of governments to design, formulate & implement policies & discharge function </li></ul></ul>
  5. 5. Common Definitions, contd <ul><li>OECD </li></ul><ul><ul><li>Encompasses the role of public authorities in establishing the environment in which economic operators function and in determining the distribution of benefits as well as the nature of relationship between the ruler and the ruled </li></ul></ul>
  6. 6. Common Definitions, contd <ul><li>Institute of Governance, Ottawa </li></ul><ul><ul><li>Sum of the many ways individuals & institutions, public & private, manage their common affairs </li></ul></ul><ul><ul><li>Continuing process through which conflicting or diverse interests may be accommodated and co-operative action may be taken </li></ul></ul>
  7. 7. Common Definitions, contd <ul><li>Democratic Governance (UNDP) </li></ul><ul><ul><li>Aims at building institutions & rules that are not only efficient and fair, as well, but also are developed through a democratic process in which all people have a political voice </li></ul></ul><ul><ul><li>i.e., it incorporates into the notion f good governance for development, democratic processes and institutions, and a concern with the securing of political & civil rights & freedoms as human rights </li></ul></ul>
  8. 8. Common Definitions, contd <ul><li>Mahbub ul Haq </li></ul><ul><li>Good Political Governance </li></ul><ul><ul><li>Structures & processes that support the creation of a participatory, responsive & accountable polity </li></ul></ul><ul><li>Good Economic Governance </li></ul><ul><ul><li>Competitive, non-discriminatory & equitable economy </li></ul></ul><ul><li>Good Civic Governance </li></ul><ul><ul><li>Society in which people are given the ability to self-organize </li></ul></ul>
  9. 9. Democratic Governance (UNDP) <ul><li>Human rights & political freedom </li></ul><ul><li>Voice in government decisions </li></ul><ul><li>Accountability </li></ul><ul><li>Inclusive & fair rules </li></ul><ul><li>Gender equality </li></ul><ul><li>Free from discrimination (race, ethnicity, class, gender, etc) </li></ul><ul><li>Needs of future generations </li></ul><ul><li>Responsive economic & social policies </li></ul><ul><li>Economic & social policies aim at poverty eradication & expanding choices </li></ul>
  10. 10. Indicators (WB Study) <ul><li>Process by which governments are selected, monitored & replaced </li></ul><ul><ul><li>Voice & accountability, political stability & absence of violence </li></ul></ul><ul><li>Ability of governments to formulate & implement sound policies </li></ul><ul><ul><li>Government effectiveness, regulatory quality </li></ul></ul><ul><li>Respect of citizens & state for the institutions that govern economic & social interactions among them </li></ul><ul><ul><li>Rule of law, control of corruption </li></ul></ul>
  11. 11. Voice & Accountability <ul><li>Orderly transfers of political power </li></ul><ul><li>Political rights </li></ul><ul><li>Vested interests </li></ul><ul><li>Accountability of public officials </li></ul><ul><li>Civil liberties & Human rights </li></ul><ul><li>Freedom of association </li></ul><ul><li>Freedom of press </li></ul>
  12. 12. Political Stability <ul><li>Armed conflicts </li></ul><ul><li>Violent demonstrations </li></ul><ul><li>Social unrest, including ethnic tensions </li></ul><ul><li>International tensions/ terrorist threat </li></ul>
  13. 13. Governance Effectiveness <ul><li>Quality of public service provision </li></ul><ul><li>Quality of bureaucracy / institutional effectiveness </li></ul><ul><li>Credibility of Government’s commitment to policies </li></ul><ul><li>Quality of general infrastructure </li></ul><ul><li>Quality of public schools </li></ul><ul><li>Public service vulnerability to political pressure </li></ul>
  14. 14. Regulatory Quality <ul><li>Unfair competitive practices </li></ul><ul><li>Government’s attitude towards investment </li></ul><ul><li>Price controls </li></ul><ul><li>Discriminatory tariffs </li></ul><ul><li>Excessive protections </li></ul><ul><li>Discriminatory taxes </li></ul><ul><li>Extent of dominance of SOEs </li></ul><ul><li>Regulation of foreign trade </li></ul>
  15. 15. Rule of Law <ul><li>Violent crime </li></ul><ul><li>Organized crime </li></ul><ul><li>Fairness of judicial process </li></ul><ul><li>Enforceability of contracts </li></ul><ul><li>Speediness of judicial process </li></ul><ul><li>Confiscation/expropriation </li></ul><ul><li>Intellectual property rights protection </li></ul><ul><li>Private property protection </li></ul>
