Shortcomings of institutional reform in public sector governance: the case of Kyrgyzstan

PDF

Download

Open document

Transcript (if available)

Content
SHORTCOMINGS OF INSTITUTIONAL REFORM

IN PUBLIC SECTOR GOVERNANCE:

THE CASE OF KYRGYZSTAN

by

Mahabat Baimyrzaeva

A Dissertation Presented to the
FACULTY OF THE USC GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(PUBLIC ADMINISTRATION)

May 2010

Copyright 2010 Mahabat Baimyrzaeva
ii

Acknowledgements

This study has benefitted from the support, insights, and continuous
encouragement from many wonderful people I wish to thank. First of all, I owe this
work to my belated grandmother Mairam who instilled confidence in my abilities. I
dedicate this work to her. My grandfather, parents, siblings, and extended family have
been very understanding and supportive, for which I am very grateful.
Professor Gerald Caiden has been more than my committee chair and faculty
advisor. I can‘t thank him enough for his wisdom and guidance. It has been a
privilege and honor to be his student. Professor Peter Robertson and Professor Jeff
Nugent – my other dissertation committee members – provided valuable guidance and
insights to improve this work. I could not have asked for more from them. I was also
very fortunate to have Professor Chester Newland and Professor Larry Jones guide
and morally support me in this process.
My dear friends‘ collaboration and encouragement made this process most
rewarding. I thank Mark Valencia who encouraged me to pursue my doctorate.
James de Shaw Rae deserves my special gratitude. His steady support and guidance
made the timely completion of this project possible. I am also indebted to Sharad
Joshi and Phil Murphy. They have helped me enormously in the last stages of this
process when I most needed their help. Other wonderful friends, including Sarah
Pease, Jenny-Miller Garmendia, Srideep Musavaty, Nadia Marinova, Erlyana Sie,
Firuza Khaitenova, Moyara Ruehsen, Nazanin Zahra, Violetta Yan, Jan Black, Peter
Shaw, Beryl Levinger, June Muranaka, Yasuo Ogawa, Amna Imam and many others
iii

have helped me in different ways and made this process enjoyable. I also wish to
thank Dr. Bohdan Kwarchenko and Dr. Nasdeen Dhanani on University of Central
Asia. They were extremely helpful during my field research.
Finally, I wish to extend my appreciation to all the people I have interviewed
and consulted with, and to all scholars and practitioners whose works inspired me to
pursue this project.
iv

Table of Contents

Acknowledgements ii

List of Tables vi

List of Figures vii

Abstract viii

Chapter 1: Introduction 1
The Policy Problem Motivating the Study 1
Research Questions and Their Significance 17
Definitions of Key Terms 21
Research Design 37
The Outline of The Study 60

Part I: Historical Overview and Analysis of the Five Decades
of Donor-Promoted Public Sector Reforms

Chapter 2: Overview of the First Wave of Institutional Reforms
In the 1950s-1960s: Development through the Modernization
of Administrative Institutions 65
Policy Context 66
Influential Schools Of Thought 68
Content of and Approach to the Reforms 75
Assessment of the Outcomes of the Reforms 79
Lessons from the Reforms 82

Chapter 3: Overview of the Second Wave of Reforms in the
1980s and Early 1990s: The Downturn of Government Institutions
and the Market as the New Driver of Development 89
Policy Context 89
Influential Schools of Thought 92
Content of and Approach to the Reforms 96
Assessment of the Outcomes of the Reforms 103
Lessons from the Reforms 109
Conclusion 114

v

Chapter 4: Overview of the Third Wave of Institutional Reforms
Since 1997: The Re-emergence of Institutional Development and
Government as a Facilitator of Good Governance 116
Policy Context 117
Influential Schools of Thought 126
Content of and Approach to the Reforms 138
Assessment of the Outcomes of the Reforms 156
Lessons from the Reforms 165
Conclusion 167

Chapter 5: Analysis of the Three Waves of Public Sector Reform 169
Key Findings from the Systematic Overview and Analysis of Five
Decades of Public Sector Reforms 172

Four Myths Informing Institutional Reforms 197
Implications from Adhering to These Myths 211
Why Has this Deficiency in Practical Knowledge Not Yet Been
Addressed by Practitioners? 219
Conclusion 227

Part II: A Case Study of Kyrgyzstan’s Public Sector Reforms
For the Last 20 Years

Chapter 6: Kyrgyzstan‘s Past and Present Governance Institutions 234
Governance Institutions in Kyrgyzstan Prior to the Independence 234
Current Governance Institutions 241
Civil Society Organizations 259
Conclusion 261

Chapter 7: The Mindless Camel: Kyrgyzstan‘s Public Reforms
From 1991-2010 262
Macroeconomic Reforms 263
Political Reforms 269
Administrative Reforms 274

Chapter 8: Analysis of the Donors‘ Influence on Kyrgyzstan‘s
Public Sector Reforms and Their Outcomes 307
What Happened on the Ground 308
How Donors Approached the Reforms 310
Explaining Donor‘s Approach: Donors‘ Knowledge Deficiency 317
Negative Side Effects of the Reforms 318
Conclusion 323
vi

Part III: Theoretical Tools and Propositions for Institutional Reform

Chapter 9: Review of the Relevant Literature: Key Limitations in
The Study of Institutions and Institutional Changes 329
Overview of the Existing Conceptual Frameworks 331
Overview of the Institutional Change Literature 351
Critical Analysis of Gaps in the Literature 358
Conclusion 363

Chapter 10: New Analytical Tools and Propositions on
Institutional Change 366
Conceptual Framework of Institutions 368
Practical Inferences Drawn From These Tools
for Institutional Reforms 387
Conclusion 400

Chapter 11: Conclusion 402
Summary of the Key Findings of the Study 404
The Study‘s Potential Contributions to Practice 412
The Study‘s Contributions to Research 416
Future Directions for Research 419

References 421
vii

List of Tables

Table 1: Three Waves of Public Sector Reforms in International
Development 171

Table 2: Key Obstacles in the Approach to the Reforms in Each
Wave 178

Table 3: Institutional Matrix 373

viii

List of Figures

Figure 1: Analytical Framework for Tracing the Role of Knowledge
in Donor-Promoted Public Sector Reforms 49

