Why devote your energies to improving a state’s capacity to perform functions when instead you can manipulate the functions to make them easier to perform?
I’m thinking of developing countries, but the general issue is relevant to all countries. Although state functions which are most important may also appear to be the most difficult to perform, they can be made easier by simplifying rule-procedures. This line of thought began in the previous post. Now I approach it from a narrower angle -- the ‘specificity’ of state action. If you can clearly ‘specify’ what a state is doing in a particular field then its activity is more likely to be controllable and measurable, i.e. ‘doable’.
In the 1980s Arturo Israel at the World Bank created a ‘specificity index’ to measure the feasibility of governmental control. Some public service outputs are hard to measure and evaluate. The greater the specificity of activity in terms of objectives, methods, control systems, rewards, timing, or outcomes, “the more intense, immediate, identifiable, and focused will be the effects of a good or a bad performance”. Dispersed activity in which policymakers make many small decisions is not easy to specify. The operation of a central bank or army is highly specific, involving relatively few decisions and interactions, and thus is easier to control and evaluate. Social services such as education or health are oriented imprecisely to dispersed human behaviour rather than to numerical or technical targets, and require a higher volume of decisions and interactions to achieve their targets. If an activity is not easily monitored, the provider will be less accountable for performance. If an activity is not transparent it will be difficult to design and reform. Specificity is determined by the nature of the activity rather than by organisational management techniques applied to it. The degree of specificity appears to be beyond the control of policymakers.
Israel explored methods for dealing with specificity obstacles. Most important was “competition to create market-like conditions” as a mechanism to improve control and performance in low-specificity activities. Even in the state sector, competition can influence institutional performance positively regardless of the specificity of an activity. Competitive pressure might create specificity by forcing public organisations to creatively devise new ways of monitoring their own performance (think Google or Walmart). Israel observed substitutes for traditional state control mechanisms in the marketplace, and simulated market-equivalent “competition surrogates” where direct economic incentive might be infeasible. Public entities compete with private entities that produce similar goods and services. Or they subcontract. Public entities are privatised and exert competitive pressure on public entities. Public agencies are made accountable to clients or suppliers who demand performance. Public agencies can be pressured in the budget process if politicians and regulators act like clients or shareholders.