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Dec132012

The unintended consequences of civil service reforms in developing countries

Author: Christian Schuster (j.w.schuster@lse.ac.uk) is a PhD candidate at the London School of Economics and Political Science’s (LSE) Government Department. He previously worked as an Economist for the World Bank.

Development practitioners are rightly concerned with depoliticising clientelist civil services. In other words that the recruitment of officials be based on merit rather than political loyalty for all but the top echelons of the bureaucracy. A number of statistical studies have linked depoliticised bureaucracies to positive development outcomes, including increased economic growth, lower levels of corruption and poverty reduction.

At the same time, the track record of donors assisting such depoliticisation has been anything but stellar. The World Bank, for example, noted in 2008 that the $422m it lent each year for civil service and administrative reform between 2000 and 2006 had no measurable impact. The prime obstacles to change were found to be political rather than technical in nature.

Awareness of the potential impact of reforming clientelist civil services, along with an understanding of the political difficulties of doing so, has led scholars and practitioners alike to take a growing interest in the politics underlying such reforms. A range of recent studies have explored the conditions under which politicians may be willing to depoliticise civil services, and why they tend to depoliticise some parts of the state – so-termed ‘islands of excellence’ – ahead of others.

However, it is crucial to recognize that politicians not only depoliticise some parts of the state ahead of others, but also some personnel decisions ahead of others. For example, in several Latin American countries civil servants are recruited on the basis of clientelism yet are protected from dismissal by tenure regulations. Thus, political considerations may still determine the hiring and promotion of bureaucrats, but they can no longer be fired at will.

But why are politicians willing to give up control over some parts of the bureaucratic career ahead of others? And does depoliticising one part of the bureaucratic career encourage or hinder the depoliticisation of other parts?

Exploring the interplay between regulations protecting civil servants against dismissal (tenure) and meritocratic recruitment and promotion (merit) as two key parts of the bureaucratic career may shed some initial light on these thus far neglected questions.

Contrary to conventional wisdom concerning merit and tenure, I will argue that merit tends to follow tenure when depoliticising civil services. Put simply: politicians (the patrons) may grant job protections to bureaucrats (the clients) when uncertain about their re-election. When unable to reverse these tenure protections, future incumbents are less able to compete electorally based on clientelism and are therefore more likely to introduce merit.

Let me explain this sequential argument in a bit more depth (feedback on the corresponding conference paper is greatly appreciated). In bureaucracies where all personnel decisions are based on political discretion (i.e. in which neither tenure nor merit have been introduced), uncertainty about re-election may incentivise incumbents to safeguard the job stability of their appointees. Consequently, they seek to hijack capacity-oriented civil service reform programmes – often supported by donors – to introduce tenure protections. This is frequently lamented by donors as the “merit trap”, not least because, according to recent statistical evidence, while merit-based personnel decisions yield the aforementioned positive development outcomes, tenure protections have, on average, no effect.

Subsequent administrations that inherit a bureaucracy staffed with their predecessor’s appointees will want to reverse these tenure protections to maximize their clientelist powers – including the power to fire and replace the entire bureaucratic stock. But when veto players thwart such reversals, the incentives of incumbents may shift. Being unable to substitute the inherited civil service with their own appointees, incumbents are deprived of a large amount of their clientelist powers. As such, they will be less able to compete electorally based on private goods. Consequently, they may introduce merit to at least enhance the public goods they may derive from their de facto civil services. In short (and probabilistically), merit follows tenure. So the much deplored “merit trap” may actually constrain clientelism for subsequent administrations and thus shift their incentives towards introducing merit.

Analysis of merit and tenure data1 from the University of Gothenburg’s Quality of Government Expert Survey 2008-10 seems to bear this out. Merit is five times more frequent when tenure is also in place2; tenure is only 1.8 times more frequent when merit is also in place. Tenure is 2.2 times more frequent without merit (relative to tenure with merit) as compared to merit without tenure (relative to merit with tenure). A tentative3 statistical test provides further evidence for the finding that merit follows tenure. When controlling for the key determinants of merit put forward in other studies (socio-economic factors such as income, education, ethnic fractionalization and urbanization; political-institutional factors such as legislative competition, veto players, political time horizons, government revenue and democratization; and external factors such as aid and economic integration) tenure remains a statistically significant determinant of merit.

It’s important to note that this is a preliminary, probabilistic rather than deterministic, finding. Merit far from always follows tenure. Longer political time horizons, higher per capita incomes, greater press freedoms and more veto players also impinge upon the introduction of merit in the statistical test presented above. They will similarly play a role in shifting incentives for politicians in favour of forsaking clientelist control over bureaucratic careers.