Figure 2: The Vision for Public Administration Reforms in the First
Wave 79

Figure 3: The Vision for Public Sector Reforms in the Second Wave
of Reforms 99

Figure 4: The Vision for Public Sector Reforms in the Third
Wave 139

Figure 5: A Nested Model of Institutions 376

Figure 6: Enforcement Mechanisms Model of Institutions 380

ix

Abstract

This three-part study generates practical and theoretical insights for researchers
of institutional change and practitioners of institutional reforms. The increased
recognition of the importance of effective public sector institutions in international
development necessitates this inquiry, especially given the poor track record of donor-
promoted reforms.
The first part of the study traces knowledge and ideas that have informed
leading donors‘ reform efforts and their outcomes. To this end, the study identifies
and examines three waves of donor-promoted public sector reforms in developing
countries for the last five decades. A deficiency in practical knowledge on
institutional change was identified which manifests itself in the disconnect between
international development practice and the broader pool of knowledge from different
disciplines. In this context, leading donors‘ reforms are informed by several
unsupported assumptions on institutional change.
The second part of this study maps and examines how such donor-promoted
reforms have played on the ground, using the case of Kyrgyzstan‘s reforms over the
past twenty years. It was found that the reforms, when designed and promoted
without comprehensive understanding of institutions and institutional change, may be
harmful to recipient countries when conducted by poorly accountable officials in
nontransparent environments.
The third part of the study addresses the deficiency in practical knowledge by
integrating key insights on institutional change scholarship from several disciplines,
x

including law, psychology, organizational development, sociology, economics,
political science, and public administration. A new set of analytical tools and
propositions are developed and applied to analyze key problems in public sector
institutions and reforms to generate practical inferences. Key among the propositions
is that the enforceability of government-made rules is primarily a function of the
alignment of rules with norms and mental models of the individuals in that setting.
This alignment is more important than a government‘s enforcement capacity,
especially in developing countries where such capacity is often limited. Donors‘
current approaches to promoting reforms, which tend to prescribe formal institutional
models from elsewhere, may deepen misalignment between rules and norms, making
enforceability of institutions even more problematic. One way of increasing such
alignment would be to focus on helping recipient countries to reform their procedural
institutions, such as participatory policymaking institutions, instead of attempting to
design substantive institutions for them.
The study‘s findings and theoretical tools and propositions apply to diverse
settings ranging from development to nation-building to organizational change.

1

Chapter 1

Introduction

Administrative reform is only a part, admittedly an increasingly crucial part,
of the much greater enterprise of institutional reform, which could well learn
much from what is already known about administrative reform.
Caiden, 1991, p. 10.

The Policy Problem Motivating the Study
Over the last five decades, donors and academics have experimented with
different approaches to promoting development, with uneven success. The most
recent idea for promoting development is through high quality institutions. The
term ―institutions‖ refers to governance mechanisms – rules and organizations – that
structure individual and organizational behavior, and determine the way society and
market are governed. It is believed that strong and effective government institutions
are essential for addressing the major ills associated with underdevelopment
including poverty, corruption, and more recently also security.
While donors have a relatively clear idea of what outcomes they envision as
desirable – in this case their goal is to help developing countries build effective and
high quality public sector/governance institutions – they are less clear on how to
accomplish them (OECD
1
, 2001a, p7, UNDP 2006, p.7). Despite noting that the

1
OECD, which stands for Organization for Economic Cooperation and Development, is a forum of
30 leading democracies (―rich countries‘ club‖), where they cooperate among themselves and other
countries to identify and share ideas, policy experiences, benchmarks, and best practices to address
social, economic, and environmental challenges of globalization, with increasing emphasis on public
sector institutional and policy reforms. OECD mainly operates through its committees and working
2

―growing appreciation of that policy depended on institutions for implementation…
no one had figured out how to build those institutions in inhospitable political and
social climates‖ (Einiorn, 2001; as cited in Jenkins and Plowden, 2006, p. 28).
Donor slowly started admitting that ―institutional appraisal and development is
difficult, and as yet, not thoroughly researched‖ (DFID, 2003). Studies
commissioned by a number of international development agencies point out that
very little is known about institutional change and even less so on how to effectively
design and implement institutional change with desired outcomes (Orrnert, 2006;
Bossyut, 2001; Jutting, 2003). Policy makers still do not know ―what makes a
particular institutional arrangement work in one context and fail in another‖ (Ornert,
2006, p. 451). Some insiders to the process point out that ―the donors do not in fact
know what to do – or that, if they do, they so far have been incapable of acting on
that knowledge‖ (Jenkins and Plowden, 2006, p.13). Other practitioners also admit
that ―it is not at all clear that the development community knows the answer to the
question of how we improve the state [institutions]‖ (Manning, 2008, p. 1007, in
Bertucci et al., 2009). If anything, despite the limited practical knowledge of how to
reform and build high quality institutions, the ambitions and the scope of donor-
promoted institutional reforms have been growing.
Interestingly, focus on institution building as a tool for development
promotion is not that new. If there was one consistent component in the donors‘

groups consisting of representatives from member nations. OECD‘s Development Assistance
Committee (DAC) is in charge It carries out its work through meetings (e.g., conferences, seminars,
peer review visits), research (e.g. study visits, comparative overviews), and various publications
(policy briefs, country reports, checklists, databases, inventories, guidelines, etc.).
3

approach to promoting development over the last five decades, it is their
institution/capacity building efforts concerned with improving the recipients‘ public
sector institutions in developing countries. But donors realize that their institution
building efforts through the customary technical assistance approach – which
mainly consists of supplying policy advisors and experts to help a recipient
government draft reform strategies and formal laws and create organizations,
provide trainings, and supply equipment – often does not work in the countries with
weak capacity and limited political support for reforms.
2

Ironically, the countries that need strong institutions are often precisely those
which have limited political will for reforms and weak capacity. Indeed, technical
assistance is considered as the most challenging component of donor assistance, and
has the poorest outcomes compared to other forms of aid (Israel, 1987). This record
may partly explain why institution building has remained peripheral to donors‘
policies for a long time, until the late 1990s when emphasis on institutions came
back. The good news is that the interest in institutional change has emerged within
the social sciences over the last few decades.
In such a backdrop, a logical and largely unexamined question is – what can
be learned from the past reforms and from the research on institutional change? The
purpose of the study is to generate practical and theoretical insight for practitioners

2
Perhaps this is one of the reasons why in one of its publications the World Bank placed hope on ―…
new leaders can mobilize alternative coalitions and spark collective action that tips the balance of
power between the potential winners and losers from further economic reforms‖ and recommends
transforming the role of the state‖ (2002b).
4

of institutional reform – primarily for donor agencies working on public sector
reforms – by examining key donor-promoted public sector reforms in developing
countries as well as interdisciplinary scholarship on institutional change over the
last five decades.
To this end, the present study traces over time of the knowledge and ideas
that informed those reforms and affected their outcomes, and what has been and can
be learned from such an examination. In so doing, this inquiry will be placed within
the broader policy context in which these reforms unfolded. In addition, this study
maps and examines how such donor-promoted reforms are playing on the ground,
using the case of Kyrgyzstan‘s reforms in the last twenty years. Furthermore, the
study integrates key insights on institutional change scholarship from a number of
disciplines, and applies those insights to analyze public sector reforms from an
institutional analysis perspective, treating public sector reform as an instance of
institutional change.
The remainder of this chapter elaborates in greater detail the background of
this policy problem, and then identifies the gap in scholarship in relation to this
problem. Specific questions are then followed by the definitions of key terms used
in this study. The chapter then concludes with an outline of the design of the study
presented next.

