Strength of state capacity - Implications for policy: Ensuring a Learning India S4 E.006

[24th post in the article series on Ensuring a Learning India. 42 posts in total. One post a day. 18 remaining.]

The previous post discussed about state capacity, nuances of autonomy and rules, and some thumb rules to categorize tasks. There are three lessons from this discussion, which are useful while thinking through policy options.

I. Autonomy vs. rules:  Autonomy fosters innovation and can address local issues quickly but in a weak bureaucracy, especially if it is filled up with political appointees or insincere employees, this can be misused. Similarly, rules standardize some procedures but it ties up the hands of frontline workers restricting innovation and lengthening the speed of response. In a context with strong state capacity, one might prefer autonomy and in contexts with weak state capacity, one may emphasize on rules. The optimal balance between autonomy and rules has to be decided considering the context and state capacity.

II. What to decentralize?: In each sector, there are certain aspects that have to be devolved and certain aspects that are to be preferably centralized. Making this distinction is crucial for design of policy. This typology table can helps us make this distinction. It may be relatively better to decentralize some aspects despite weak state capacity because the centralized model would be worse.


III. Transition from low capacity-low autonomy to high capacity-high autonomy: The final goal for everyone would be to move towards a condition with high autonomy and high state capacity. As like many other real life problems, though the final goal is clear, transition from existing state to the desired state can be the challenging aspect. Timing matters a lot in such transitions else immediate negative effects can adversely affect future efforts of transition.

In some cases, it might make sense to first devolve everything and then let the capacity build up. In some other cases, it might make sense to keep the systems rule based for some time and then devolve. This example can illustrate this better.

In any organization, one would desire to have teams which are capable of making certain decisions themselves and act swiftly. This is the desired state. But, if the current state of organization is that employees are insincere, irregular in attending office, how do we transition to the high autonomy state? Directly giving autonomy to them may affect the company in short term. Monitoring only by outcomes at this stage, when it is already known that outcomes are poor may not be helpful because, employees can unite and play an alibi game citing external reasons justifying their lack of effort. In such contexts, it might make sense to initially administer through strict rules, to at least ensure minimum pre requisites.

Strict rules ensuring attendance and work hours, regular filling of work reports and tracking their activity may at least make the employees do the minimum necessary. While this may necessarily not result in outcomes, this will at least ensure minimum pre requisites. When this is strictly implemented and employees are forced to follow for some time, this can induce seriousness towards adhering to rules and can increase stigma towards breaking rules. After some time, slowly these can be eased alongside with other supportive measures to perform them better.

The problem here is that at any given point, an organization has a mix of two kinds of people, high performing and those not putting efforts. It isn’t feasible for organization to have different set of rules for different people. Blanket rules like above constrain the high performers, suffocate them and may even make them leave the company. How do we manage them in a rule based administration, which is required to put other things in order?

Thus, the transition requires lots of wisdom and judgment on the part of the administrator or reformer. There may not be ready made solutions to this but at least recognition of these nuances can help one take better decisions.

IV. State capacity should also be factor in making policy choices: State capacity is considered while deciding the optimal balance between autonomy and rules. The other avenue it can be used to is while making policy choices.

For example, World Bank released a report named 'Skills and Jobs - Lessons Learned and Options for Collaboration'. This has good summary of experience of skill training programmes from across the world and the experience. Not surprisingly, the skilling programmes differ widely in design across countries.

Germany uses apprenticeship model where the firms (or individuals) are subsidized for training apprentices. The structure of the program, quality, content and other aspects are regulated by a central agency. The report then adds, “the strongest constraint in the transferability of such programs is that they require a strong institutional framework, in particular a clear legal framework.” Compare this with the voucher model where workers are eligible for voucher for certain amount, they use the voucher to equip them with the skills they like. The challenge with this model is the certification and monitoring of the skill development centres.

Which one should the government opt for? Germany’s model requires strong legal framework and quick dispute resolving mechanisms in order to make it a success. Voucher model requires another set of conditions. So, capacity to enforce policies should also be considered as a factor while making policy choices apart from the usual metrics of context, cost effectiveness, political economy etc. Not all regulations are enforceable by everyone. The capacity to enforce depends on the strengths of the government, context, time and some times the amount of focus needed. Focusing on a particular policy to ensure its smooth execution also comes with its own opportunity costs, in cases of states with weak state capacity. All of these should be factored in while making policy choices.

In the context of education, it is also often argued that, how can a government which can’t run public schools, monitor the private schools?  The appropriate question to ask is, which policy does the government think that it can enforce better?

It must be remembered that capacity alone shouldn’t be the deciding factor. Sometimes, necessity also matters. For example, if capacity to execute was to be used as a filter, then the Aadhar policy wouldn't have come into light. In such scenarios, if it is decided that it is necessary to implement the policy then putting extra efforts to ensure its proper execution is the only way out. Thus, capacity to execute a policy should be used while prioritizing from among multiple policy options but not to filter the policy options.

V. Weak state capacity reduces policy options: Governments have to often design and enforce policies in contexts of wide variety, which might require a mixture of approaches.  Lack of state capacity rules out some options for the government, thereby constraining it. Weak state capacity also limits governments’ ability to incorporate good ideas from other contexts. For example, in the apprenticeship example of Germany discussed above, if the capacity of a nation to enforce legal contracts and other aspects is weak, it automatically rules out the possibility of this model.

Choice to governments is as important as the choice to an individual. Lack of choices resulting from weak capacity is detrimental to already ailing systems. This again emphasizes the importance of state capacity and the urgent attention it deserves.

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