  16. 16. Control of Corruption <ul><li>Public trust in financial honesty of politicians </li></ul><ul><li>Corruption among public officials </li></ul><ul><li>Corruption as obstacle to business </li></ul><ul><li>State capture, including positions of power through patronage </li></ul>
  17. 17. How Does Nepal Fare? <ul><li>The World Bank Study [2003] </li></ul><ul><li> 1996 1998 2000 2002 </li></ul><ul><li>Voice & Accountability 0.13 -0.01 -0.12 -0.52 </li></ul><ul><li>Political stability 0.14 -0.43 -1.02 -1.63 </li></ul><ul><li>Governance effectiveness -0.32 -0.94 -0.72 -0.51 </li></ul><ul><li>Regulatory quality -0.24 -0.34 -0.30 -0.50 </li></ul><ul><li>Rule of law -0.34 -0.25 -0.31 -0.50 </li></ul><ul><li>Control of corruption -0.26 -0.59 -0.42 -0.30 </li></ul><ul><li>(Scores range from -2.5 to 2.5) </li></ul>
  18. 18. Global Income Disparity <ul><li>Share, in 1990, of </li></ul><ul><li> Richest 20% Poorest 20% </li></ul><ul><li>GDP 86 1 </li></ul><ul><li>Exports 82 1 </li></ul><ul><li>FDI 68 1 </li></ul><ul><li>Telephone Lines 74 1.5 </li></ul><ul><li>Internet users 93 0.2 </li></ul>
  19. 19. Forces of Globalization <ul><li>Decline in costs of 1960 1990 </li></ul><ul><li>Computers 125 1 </li></ul><ul><li>Telephone calls 15 1 </li></ul><ul><li>Air transport 2 1 </li></ul>
  20. 20. Declining Influence of Government <ul><li> 1997 Data </li></ul><ul><li>Total sales of General Motors $164 B </li></ul><ul><li>Total GDP of Thailand $154 B </li></ul><ul><li>Total sales of Hollywood movies $30 B </li></ul><ul><li>Total sales of movie Titanic $1.8 B </li></ul><ul><li>Total GDP of Nepal $4.8 B </li></ul><ul><li>Of 100 largest economies in the world </li></ul><ul><li>50 countries 50 MNCs </li></ul>
  21. 21. Rampant Poverty & Low HDI <ul><li>Of 6 B people in the world, </li></ul><ul><li>2.8 B live on less than $2 a day </li></ul><ul><li>1.2 B live on less than $1 a day </li></ul><ul><li>Under 5 mortality </li></ul><ul><li>In rich countries 1 in 100 children </li></ul><ul><li>In poor countries 20 in 100 children </li></ul><ul><li>Malnourishment </li></ul><ul><li>In rich countries < 5% </li></ul><ul><li>In poor countries 50 % </li></ul><ul><li>60 countries ended 1990s poorer </li></ul>
  22. 22. Global Politics <ul><li>Since 1980, 81 countries democratized, 47 fully functioning democracies </li></ul><ul><li>37,000 INGOs in 2000 </li></ul><ul><li>Only 14% of parliamentarians women, 10 countries with none </li></ul><ul><li>Only 6 vetoes cast in UN security council in the second half of 1990s (cf average of 25 between 1946-1995) </li></ul>
  23. 23. Global Positives <ul><li>Lowering of ideological tensions since the end of the Cold War </li></ul><ul><li>Emerging consensus on the need for certain economic & new political reforms </li></ul><ul><li>Heightened flows of information made possible by the ICT technology advances </li></ul>
  24. 24. Global Positives, contd <ul><li>Extreme poverty </li></ul><ul><li>29% in 1990 to 23% in 1999 </li></ul><ul><li>In 1990s, </li></ul><ul><li>800 M people gained access to improved water, & 750 to improved sanitation </li></ul><ul><li>Between 1970 & 200, Under 5 mortality </li></ul><ul><li>96 to 56 per 1,000 </li></ul><ul><li>Primary school enrolment </li></ul><ul><li>80% in 1990 to 84% in 1998 </li></ul><ul><li>Death from interstate conflict down 3 times in 2990s from 1980s </li></ul>
  25. 25. Global Negatives <ul><li>Declining global ODA grossly insufficient to meet MDGs </li></ul><ul><li>Nearly 3.6 M killed in wars within states </li></ul><ul><li>50% more refugees & internally displaced in 1990s </li></ul><ul><li>Half of all civilian war casualties are children </li></ul><ul><li>Estimated 300,00 child soldiers worldwide </li></ul>
  26. 26. Governance in Nepal <ul><li>3 General Elections & 2 Local Election </li></ul><ul><li>Strong decentralization law </li></ul><ul><li>About 200,000 elected representatives in local government </li></ul><ul><li>About 36,000 of them women </li></ul><ul><li>Strong growth of civil society </li></ul><ul><li>Revolution in media </li></ul>
  27. 27. Governance in Nepal, contd <ul><li>Stronger anti-corruption regime </li></ul><ul><ul><li>CIAA, Corruption control act </li></ul></ul><ul><li>Reforms aimed at building inclusive society </li></ul><ul><ul><li>NHRC, NWC, NDC, NAIP </li></ul></ul><ul><li>Initiation of devolution of basic service to LGIs </li></ul><ul><li>Initiatives for public expenditure priritization </li></ul>