5

Donors’ “Institutions Matter” Policy that Emphasizes Public Sector Reforms is
Not New
The ―Institutions matter‖ policy, which stresses the need to reform
government institutions to build and strengthen their capacity, reemerged as a new
idea in donor circles in the second half of 1990s. But few have noted that donors
have been explicitly or implicitly promoting such institutional reforms in developing
countries, with the focus on strengthening public sector institutions, at least since
the emergence of official development assistance at the end of the WWII.
Institution building was the main focus of the reforms promoted in
developing countries by donors during the first wave of official development
assistance led at that time by the United States. The 1949 ―Point Four Program‖ of
U.S. President Harry Truman called for mobilization of Western expertise to build
and modernize the governments of newly independent postcolonial countries,
launching the major wave of institution building (IB)
3
reforms. Institutional reform
during this time was largely confined to the organizational level changes concerned
with improving the managerial capacity of the administrative system and specific
organizations. But the attempts by experts to help developing countries build
government institutions by modeling them after those of the West did not deliver the

3
Institution building and institutional development are used interchangeably in this dissertation. But
some authors suggest distinguishing them. For example, for Korten (1983) institution building is the
reproduction of a known structure using blueprints, whereas institutional development means more
open-ended process.

6

expected results. Disillusioned with such outcomes, donors pushed institutional
development to the backseat until the mid-1990s to reemerge with new rigor.
Institutional development remained an important component of donors‘
projects and programs between the end of the 1960s and the mid-1990s even when
donors moved away from explicit reliance on institution building and switched their
attention to other kinds of inputs to promote development. The transfer of
technologies, provision of services, policy advice, or building of infrastructure
projects all have been complemented with technical assistance components intended
to improve or build the institutional capacities of the recipient governments to
manage and operate those inputs (UN, 1982; Israel, 1987; Bossuyt, 2001; Goldmith,
1992; Grindle, 1997a; Caiden, 1991; Blasé, 1986; Eaton, 1972).
Even in the 1980s and early 1990s – referred to here as the second wave of
donor-promoted reforms – when the most influential donors, the International
Monetary Fund (IMF) and the World Bank urged recipient countries to downsize
their public administration systems to free markets from government control and
make the latter perform like businesses, institutional reform was a crucial part of
these interventions. While this wave of reforms was concerned with downsizing
public sector institutions, downsizing was not simple elimination, but a complex
process that required transformation of systems of bureaucratic institutions.
Ultimately, this aspect of reform was overshadowed by other elements of donor
policies. This wave of reform also largely failed to deliver expected outcomes in
many countries, partly because donors did not pay sufficient attention to
7

institutional reform, and because few knew how it could be done (Spink, 1999;
Shepherd, 2003). Essentially, even though institutional reform remained an
important component of donor projects, there was inadequate knowledge and
expertise on how to carry it out. And since such reform was not successful, it led to
disillusionment and stress on other aspects of the donor‘s project.
In the late 1990s, institutional reform regained the spotlight in development
circles. The current consensus among donors is that ―high quality institutions
enable a better economic and investment climate, foster better governance and
accountability, encourage trust, reinforce property rights, and avoid the exclusion of
sections of the population‖ (OECD Development Center, 2006b, p.1). The
experiences with failed structural adjustment reforms in many developing and
transitioning countries from the 1980s to the 1990s, combined with the new
developments in research, among other factors, made it clear to donors the
important role that strong and effective public sector institutions play in
development. Donors realized that externally supplied policy advice and other
inputs would not benefit recipient countries without improved governance
institutions. Research findings, which informed donor agendas and policies, also
demonstrated that governments‘ institutional capacity is the key factor that accounts
for economic development as well as for the effectiveness of development
assistance (World Bank, 1997a, 2002a). In the words of the then World Bank
president James Wolfenson, ―even in the worst of situations, very small steps
8

toward a more effective state can have a large impact on economic and social
welfare‖ (World Bank ,1997a, p. iv).
In this third wave donor institutional reform has become even more complex
and has a much broader orientation compared to previous waves (Spink, 1999).
Donors started advocating transformation of entire governance systems of recipient
countries as they came to realize that institutions are interdependent and that
reforms need to account for this reality. This means that economic, political, and
societal institutions should be changed along with public administration systems for
the reforms to have sustained effect (Caiden, 2006). Thus, the current wave of
institutional reform – sometimes referred to as ―governance reform‖ – encompasses
a wide range of economic and political (democracy-promotion) reforms intended to
ensure that governments, in partnership with NGOs and the private sector, work
towards ―good governance,‖ economic growth, and poverty reduction (OECD,
2008). In practice, however, most donors are cautious of intervening in the political
aspects of reforms and believe that economic development hinges on the quality of
the regulatory environment. This puts even more emphasis on reforming
administrative institutions.
In sum, while the scope of donors‘ development-promotion efforts has
drastically expanded over time, reform of administrative/public sector institutions
has constituted the pillar of donor-promoted development efforts in all three waves.
But for the last decade institutional reform has reemerged with a more ambitious
twist. As the content of administrative reform has expanded, so has the emphasis on
9

links between public administration, its political context, and society.
―Administrative reform is no longer about transforming the administrative state per
se, but transforming governance and the relationships between societal institutions
that exercise authority within a single country/state, a group of states, or a country
association‖ (Caiden, 2006, p. 17). Hence, the terms ―institutional reform,‖
―institution building,‖ ―institutional development,‖ ―capacity
development/building,‖ ―governance reform,‖ ―administrative reform,‖ and ―public
sector reform‖ are often used interchangeably. Additional terms loosely used as
synonyms to institutional development include ―development administration,‖
―development management,‖ ―private sector development,‖ and ―capacity
building.‖
4
(Goldsmith, 1992, p.582)
While the scope of reform has expanded, the state of knowledge to enable
and inform these initiatives has not kept up. Caiden (2006) suggested that if public
administration reform – the primary focus of the first wave of institution building –
was not vexing enough, current reform of public sector institutions is likely to be
even more daunting. If ―administrative reform is only a part, admittedly an
increasingly crucial part, of the much greater enterprise of institutional reform,
which could well learn much from what is already known about administrative
reform‖ (Caiden, 1991, p. 10), what does the literature analyzing donors‘

4
Brief definitions of key terms used in this dissertation are provided in the last section of this
chapter.

10

administrative reform experiences have to offer to practitioners of the current wave
of institutional reforms?