Perhaps more importantly, looking at the contribution of tenure to the introduction of merit allows for broader conclusions about sequences and unintended consequences of reforms to developing country bureaucracies. It puts a premium on considering not only the immediate technical results of support to state reform efforts but also their effects on political incentives for future reforms. Sometimes an unintended and much-deplored initial result – in this case the “merit trap” of tenure protections – may, further down the road, unintentionally shift political incentives towards the reform desired in the first place.

______________________________

1. Merit may be usefully captured by responses (on a 1-7 scale) to the survey question: “When recruiting public sector employees, the skills and merits of the applicants decide who gets the job?” Tenure protections in turn may be usefully approximated by responses to the question: “Once one is recruited as a public sector employee, one stays a public sector employee for the rest of one’s career?”
2. Based on dummies for merit and tenure set respectively to 1 whenever survey responses exceed the mean value of the response scale (=4).
3. The test is tentative not least as the lack of panel data on tenure and merit precludes a more conclusive statistical analysis of their sequential relationship.



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Reader Comments (7)

This is a great post. I think this is an intriguing argument – and I’m convinced by the logic behind the merit-follows-tenure argument. I recall working on merit-based recruitment in a country where, to my surprise, a group of reformers were enjoying some backing by the political leadership in spite of widespread clientelism and corruption. Their explanation was, in a nutshell: “Well, they got all their friends into the bureaucracy and now it dawns on them that the still need someone to run the place”.

You're absolutely right, in my view, to emphasize the open, non-deterministic nature of these findings. There is nothing that automatically makes merit follow tenure, and where successful, it’ll require lots of painful work to happen. It would be silly to conclude from this that it makes sense to promote civil service tenure in all sorts of places based on the assumption that merit would be next.

December 15, 2012 | Unregistered CommenterPhilipp Krause

Hey Christian, nice post and interesting hypothesis. I think your theory is plausible and well-supported. That said, I'm going to play devil's advocate for a minute and propose a couple alternative explanations for your empirical findings - I'm not sure I believe these, but maybe they're worth throwing out there. (Apologies if you've addressed these in the paper which I haven't had time to read yet.)

1) One possibility is simply that tenure is easier to introduce than merit. With a single pen-stroke you can institute tenure throughout the entire government, but introducing merit-based hiring (especially in a real sense, as opposed to simply some formally meritocratic criteria) is much more difficult because it requires sustained monitoring and intervention of notoriously hard-to-observe processes. So even if there's no political logic to sequential introduction (e.g. if both tenure and merit are "good things" from politicians' perspective, or if there's some kind of general evolution towards them as countries get wealthier), it may simply be that tenure gets introduced before merit because it's easier to do so.

2) The QoG survey excludes lots of smaller and poorer countries, notably almost all of Africa. But these are the countries which are probably most likely to be "tenure and no-merit" observations (African governments are much more likely to have tenure than Latin American ones, for example). So your 2x2 comparison of the relative frequencies of tenure and merit might be biased by all these missing observations. More generally, the merit variable may actually reflect some underlying perception of government performance rather than purely merit-based hiring; if performance is correlated with income and lots of poor countries are missing from the sample, then you have a problem. One way to test for this would be to define your variables relative to the sample mean rather than to the middle of the survey's scale (i.e. using 4 as the cut-off, which seems to be what you're doing), but this isn't perfect.

A related issue is that there may be different underlying processes in different countries. What you hypothesize may be happening in Latin America and Europe, but many African countries effectively had tenure protections from independence, either as a result of formal legacies or due to the strength of unions and their importance in the independence struggles. So you might see merit following tenure in these instances, but for somewhat different reasons than you hypothesize.

My other concern is that it's unclear what the experts are actually thinking about when they respond to the "merit" question - do they mean merit in a real sense (the best person gets the job), or merit in a formal sense (there is a nominally competitive process, hiring qualifications, exams, etc.)? It might be possible to do a bit of digging with the data to figure out how they're responding, for example by comparing the responses to the "merit" question to response for whether or formally meritocratic procedures are in place.

Really interesting hypothesis though, and I like the way you support it with theory - I think this makes it fairly convincing even given these other possible interpretations and the lack of time variation in the data.

December 20, 2012 | Unregistered CommenterMartin Williams

Hello Christian,

Very interesting discussion and provocative arguments, congratulations on a very nice post.

I would just like to raise two points, one related to the differentiation between merit and tenure, the other (closely related) regarding the kind of bureaucratic organizations you take into account. I take as a departing point my limited experience studying (and working for) the Mexican public administration.

