Why Civil Service Reforms Do Not Work

Public sector reform (PSR) efforts in developing countries have been less than successful in the past. Motivated by budgetary considerations, they have focused on downsizing and procedural changes without radically altering the outmoded incentive system, which, in many countries, is now characterised by declining real wages, wage compression, and a non-merit promotion and reward system. Using results from the incentives literature, this paper argues that, for a reform effort to succeed, public sector human resource management (HRM) will have to be reformed at an early stage to establish productivity incentives in the public sector. These will include introducing substantial autonomy to organisations in their work, incentive schemes, and HRM along the lines of the now well-accepted concept of central bank independence. Past PSR efforts have also attempted to conduct a unified reform effort led centrally by the ministry of finance. A continuous process like PSRspread out over a considerable period and involving many different people and organisationsmight need to build in decentralisation, local leadership and local incentives, and HRM. PSR must be based on the recognition that people are at the heart of public service. As a result, managing human resources must be at the centre of any effort. The people who are at the center of this change can either be its architects and beneficiaries or its losers and therefore opponents of change. Design and implementation of reforms must, therefore, be sensitive to this important fact. It is essential that the reform is led by individuals at the organisation level who understand the vision as well as process of change. Governments must empower such leadership to guide, initiate, innovate, and manage change.Civil Services, Reforms

Why Civil Service Reforms Do Not Work

Public sector reform (PSR) efforts in developing countries have been less than successful in the past. Motivated by budgetary considerations, they have focused on downsizing and procedural changes without radically altering the outmoded incentive system, which, in many countries, is now characterised by declining real wages, wage compression, and a non-merit promotion and reward system. Using results from the incentives literature, this paper argues that, for a reform effort to succeed, public sector human resource management (HRM) will have to be reformed at an early stage to establish productivity incentives in the public sector. These will include introducing substantial autonomy to organisations in their work, incentive schemes, and HRM along the lines of the now well-accepted concept of central bank independence. Past PSR efforts have also attempted to conduct a unified reform effort led centrally by the ministry of finance. A continuous process like PSR—spread out over a considerable period and involving many different people and organisations—might need to build in decentralisation, local leadership and local incentives, and HRM. PSR must be based on the recognition that people are at the heart of public service. As a result, managing human resources must be at the centre of any effort. The people who are at the center of this change can either be its architects and beneficiaries or its losers and therefore opponents of change. Design and implementation of reforms must, therefore, be sensitive to this important fact. It is essential that the reform is led by individuals at the organisation level who understand the vision as well as process of change. Governments must empower such leadership to guide, initiate, innovate, and manage change.Civil Services, Reforms

Beyond Planning and Mercantilism: An Evaluation of Pakistan’s Growth Strategy

Through the nineties Pakistan remained preoccupied with crisis management. All debate and policy was, as a result, involved with current policy and our coping with the IMF programmes. Adjustment was the main theme leaving little room for growth initiatives.1 A lively debate has raged on the distributional impacts of adjustment policy on which the government and the thinking community have adopted opposing stances, often with much emotion. With this focus of economic and political discussion on critiquing of the current government and its policies, there has been little effort put in understanding and reviewing the country’s growth strategy. This paper attempts to assess the evolution of Pakistan’s long-term growth strategy.2 It is my contention that the growth strategy remains inertia-ridden because of the lack of an academic community and debate.3 The paper will also attempt to identify the actors who influence and shape this strategy. This will be followed by what changes should be made in that strategy, based on more recent developments in economic thinking and experience in the world. For long-run sustained growth that will lead us to join the club of the more advanced countries, a new strategy based on the latest research findings will be needed. Finally, I shall point to the factors that impede the adoption of such a strategy, and especially to our owning such a strategy.Economic Growth

Awake the Sleeper Within : Releasing the Energy of Stifled Domestic Commerce!

Policy in Pakistan has been fairly path-dependant, placing a higher weight on export promotion and domestic industrialisation development than on domestic commerce. Yet domestic commerce is growing rapidly, and quite possibly is the largest sector in the economy. This paper argues that a more holistic policy, with no favourites, that allows for all sectors to grow leads to better long-term economic results. A vibrant domestic commerce sector is the core of the economy facilitating intermediation between supply and demand, entrepreneurial development, risk-taking, innovation, and competitive markets. Such an economy moves beyond commodity exports to brand name, process, and capital exports, all of which command a higher rate of return. Pakistan could therefore achieve a higher and a more sustainable growth rate by adopting a more balanced growth strategy.domestic commerce, policy

Impact of Export Subsidies on Pakistan’s Exports

Throughout Pakistans history, policy has sought to promote exports through government support and incentives. The government machinery is geared to export promotion especially through direct and indirect subsidies. Surprisingly, these policies have been continued without serious examination. This paper makes a first attempt to evaluate these policies by estimating the impact of two such schemesexport financing and rebate/refund schemeson export performance. Our analysis shows that, over the long run, the export financing scheme had a negative effect on exports while the rebate/refund scheme affected exports insignificantly. Subsidy schemes clearly do not seem to work, yet they have been retained for many years.Rebate, Duty Drawback, Export Financing, exports, trade, exchange rate, co-integration, Vector Error Correction, Pakistan