Systematic Analysis of the Five Decades of Public Sector Reforms Has Been
Limited
Although institutional development has been a key to donors‘ development-
promotion efforts since the very beginning of the official development assistance
practice, and its importance and scope has increased in the last decade, no study has
analyzed this experience by systematically comparing and contrasting the three
waves of public sector reforms launched by most influential donors since the 1950s.
Existing studies only partially address this question. Several comprehensive studies
have been conducted on the theoretical underpinnings, the descriptions, and
analyses of institutional reforms promoted by donors in developing countries
between 1950s and 1990s (Blase, 1986; Eaton, 1972; Esman, 1988; Heady, 2001;
Caiden, 1991; Riggs, n.d.; Turner and Hulme, 1997). But, almost all of them are
outdated; they provide an account of administrative reforms initiated before or up to
the 1990s, but leave out the current wave of institutional reforms that has taken
place over the past decade. Some studies cover one period and one donor at a time
(inter alia, Israel 1987 for the World Bank, Skoog, 2007 for OECD). Studies that
do cover different donors still tend to focus on only one wave of reforms. For
example, both Bandstein (2005) and Orrnert (2006) focused on the third wave of
reforms. Others covered a limited time period (Schacter, 2001, for example, covers
11

1980-2000). Few recent studies that include the current wave of reforms tend to
treat institutional reforms as something new (Skoog, 2007; Bandstein, 2005;
Orrnert, 2006; Bossuyt 2001; DFID, 2004; OECD, 2005a). The few studies that
attempt to show how the institutional development approach has evolved over time
across donors are also not completely up to date and tend to be too brief to do
justice to the importance and vastness of the issue (Goldsmith, 1992; Grindle,
1997b; Shields, 1989; Krueger et al., 1989). The only study that analyzed the last
70-year record of civil service reforms in 15 Latin American countries by Spink
(1999) is focused on one region and one component of public sector reforms. To
date no attempt has been made to conduct a comprehensive synthesis of what was
learned from administrative reforms promoted by donors in developing countries
from the 1950s to the present. The studies mentioned above only partially address
the problems of institutional change, focusing on one discipline or one aspect of the
problem at a time.
Researchers and practitioners of comparative public administration and
development management caution against the failure of the reformers to learn from
lessons, as well as the loss of institutional memory (Brinkerhoff, 2008; Spink, 1999;
Shepherd, 2003). Meanwhile such inquiry could offer valuable insights not only for
the current ambitious wave of institutional reforms, but also for better understanding
of institutional change overall.

12

Academic Research Has Not Caught Up with the Practitioners’ Demand
If donors failed to generate systematic knowledge from analyzing their own
experiences with promoting public sector reforms and applying them in practice,
how well have academics addressed this demand for knowledge about designing
and implementing deliberate institutional change from practitioners of transnational
public sector reforms? Although interest in institutional change and processes have
burgeoned in social sciences for the last few decades, the answer to this question is
also not satisfactory. To date, no study has synthesized and applied the existing
institutional change literature from different disciplines to illuminate and analyze
the donor-promoted deliberate transnational institutional change processes intended
to transform recipient countries‘ public sector institutions. As the brief review of
research in comparative public administration and other disciplines provided below
illustrates, overall, academics are yet to clearly understand institutional change
processes, let alone to generate practical guidance for practitioners of public sector
reforms.

Research in Comparative Public Administration
From its inception the comparative public administration discipline was
intended to examine and inform deliberate changes in public sector institutions. For
example, one of its founders and leaders Fred Riggs called for better understanding
of ―the forces which lead to administrative transformations‖ to improve the
effectiveness and efficiency of administrative institutions (Riggs, 1964, 3). But their
13

attempts to systematically examine the challenges of administrative institutional
reforms and synthesize lessons by developing conceptual and theoretical
frameworks drawing from institutional literature in other disciplines faced numerous
obstacles. For example, the Comparative Administration Group‘s initiative to
examine these challenges in 1960s under the leadership of Fred Riggs lost
momentum due to the complexity of the subject, excessive criticism of its theories,
ethnocentric sentiments, and limited funding and interest in the subject. More
recent research has also been stifled by limited interest in the subject and a lack of
general conceptual and theoretical frameworks that hinders synthesis of scholarship
(Jreisat, 2005). Thus, the remaining challenge is ―how to utilize the wide-ranging
human experience to advance knowledge about administrative reform and how to
apply it to institutional capacity building‖ (ibid). As one contemporary scholar of
public management put it,
We need more and more sophisticated ways of thinking about this trade in
management ideas. Too often such transfers and attempted transfers are
debated and decided as ―technical fixes.‖ The discussion proceeds as though
what was being transferred was some kind of instrument or machine part,
where the object of the exercise is to get the right part and fit it into its place.
Alternatively, at a political level, borrowing management reforms may
become a matter of following fashion and appearing to be ―modern‖ and up
to date. From this perspective, whatever the ―market leaders‖ like the USA
or the UK are doing, the rest of the world needs to pay attention to and
follow as far as it can. At both levels of discussion there is a frequent
perception that we need to get ―that‖ installed, and then we will have
achieved a new equilibrium - problems solved, closure. My argument will be
that these ways of conceptualising international management learning are
deeply inadequate (Pollitt, 2004).

14

In addition, comparative public administration research made limited use of
theories from other disciplines to examine donor-promoted administrative reforms.
Much of the research in comparative public administration concerns itself with
description and at best explanation of institutional change processes. Ferrel
Heady‘s classic textbook (2001) is the prime example of the state of the field. It
provides a dense and rich summary of extremely valuable information on various
administrative systems and reforms, but it falls short of analyzing and synthesizing
this information, let alone drawing inferences for practitioners. Only a few invested
efforts in synthesis and application of that knowledge to generate guidelines for
practitioners of institutional reforms (Riggs, 1964; Blaise, 1986; Caiden, 1991;
Turner and Hulme, 1997), but they are not up-to-date. Other attempts at theorizing
about institutional change have been limited to heuristics (Esman, 1972; Pollitt,
2004).
Still, as this study demonstrates in later chapters, comparative public
administration has generated valuable insights for practitioners and researchers
studying institutional change and reforms. Its value can be amplified if merged with
scholarship in other disciplines.