  28. 28. Governance in Nepal, contd <ul><li> 1990 2000 </li></ul><ul><li>GDP 100 175 </li></ul><ul><li>Literacy 40% 55% </li></ul><ul><li>Life expectancy 40 yrs 62 yrs </li></ul><ul><li>Infant Mortality (1,00) 102 64 </li></ul><ul><li>Child Mortality (1,00) 162 91 </li></ul>
  29. 29. Governance in Nepal, contd <ul><li> 1989 2000 </li></ul><ul><li>Social spending 2.2 times </li></ul><ul><li>Revenue 2.3 times </li></ul><ul><li>Industrial production 3.3 times </li></ul><ul><li>Exports 4.7 times </li></ul><ul><li>Exports to India 18.7 times </li></ul><ul><li>Service exports 2.8 times </li></ul><ul><li>Tourism income 1.6 times </li></ul><ul><li>Forex reserve 3.8 times </li></ul>
  30. 30. Governance in Nepal, contd <ul><li> 1989 2000 </li></ul><ul><li>Energy consumption 1.4 times </li></ul><ul><li>Hydro-power generation 3.0 times </li></ul><ul><li>Road 2.3 times </li></ul><ul><li>Telephones 6.9 times </li></ul><ul><li>School enrolment 1.5 times </li></ul><ul><li>Schools 1.6 times </li></ul><ul><li>Health centers 4.1 times </li></ul>
  31. 31. What Went Wrong <ul><li>12 Governments in 13 years </li></ul><ul><li>Stagnant agriculture </li></ul><ul><li>grew only 1.5 times in 11 years </li></ul><ul><li>Export trade benefited almost exclusively Kathmandu valley and few major towns </li></ul><ul><li>Export trade with no significant backward or forward linkage </li></ul>
  32. 32. What Went Wrong, contd <ul><li>Delay in banking & financial sector reform much needed with economic liberalization </li></ul><ul><li>Inadequate bank supervision and the resultant in large non performing assets </li></ul><ul><li>Organized interest groups reaping economic benefiting from the political patronage </li></ul>
  33. 33. What Went Wrong, contd <ul><li>Lack of transparency in political party financing opening room of political graft & corruption </li></ul><ul><li>Sense of supremacy over law reinforcing political graft & corruption </li></ul><ul><li>Continued petty corruption leading to further alienation & powerlessness </li></ul>
  34. 34. What Went Wrong, contd <ul><li>Tendency for graft & corruption reinforced by </li></ul><ul><ul><li>Weak institutional capacity to combat corruption </li></ul></ul><ul><ul><li>Weak government fund disbursement procedure, & auditing </li></ul></ul><ul><ul><li>Faulty public procurement rules </li></ul></ul><ul><ul><li>Revenue leakage </li></ul></ul>
  35. 35. What Went Wrong, contd <ul><li>Political patronage leading to inefficiency, irresponsiveness in civil service </li></ul><ul><li>Lack of appropriate pay & other incentives resulting in a civil service incapable of leading economic growth & private sector development </li></ul><ul><li>Bias in public expenditure towards urban & modern sector of the economy </li></ul><ul><li>Centralized political system failing to deliver services to poor, inaccessible & remote areas </li></ul><ul><li>Lack of effective public programs to mitigate the adverse effects of transition toward market economy </li></ul>
  36. 36. What Went Wrong, contd <ul><li>Excessive burden of recurrent expenditures, and inefficient & wasteful SOEs constraining much desired public investment in rural economic and social infrastructure development </li></ul><ul><li>Disproportionate share of increased social sector spending to urban economy & richer population </li></ul><ul><li>Due to centralization, social sector spending could not benefit interior & backward regions </li></ul><ul><li>Inability to reach out to poor, marginalized and vulnerable </li></ul>
  37. 37. What Went Wrong, contd <ul><li>Lack of hard budget constraint leading to a lack of prioritization in public expenditures </li></ul><ul><li>Lack of resources & poor capacity of LGIs </li></ul><ul><li>Public expenditures on </li></ul><ul><ul><li>primary vs tertiary education </li></ul></ul><ul><ul><li>primary vs hospital health care </li></ul></ul><ul><ul><li>Rural vs urban drinking water and sanitation </li></ul></ul>
  38. 38. What Went Wrong, contd <ul><li>Increased public awareness, expectation, not matched by economic growth, opportunities leading to widespread frustration in the rural areas providing breeding ground for Maoist insurgency </li></ul><ul><li>Break down, near collapse of government in rural areas outside district headquarters </li></ul><ul><li>Existing violent conflict between pro & anti 2047 constitution complicated by new triangular conflict </li></ul>