'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.