Relevant Research in Other Disciplines
To what extent do other disciplines provide practical insights for the practice
of donor-promoted public sector reforms in developing countries? Extensive
institutional changes have occured in the process of institution-
15

building/administrative reforms, with vast implications for a large number of people
around the world. These reforms also generate huge amounts of data. This type of
institutional change, however, has surprisingly not received due attention from
institutional analysis research in other disciplines.
Donor-promoted public sector reforms are examples of macro level
institutional change which are deliberately and exogenously initiated and/or
promoted. But the existing research focuses on other types of institutional change
processes that cannot always be directly applied in the practice of such reforms.
Much institutional analysis research focuses on endogenous and evolutionary
changes taking place within relatively homogenous cultural environments. The
existing studies of institutional change also tend to focus on processes triggered by
social movements or technological changes (in sociology), on longitudinal historical
processes in the West (in economics), or on changes at the organizational level
fueled by demand from private organizations (Scott, 2007). Those studies that
looked at deliberate macro level institutional changes in developing countries
focused predominantly on changes in political institutions such as electoral rules or
party formation (inter alia O‘Donnell, 1996; Luong, 2000; Kubicek, 2000).
Research in economics tends to examine changes in governance systems of
developing countries primarily in relation to economic development (Gradstein and
Konrad, 2006; Nabli and Nugent, 1989b).
Furthermore, macro level deliberate institutional change of governance
systems remains poorly understood (Scott, 2007; North, 2005; Ostrom, 2005;
16

Rodrik, 2008). Organizational studies have advanced furthest in illuminating
deliberate change in organizations (Scott, 2001; DiMaggio and Powell, 1983; Van
de Ven and Hargrave, 2004; Poole and Van de Ven, 2004). Alas, this field of
scholarship focuses mainly on organizational and organizational systems level
change processes in developed countries. The other components of institutions –
the rules, norms, and prescriptions, as well as macro level changes of organizational
systems, such as public administration of the whole country, the latter being more
complex than the former – do not fall within the immediate research interest of
scholars in this field.
Those rare studies examining institutional change at the macro level mainly
focus on reforms of developed countries‘ public administration systems (March and
Olsen, 1989) or on evolutionary institutional change processes in the Western world
(Scott, 2001; North, 1991; North and Thomas, 1973). The distinction between
institutional change in developing countries and industrialized countries is
important: While the capacity of the governments may not matter as much in self-
emerging institutional change processes, it matters a lot for deliberate institutional
change, because the latter is the most formidable, if even possible, task (March and
Olsen, 1989; Caiden, 1991).
The broad consensus among institutional analysis scholars in various schools
and disciplines is that despite significant advances in institutional theory for the last
few decades, institutional change is still not well understood and theorized, let alone
subject to effective deliberate design and implementation (Siffin, 1972, p. 47, as
17

cited in Eaton 1972; Zucker, 1984; March and Olsen, 1989; Scott, 2001; North,
1990, 1993, 2005; Campbell, 2004; Ostrom, 2005). More importantly for this
research, the ―one aspect of institutional change [that] remains underexplored [is]
the conditions that make it more or less likely that reformers will achieve their
intended procedural and policy goals when modifying a particular institution‖
(Cortell and Peterson, 2001, 768-769).

Research Questions and Their Significance
In this backdrop this study intends to improve understanding of institutional
reforms and generate theoretical and practical insights for researchers and
practitioners of institutional change. To this end, the present study asks what
researchers and practitioners can learn about institutional reform:
1. through systematic analysis of the five decades of donor-promoted public
sector reforms in developing countries,
2. from the analysis of how those donor-promoted public sector reforms played
out in a specific country context, and
3. from interdisciplinary scholarship on institutional change.
These are large but pressing questions in international development practice and
social sciences, especially in comparative public administration. As noted above,
donors emphasize the importance of institutions and the promise of
institutional/governance reform to remedy a host of social, political, and economic
ills, but they do not appear to know how to accomplish this ambitious task.
18

Institutional analysis is valuable for understanding these reforms as unique
cases of artificially induced institutional change. In turn, the accounts of donor-
promoted public sector reform experiences in developing countries also offer a
wealth of data for scholars of institutional change. Although these two fields could
enrich one another, as mentioned above, the recent analyses of the reform
experiences in comparative public administration made limited use of institutional
theories, and institutional analysis scholarship also overlooked rich data from the
reforms, partly due to the inadequacy of analytical tools and disciplinary
fragmentation. These theoretical limitations and bridges these two fields of
knowledge are addressed below.
Moreover, few seem to understand clearly what happens if and when these
reforms fail to accomplish expected outcomes, which is too often the case (Caiden,
1991; Brinkerhoff, 2008). If institutions are powerful in affecting human behavior
and the direction the society takes, and if the reforms often fail, what kinds of
institutions emerge as a result of failed reforms, and how are they affecting the
recipient societies? Evidence from the previous experiments suggests that
institutional reforms may result in negative side effects when they are confined to
formal legal and organizational changes through importing the OECD‘s best
practices and models to developing countries without accounting for the latter‘s
unique contexts (Evans, 2004; OECD 2005a). Institutional reforms are typically
conducted in non-transparent environments, which make them vulnerable for misuse
for private purposes. Unfortunately, these conditions are still present in many
19

institutional reforms. As the emphasis on institutional reforms has increased for the
last decade with donors harmonizing their efforts in development interventions, the
potential negative side effects of institutional reforms may increase. Given the
path-dependent nature of institutions, poorly informed institutional reforms may
lock the developing countries into a vicious circle of dysfunctional institutions for a
long time.
Learning how to build or transform public sector institutions that can
facilitate development (broadly defined) should come less from grand experiments
with large human costs and more from systematic analysis of abundant empirical
evidence and theoretical scholarship.
Answers to the questions the current research asks can provide insights for
pressing ills such as corruption, which plagues development of many poor countries.
Understanding, designing, and maintaining effective governance institutions are the
keys to combating corruption. Such an approach can help not only donors and
recipient countries in promoting effective institutional reforms, as mentioned above,
but may also help developed economies that are forced to redesign their own
institutions in light of the recent financial and social security crises.
Moreover, such stocktaking – drawing lessons and insights from five
decades of public sector institutional reforms and synthesis of interdisciplinary
scholarship – can be helpful for the reformers of not only administrative entities, but
also for political, economic and private institutions as well. The worldwide
democratization movement also requires clear and practical guidelines for
20