Incentives and Human Resource Management in the Design of Public Sector Reform

We, in Pakistan, should be very happy that the global development community has finally accepted the centrality of public sector reform (also known as improved governance) in the quest for improved living standards in poor countries. Development economics is a subject that is based on the interpretation and observation of some Western academics and Western donor-based agencies. We should have some sympathy for these leaders of development thought and policy for they have struggled with integrating the prevailing theme (fad) in Western thought and philanthropy with learning about the societies and economies that they were supposed to be prescribing for. Using the principle of “ends justifying the means”, they defend their reliance on the current “fad” as well as on the only clearly visible, organised and powerful actor—the government, no matter how inefficient—they would. The result is that this approach led to a long era of government-led development, which centralised policy- and decision-making, initiated planning, and created a wide range of public-sector institutions. The role of the government was thus extended into areas that were conceptually indefensible. In this manner, the public servant grew into her new much more lustrous and looser robes. A bloated, over-centralised, and a private sector inhibiting government was created to be the observation and implementation outpost of the development word. This was the first step in the transformation of the public sector in the direction of misgovernance.

RETHINKING INDUSTRIAL POLICY

Despite the hold of the neoliberal orthodoxy on policy making in developing countries, industrial policy remains important for the promotion of industrial development. However, the context for the design of industrial policy has profoundly changed as a result of new rules governing international trade, the rise of global value chains and marketing networks, and other aspects of globalization. Traditionally, the case for industrial policy has been framed in terms of “market failures” but the paper argues that that is not a sufficient basis. After addressing the traditional points of criticism, an attempt is made to outline the “domains” of industrial policy in the current circumstances, especially for industrially lagging countries. As country contexts differ widely there are no satisfactory blueprints for policy making that countries can readily adopt. As in production decisions, considerable ingenuity and innovation is needed in designing policies. This is all the more necessary as the WTO rules have become increasingly stringent and the rise of international trading networks has created new barriers for young firms to enter the world market. These developments have changed the context but not the importance of policy in industrial development. The paper identifies areas where government intervention is needed and can still make a positive difference.

Awake the Sleeper Within: Releasing the Energy of Stifled Domestic Commerce!

Policy in Pakistan has been fairly path-dependant, placing a higher weight on export promotion and domestic industrialisation development than on domestic commerce. Yet domestic commerce is growing rapidly, and quite possibly is the largest sector in the economy. This paper argues that a more holistic policy, with no favourites, that allows for all sectors to grow leads to better long-term economic results. A vibrant domestic commerce sector is the core of the economy facilitating intermediation between supply and demand, entrepreneurial development, risk-taking, innovation, and competitive markets. Such an economy moves beyond commodity exports to brand name, process, and capital exports, all of which command a higher rate of return. Pakistan could therefore achieve a higher and a more sustainable growth rate by adopting a more balanced growth strategyCommercial policy

GLOBALIZATION, NEOLOBERALISM AND LABOUR

The paper discusses the issue of globalization from the perspective of employment and labour. It argues that it is the ideological basis of policy prescriptions advanced in support of globalization, rather than the increasing global interdependence, that is the real source of controversy and anxiety over globalization. The paper discusses the impact of the neoliberal policies on economic growth, employment, and income distribution, and examines the issue of labour market rigidities from the perspective of industrial as well as developing countries. It argues that developing countries face conflicting pressures: the new liberal policies prescribe liberalization of labour markets, while the organized labour in the industrial countries is pushing for higher labour standards in developing countries. The paper concludes with a section containing ideas on how the process of globalization may be humanized, so that the gains from the growth in incomes and trade are more widely shared within as well as across countries in an increasingly interdependent world.

COMMODITIES UNDER NEOLIBERALISM: THE CASE OF COCOA

The paper examines the case of cocoa as an illustration of the problems faced by primary commodity producers. The impact of market liberalization in cocoa producing countries as well as consuming industrial countries on the cocoa price and cocoa farmers is examined. The paper shows that the market liberalization cannot be held responsible for such improvements in productive efficiency as occurred over time, which was one of the two stated goals of these measure. Nor is there convincing evidence that the producer’s share in the export price increased, which was the other goal. A serious consequence of the preoccupation with market liberalization, however, was that it diverted attention from the main concerns of cocoa producers, viz., the market volatility, low prices, and the declining producers’ share in the value chain. The paper then goes on to explore the kinds of action that might be considered to address these issues. It makes a case for filling the institutional vacuum that has been created as a result of the abolition of state marketing authorities in several cocoa producing countries. The paper attempts to show that the conditions are favourable for cocoa producers to coordinate their production policies in order to maintain satisfactory cocoa prices, which is needed to arrest the erosion of incomes of cocoa producers.