First. you mention that "Exploring the interplay between regulations protecting civil servants against dismissal (tenure) and meritocratic recruitment and promotion (merit) as two key parts of the bureaucratic career may shed some initial light on these thus far neglected questions". You relate these to clientelistc practices which indeed take place in many developing countries. Now, my first point would be, to what extent merit and tenure are actually part of bureacratic careers for all "civil servants". Let me restate my point: tenure has always been very important for low/street-level public servants, which are not civil servants in a developed country's sense. And they have been traditionally recruited (albeit less and less so) in those positions on clientelistic grounds. Merit has not been a concern for those groups (or politicians behind them), basically because in most cases they develop very simple administrative tasks, and their "bureaucratic career" is limited to the same position for life. However, tenure was not for middle-level public servants, nor for senior civil servants, many of which did develop a bureaucratic career on the basis of informal merits. When the 2003 civil service reform took place, tenure and merit arrived simultaneously, not separately. So no clear sequence in these various cases, but different patterns of recruitment/promotion in each world. This, I think, raises three issues regarding your discussion. To what extent and how should we separate merit and tenure from the analysis? To what extent concepts like "civil servants" or "bureacratic career" travel and apply to different countries and with what caveats? Are we conflating different dynamics by not making explicit the differences between public servants' groups?

The latter leads me to my second point. You mention that in some countries there are islands of excellence, which would seem to show that a) the development of merit-based civil service systems, albeit clearly and organizationally delimited, is possible; and b) that politicians apparently prefer to professionalize some areas before others. While I would agree with the first assumption (and I have certainly observed that), I am not as convinced by the second one. As Martin suggests, there might be other dynamics at play, and not just politicians' preferences. First, some islands of excellence are less the product of an explicit decision, than kind of a "natural" result of profesionalization trends: finance ministries staffed by economists who recruit economists, ministries staffed by professionals (e.g. engineers or doctors) who recruit their peers, etc. Second, in some cases the islands of excellence are new organizations, rather than older ones reformed. Therefore, they are easier to mould along merit aspirations, than the older ones were tenure might already be the rule, and were not only political/clientelistic complications but also legal issues might be flagged regarding rights that have been acquired (check out the recent discussions about the public school teachers in Mexico).

Cheers!

Mauricio

December 20, 2012 | Unregistered CommenterMauricio Dussauge

Thanks, Philipp, Martin and Mauricio. These are terrific comments and I will certainly keep them in mind when further revising the paper the blog was based on. In response, allow me to expand upon three issues which may help clarify some of the points raised: the nature of the argument, data limitations and the relevance of the argument for distinct bureaucratic echelons.

First, merit reforms are governed by equifinality -- across cases, underlying causes for and causal pathways leading to reform may differ; related, tenure as an explanatory variable is characterized by multiple conjunctural causality – the effect of tenure will be contingent upon the properties of other explanatory factors during the same time interval. In other words, tenure, on average, seems to have an effect; its effect in a given case, however, will depend on its interaction with other explanatory variables (including most prominently the existence of actors vetoing tenure reversals). It may thus at times well be brought about concurrently with merit as in the Mexican case.

While representing much progress compared to the prior data scarcity, the QoG survey data has limitations to which Martin rightly points to – including limited coverage of Africa compared to Asia and Latin America, in particular, as well as lack of panel data – which thwart a more rigorous statistical test of the argument. While conclusive evidence is thus lacking, the data does help to illustrate – through its proxies for merit and tenure – the added value of differentiating rather than conflating the two concepts as well as the potential effect of the latter on the former. I elaborate on this differentiation in more depth in the paper, Mauricio, if this is of interest to you.

A further potentially useful differentiation would be to inquire not why some personnel decisions are depoliticized ahead of others as I do in the blog or why some state institutions are depoliticized ahead of others – as a growing literature does – but why some bureaucratic echelons are depoliticized ahead of others. As my argument revolves around merit as a vehicle to increase electoral competitiveness based on enhanced public goods provision, it applies most forcefully to technical-level and managerial positions; tenure for bottom-level service personnel without career advancement opportunities and, as I presume, with limited need for professional qualifications to fulfill job duties (as in the Mexican case) would thus not induce the incentive mechanism I lay out.

December 21, 2012 | Unregistered CommenterChristian Schuster

Really interesting. I will think more about the fuller paper but I think the argument you make is sensible and raises some interesting and practical thoughts about when merit based hiring might be more accepted and how these reforms might be better structured.

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