administrative reforms. ―Before a country can become a democracy it must have a
coherent, effective administration‖ (Carothers, 2003a). March and Olsen similarly
attest that ―the effectiveness of political systems depends to a substantial extent on
the effectiveness of administrative institutions, and the design and control of
bureaucratic structures is a central concern to any polity‖ (1989, p. 69).
Inability of the poorest and most fragile states
5
to contain threats to global
security within their boundaries also calls for more effective ways of helping them
build workable institutions. Unfortunately, the responses of the developed world, as
in the example of the European Union, are largely confined to usual ―technical and
managerial means‖ (Hout, 2010, p. 154), as Chapters 2 through 6 illustrate, such
means have not been effective in countries with weak capacity. Furthermore, while
such security threats have been at the center of leading donor countries‘ foreign
policy agendas especially since 9/11, limited stocktaking of institution building
experiences has taken place (Brinkerhoff, 2008). Related, grand nation building
efforts in countries like Iraq and Afghanistan also require practical knowledge of
what works and how it should be done not only in building political institutions but
also in building and reforming administrative ones which are often overlooked
(ibid).
The findings to these questions may also present interest for organizational
development field, which has been searching for an answer on how to transplant

5
According to OECD‘s Development Assistance Committee (DAC) ―states are fragile when state
structures lack political will and/or capacity to provide the basic functions needed for poverty
reduction, development and to safeguard the security and human rights of their populations‖ (Hout,
2010, p. 143).
21

successful institutional and organizational models to new environments. In sum, this
analysis of transnational public sector reforms can offer valuable insights for
institutional analysis and practice in a wide range of settings.

Definitions of Key Terms
The changes in the context and content of public sector institutional reforms
are reflected in the use and proliferation of the new and modified terms. The
meaning of each is not always clearly articulated. The same term may be used to
convey different ideas, or different terms may be used to means the same things by
different donors. These terms include ―development,‖ ―governance,‖ ―governance
reform,‖ ―corruption,‖ ―rule of law,‖ ―public sector reform,‖ ―capacity building,‖
―institutions,‖ and ―institutional reform.‖ Interestingly, although these terms largely
overlap, they are often used to identify or emphasize different aspects of reform.
Moreover, organizations using one term often ignore what the others have to say
about the same content using different terms. The following section therefore
attempts to identify the points of consensus on key terms related to the research
questions.

Capacity Development
The term capacity development (CD), and, to a lesser extent, capacity
building, started substituting institutional development (and institution building) in
donors‘ vocabulary for the last couple of decades. CD is defined by the UNDP as
22

―the process through which individuals, organizations and societies obtain,
strengthen and maintain the capabilities to set and achieve their own development
objectives over time‖ (UNDP, 2008, p. 4). Individual-level capacity includes a
person‘s skills, experience and knowledge. Organizational-level capacity includes
internal policies, arrangements, procedures and frameworks. Societal-level
capabilities – also referred to as an enabling [institutional] environment –
encompass the ―rules of the game,‖ which include policies, legislation, power
relations and social norms that shape interactions among organizations (ibid, pp. 5-
6).
Although most donors consider CD as the primary objective of development
cooperation, especially since it was the main focus of the 2005 Paris Declaration
which was concerned with the long-term effectiveness and sustainability of
development aid, few have invested any serious analytical work on it. As
mentioned above, ―capacity development‖ is used along with ―capacity building,‖
6

―institutional development,‖ ―public sector reform,‖ and ―governance reform,‖
frequently to mean the same thing. For example, capacity development is
understood as building and strengthening human, organizational, institutional, and
societal capabilities in developing countries mainly focused on their public

6
According to UNDP‘s Practice Note on Capacity Development, ―capacity building‖ is preferred to
―capacity development,‖ except for post-conflict situations where all capacity is destroyed and needs
to be built from scratch. ―Capacity building‖ implies that there is no capacity on the ground and it
needs to be built according to a preconceived design, which is not a successful way of enhancing
capacity. ―Capacity development‖ refers to not only starting with the existing capacity, but is also
viewed as a process driven by inside (2008).

23

administration systems (IMF, 2007). The World Bank‘s Strategy for Reforming
Public Institutions and Strengthening Governance defines capacity building as
―building effective and accountable institutions to address development issues and
reduce poverty in borrowing countries,‖ and emphasizes its importance as the core
of the World Bank‘s activity (2000a, p. xii).
While this term is not new to the development assistance field, the currently
emphasized focus/scope and the means of improving capacity reflects the broader
shift in thinking about development. In terms of focus/scope of CD, donors
switched from individual- and organizational-level to broader societal and
governance level. In the past, technical capacity building with emphasis on
individuals and organizations received more attention, ―involving the simple
transfer of knowledge or organisational models from North to South‖ (OECD,
2006a, p. 3). Donors did not pay as much attention to the broader context of their
interventions. More recently donors came to emphasize macro-level components of
capacity development; i.e., building, developing, and transforming the very
governance system and its institutions that structure the behavior of individuals and
organizations. Donors learned that the past focus on inputs, such as developing
organizational capacity through training and technology transfers and policy advice
was not adequate when institutions – ―rules of the game‖ that converted those inputs
into desirable outputs within a given governance system – remained the same
24

(DIFD, 2003; Girishankar, p. 2001).
7
In this sense, institutional
reform/development is part of capacity building efforts regardless of whether
institutions are defined as rules of the game or as organizations. But as mentioned
above, institutional development is sometimes used interchangeably with capacity
development.
This emphasis on institutional capacity building is conditioned by IDA‘s
understanding that:
the heart of the problem in poor societies is not the lack of funding or
technical know-how (the traditional components of aid), but a matter of
governance and the resulting inability to make good use of existing
institutions and capacities (Bossuyt, 2001).

