'Effective state' key to economic development
'Effective state' key to economic development
JAKARTA (JP): Effective state is the cornerstone of successful
economies, and without it, economic and social development is
impossible, the World Bank asserts.
The World Development Report 1997: The State in a Changing
World issued in Washington today attributes the dazzling growth
of East Asia to effective state, one which harnesses the energy
of private business and individuals, and acts as their partners
and catalyst.
The report, a copy of which was obtained here yesterday, says
the global integration of economies and the spread of democracy
have narrowed the scope for arbitrary and capricious behavior on
the part of state.
"Markets and citizens have come to insist on transparency in
the conduct of government and on other changes to strengthen the
ability of the state to meet its assigned objectives," says the
report which was prepared by the World Bank.
The 265-page report examines what the state should do, how it
should do it and how it can do it better in a rapidly changing
world.
The World Bank stresses that an effective state is vital for
the provision of the goods and services -- and the rules and
institutions -- that allow markets to flourish and people to lead
healthier, happier lives.
"What makes for an effective state differs enormously across
countries at different stages of development," it says, adding
that differences in size, ethnic make up, culture and political
systems make every state unique.
The report acknowledges there is no single recipe for building
an effective state but offers a two-part strategy to guide
countries in this process.
The first, it says, is getting governments to focus sharply on
those core public tasks-- establishing a foundation of law,
maintaining an effective macroeconomic framework, investing in
basic social services and infrastructures, protecting the
environment.
The second is reinvigorating state institutions by providing
incentives for public officials to perform better while keeping
arbitrary action in check.
The report cites three basic incentives to improve the state's
institutional capability: establish effective rules and
restraints, foster competition and increase citizen's voice and
partnership with the private sector.
"Cutting back on discretionary authority on the part of the
government is essential. Formal checks and balances can also help
reduce official corruption," the World Bank says.
This, however, is not enough. Reforming the civil service,
restraining political patronage, and improving civil service pay
have also been shown to reduce corruption by giving officials
more incentive to play by the rules, the report asserts.
"Government credibility-- the predictability of rules and
policies and their consistent application--is important for
attracting private investment," the report points out.
The report devotes one chapter specially to discussions on how
to minimize arbitrary state action and corruption.
It calls for formal mechanisms of restraint that hold state
and its officials accountable for their actions. Two of principal
formal mechanisms of restraint are a strong, independent
judiciary and the separation of powers.
Politicians, bureaucrats and judges control access to valuable
benefits and can impose costs on private citizens and businesses,
the report says.
Countries which have so far achieved high economic growth
despite serious corruption may find themselves paying a higher
price in the future, the report warns.
"Corruption feeds on itself, creating a widening spiral of
illegal payoffs until ultimately development is undermined and
years of progress are reversed," the World Bank cautions.