Reform-oriented political leaders and elites can speed reform by making decisions that widen people’s options, articulate the benefits clearly, and ensure that policies are more inclusive.
In recent years farsighted political leaders have transformed the options for their people through decisive reform. They were successful because they made the benefits of change clear to all, and built coalitions that gave greater voice to often-silent beneficiaries.
They also succeeded-and this is crucial-because they spelled out a longer-term vision for their society, allowing people to see beyond the immediate pain of adjustment. Effective leaders give their people a sense of owning the reforms-a sense that reform is not something imposed from without.
Reforming the state requires cooperation from all groups in society. Compensation of groups adversely affected by reform (which may not always be the poorest in society) can help secure their support. Although compensation may be costly in the short run, it will pay off in the long run. Deep- seated differences and mutual suspicions among groups can also delay reform.
There are no quick fixes for removing age-old enmities, but social pacts, such as Spain’s Moncloa Pacts and Benin’s National Economic Conference, can help.
International agencies can encourage and help sustain reform in four ways. First, they can provide important technical advice on what to do and what not to do. This assistance is often invaluable, especially for smaller states that lack the resources to handle all the technical issues internally. But it must be complemented by local expertise, to adapt reforms to local conditions and institutions.
The World Trade Organization plays a major role in trade reform, the World Health Organization on health issues, and the International Labour Organisation on labor legislation and employment policy. Second, international agencies can provide a wealth of cross-country experience on a wide range of issues. Often staffed by people from all over the world, they can bring in experts from different backgrounds.
Third, the financial assistance these agencies provide can help countries endure the early, painful period of reform until the benefits kick in. Fourth, they can provide a mechanism for countries to make external commitments, making it more difficult to backtrack on reforms. If the history of development assistance teaches anything, however, it is that external support can achieve little where the domestic will to reform is lacking.
The approach of the twenty-first century brings great promise of change and reason for hope. In a world of dizzying changes in markets, civil societies, and global forces, the state is under pressure to become more effective, but it is not yet adapting rapidly enough to keep pace.
Not surprisingly, there is no unique model for change, and reforms will often come slowly because they involve a fundamental rethinking of the roles of institutions and the interactions between citizens and government. But the issues raised in this Report are now an integral part of the rethinking of the state in many parts of the world and are on the agenda of the international organizations that assist them.
People living with ineffective states have long suffered the consequences in terms of postponed growth and social development. But an even bigger cost may now threaten states that postpone reforms: political and social unrest and, in some cases, disintegration, exacting a tremendous toll on stability productive capacity, and human life.
The enormous cost of state collapse has naturally turned attention to prevention as a preferable and potentially less costly course of action-but there are no shortcuts. Once the spiral into collapse has occurred, there are no quick fixes.
Instances of state collapse are both extreme and unique, but they are growing. As the Report elaborates, no simple generalizations about their causes or effects can be made, nor, for that matter are there any easy solutions to their reconstruction; each case brings its own challenges for countries, their neighbors, and the international system.
The consequences, however, are almost uniformly borne by ordinary people, illustrating once again how fundamental an effective, responsive state is to the long-term health and wealth of society.
The quest for a more effective state even in the established industrial countries suggests that the returns to incremental improvements are high.
This is especially true in countries where the effectiveness of the state is low. Over time, even the smallest increases in the capability of the state have been shown to make a vast difference to the quality of people’s lives, not least because reforms tend to produce their own virtuous circle.
Small improvements in the state’s effectiveness lead to higher standards of living, in turn paving the way for more reforms and further development.
A tour of the world’s economies in 1997 would turn up countless examples of these virtuous circles in action. But it would provide equally plentiful evidence of the reverse: countries and regions caught in vicious cycles of poverty and underdevelopment set in train by the chronic ineffectiveness of the state.
Such cycles can all too easily lead to social violence, crime, corruption, and instability, all of which undermine the state’s capacity to support development-or even to function at all.
The crucial challenge facing states is to take those steps, both small and large, toward better government that set economies on the upward path, using the two-part framework suggested in this Report.
Reform of state institutions is long, difficult, and politically sensitive. But if we now have a better sense of the size of the reform challenge, we are also much more aware of the costs of leaving things as they are.