Thus, the leading IDA now intend to focus more on helping developing countries to
set up proper incentive structures via institutional reforms that would in turn
improve government capacity (World Bank, 1997; IMF, 2003; UNDP, 2001;
OECD, 2005b; OECD 2006a; Jutting, 2003; Orrnert, 2006; Bossuyt, 2001;
Bandstein, 2005). As summarized by the Lavergne and Saxby (2001) for the
Canadian International Development Agency (CIDA):
What distinguishes a CD perspective is enhanced concern for the intangible
dimensions of development. CD is about increased ability to use and
increase existing resources, in an efficient, effective, relevant and sustainable
way. Usually emphasizing ―core‖ capabilities, the CD approach recognizes
the primacy of learning by doing, takes a holistic approach that recognizes
the interdependence of actors and systems, and seeks to balance the need for

7
Note that in the World Bank publication Evaluating Public Sector Reform, authored by Girishankar
(2001), improving ―capacity conditions‖ refers to organizational development measures such as
trainings and equipment assistance, while transformation of ―structural conditions‖ is referred to
broader macro level institutional development that includes changing formal incentives, checks and
balances and availability of timely information.

25

short term results in satisfying social needs with the need for long-term
improvements in capacity…. ―A process by which individuals, groups,
organizations and societies enhance their abilities to identify and meet
development challenges in a sustainable manner‖ (p. 4).

In terms of approach, the same as institutional development, CD has been
promoted mainly through technical cooperation (TC) – technical assistance through
expert-consultant advice and training of local staff – which absorbs about quarter of
the donor aid (OECD 2006a). Donors now claim capacity development should not
be confined to and filled by externally determined technical fixes, but should be
driven by internal processes and encompass political relationships between
government and citizens. As outlined in the Accra Outcome Statement (2008),
capacity development:
has been viewed through the wrong end of the telescope – the technical
cooperation (TC) end. We need to look through the capacity development
(CD) end to determine what needs to be done, and how TC can support the
process. In short, a supply-driven process needs to be replaced by one that
is demand-driven (UNDP, 2008, p.ix).

Now donors expect the recipient countries to take responsibility for their
own capacity development. Capacity is to be enhanced by fostering participation,
competition, and setting proper incentives in an overarching governance
environment where those organizations operate (2006a). This new consensus is
articulated in the 2005 Paris Declaration (OECD, 2005b). It views capacity
development as an endogenous process – one that is set from within a country and
defined by its governance context, where donors are expected to play a supporting
26

role to the recipient countries‘ own initiatives (ibid). This thinking is summarized in
the Accra Agenda for Action (AAA) in the following six principles:
1) Civil society and private sector: enabling local civil society and the
private sector to play their role in capacity development.
2) National, sector, and thematic strategies: ensuring proper integration of
capacity development priorities in key national, sub-national, sector and
thematic strategies.
3) Technical co-operation: working towards demand-driven efforts in
technical co-operation and promoting the use of local and regional resources,
including through South-South arrangements.
4) Enabling environment: addressing the systemic impediments to local
capacity development.
5) Country systems: assessing, strengthening and promoting the use of
country systems to implement policies and manage public resources,
including procurement, public financial management, results, statistics, and
information systems.
6) Fragile situations: tailoring, phasing and coordinating capacity building
and development in situations of fragility, including countries emerging
from conflict (2008, p. 8).

Capacity development is now about strengthening the capability of
government and the internal demand for improved governance through
strengthening the capacity of civil society organizations and the private sector,
although public sector reforms still ―are recognized as an essential element of
capacity development‖ (OECD, 2006a, p. 8). Within the public sector, donors‘ CD
activities targeted developing countries‘ planning, resource allocation and
monitoring systems, including ―statistics, public financial management,
accountability systems, systems of oversight, taxation, fiscal systems, monitoring
and evaluation, planning systems, budget management, procurement, and audit
systems‖ (ibid, 9). While donors have a relatively clearer idea of how CD may be
27

promoted at the organizational level, as mentioned above, they are still unclear how
CD should be promoted at the broader governance-level. A number of donors are
paying increasing attention to research at this level.

Corruption
Corruption, redefined as the antithesis of ―good governance,‖ is considered
to be an essential problem to be addressed by governance reforms. Corruption,
conventionally defined as the misuse of public authority for private goals (Caiden,
1991), is now broadly perceived by donors as a function of weak and ineffective
institutions that generate perverse incentives. The donors came to emphasize that
corruption hampers growth, discourages investment, and furthers poverty (World
Bank, 1997b). Thus, donors, especially the World Bank and UNDP, now pay close
attention to corruption as part of their public sector reforms.

Development
The term development has been associated with different meanings since the
emergence of the official development field and practice, and its meaning has also
expanded over time. In the 1950s, development was associated with administrative
modernization; in the 1970s and 1980s with economic development; and since the
1990s, it has gradually incorporated political and social dimensions. This trend
reflects the widespread recognition that all of these dimensions of development are
interconnected and need to be accounted for to secure lasting and positive outcomes.
28

Effective administrative, political, economic, and social institutions – rules
and organizations that structure and enforce the behavior of bureaucracies, elected
officials, financial actors and civil society respectively – are increasingly perceived
as complementary and interdependent ingredients of good governance. In practice,
good governance is seen both as the means and ends of development. While all
major IDA accept this broader notion of development, some leading donors, such as
the IMF and World Bank, still tend to emphasize the economic dimensions of
development. Others, such as the UNDP, hold a more holistic model of
development as exemplified in its Human Development Index (HDI).

Governance
The term ―governance‖ has become popular among academics, practitioners
of international development, and Western governments. The World Bank has been
most instrumental in operationalizing and mainstreaming this term. One can
distinguish a neutral definition of governance from its normative definition,
although these two sometimes overlap. The neutral and broader notion of
governance is commonly used by academics and some donors. It refers to the way
authority or power is exercised, which encompasses the environment, participants,
rules, and processes of governing society. Participants of the governance process, in
this view, include not only government (political and administrative) institutions,
but also private and societal institutions that all together influence how society is
governed. Governance thus connotes the idea that the government is no longer the
29

sole player in society, and that other interdependent private, non-profit, societal
(community), and international institutions and organizations share authority in
making and implementing decisions on public matters (Peters and Pierre, 1998;
Hooghe and Marks, 2003). As summarized by the OECD‘s Development
Assistance Committee (DAC), governance became a prominent concept which
evolved from narrow public sector management to encompass a broad range of
related political issues such as corruption, security, human rights, and the role of
formal and informal institutions (OECD, 2008).
The emergence of this term reflects the changes in and the dynamics among
the means of exercising authority; it is a reaction to the trends associated with
globalization and devolution (Kettl, 2000) as well as economic liberalization and the
reduction of the role of welfare state (Hyden, 2002). These changes created new
opportunities and incentives, and altered previously stable power relationships
organized around governments‘ formal authority. The increasing turbulence
brought in new types of shareholders wanting to participate in decision-making
(e.g., civil society organizations) at multiple levels of government, ranging from
local communities to relationships of global scale, thus affecting the bargaining
shares of the existing players (Cope, Leishman & Starie, 1997; Horrocks and
Bellamy, 1997; Kooiman 1996).
This distinction between government and governance and the new role of
government in the current context is best captured by Stoker (p. 1, c.f. in Horrocks
and Bellamy 1997):
30

Government is the term conventionally used to refer to a formal institutional
structure with authoritative decision-making powers… Governance is used
to refer to the changing processes and practices of governing which involve
―multi-agency partnerships, a blurring of responsibilities between public and
non-public sectors, a power dependence between organizations involved in
collective action, the emergence of self-governing networks and the
development of new governmental tasks and tools.‖

The previous emphasis on government was also weakened with the
realization that more self-governance through decentralization and participation can
enhance efficiency and mitigate the growing costs of control (Hooghe and Marks,
2003; Bardhan, 2002). As a result, ―the traditional concept of government as a
controlling and regulating organization for society is argued to be outmoded‖
(Peters and Pierre, 1998). Instead, ―governance without government‖ is becoming a
dominant pattern in industrial democracies under global and domestic pressures
from international capital markets, supranational organizations, the private sector,
and strengthened civil society and interest groups. ―Governance reform‖ from this
standpoint refers to a wholesale transformation of interdependent political,
administrative, as well as private, nonprofit, and even societal institutions (Caiden,
2006). As formulated by another leading expert in this field, ―public administration
as a field serves within and across social, economic, and political governance, not
simply in governmental institutions‖ (Newland, 2003). This term conveys an
understanding that institutions are interdependent and that reforms need to account
for this reality. This, at a minimum, means that changing economic or political
31

institutions alone will not be sustainable unless public administration systems are
also reformed (Caiden, 2006).
The narrower and more normative definition of governance is commonly
used by major donors, such as the World Bank and United Nations; it refers to what
governments should do. For example, the World Bank defined governance as
The exercise of authority through formal and informal traditions and
institutions for the common good, thus encompassing: (1) the process of
selecting, monitoring, and replacing governments; (2) the capacity to
formulate and implement sound policies and deliver public services, and (3)
the respect of citizens and the state for the institutions that govern economic
and social interactions among them (Kauffmann, 2003, p. 5).

The UN Committee of Experts included in governance ―public
administration and civil service, rule of law, human rights, macroeconomic policies
and regulatory frameworks and transparent and participatory decision-making
processes‖ (UNDP 2002, p. 16).
The normative definition overlaps with the term ―good governance.‖ ―Good
governance‖ refers to a set of idealized principles and guidelines for reforms that
IDA draw from best practices of the OECD countries‘ experiences and their own
ideas of how governments should function. These principles include:
• formal checks and balances, competition within civil service and among
other institutions, and contested elections (World Bank, 1997a);
• rule of law, efficiency and accountability of the public sector, and tackling
corruption (IMF 1997a, as cited in Jenkins and Plowden, 2006, p. 32);
32

• policy making and allocation of resources based on consensus in society
that accounts for the voices of the poorest and the most vulnerable (UNDP,
1997);
• ―democratic accountability, fundamental freedoms, service delivery for all,
due process rights and security‖ (U .K. Department for International
Development (DFID), n.d.);
• democratic governance; transparency, pluralism, citizen involvement in
decision-making, representation, and accountability (USAID, 2003); and
• rule of law, responsibility, openness, integrity, efficiency, accountability
and transparency (SIDA, 2003).
The World Bank‘s instrument to measure the quality of governance by the
following six parameters more or less captures the principles mentioned above: (1)
voice and accountability to citizens, (2) political stability and lack of violence,
crime, and terrorism, (3) government effectiveness, (4) lack of regulatory burden,
(5) the rule of law, and (6) control of corruption (Kaufmann, 2003, p.5).
From this standpoint the purpose of institutional reforms, which are
sometimes called ―governance reforms,‖ is to establish the way of governing that
follows ―good governance‖ principles. Developing countries are advised to reform
their institutions to exercise good governance aligned with these principles and, as a
result, secure economic, political, and social development.
8
As mentioned above, in

8
The assumption that good governance will lead to improved economic, political and social
indicators, at least in short-term, does not have strong empirical support. This point is discussed in
more detail in chapter six.
33

this wave of institutional reforms, good governance is treated both as the means and
ends of development.

Institutions
Institutions have been defined in different ways. The sources, consequences,
and potential solutions to this definitional ambiguity are discussed in the next two
chapters. For the purposes of this chapter, institutions refer to rules and
organizations that shape individuals‘ and organizations‘ behavior. Institutional
reforms accordingly refer to the artificially or deliberately induced changes in rules
and organizations. A more precise definition is proposed in Chapter 7.

Public Administration Reform, Administrative Reform, and Public Sector
Reform
Public administration reform has been traditionally viewed by many donors
more as a set of technical interventions to improve internal efficiency of government
organizations, and its political context and dimensions have been downplayed. But,
this term is perceived to be somewhat narrow given that the performance of public
administration system is not only a function of how civil service operates. It is also
shaped by of economic, social, political, and cultural factors. Indeed, public
administration reforms include not only transformations in civil service, but also
reforms of the policy process, decentralization, and privatization, and reform of

34

citizens‘ relationship with government through greater mobilization of civil society,
all of which alter the power dynamics in the society.
Administrative reform, often used interchangeably with public
administration reform, has been more broadly defined as ―the induced systematic
improvement of public sector operational performance‖ (Caiden, 1991, p. 1). This
definition of administrative reform was further modified and expanded by Quah to
include attitudinal aspect, on top of structural one, as:
a deliberate attempt to change both (1) the structure and procedures of the
public bureaucracy (i.e., reorganization of the institutional aspect) and (b)
the attitudes and behavior of the public bureaucrats involved (i.e. the
attitudinal aspect), in order to promote organizational effectiveness and
attain national development goals (1976, p.58).

Now, both ―public administration reform‖ and ―administrative reform‖ are gradually
being replaced by ―public sector reform,‖ (PSR) and, for the last decade, also by
―governance reform.‖ ―Administrative reform is no longer about transforming the
administrative state per se but transforming governance, the relationships between
societal institutions that exercise authority within a single country/state, a group of
states, or a country association‖ (Caiden, 2006, p.17).
Still, different donors prefer using different terms. The United Nations uses
―public administration reform‖ in to refer to reforms of ―the aggregate machinery
(policies, rules, procedures, systems, organizational structures, personnel, etc.)
funded by the state budget and in charge of the management and direction of the
affairs of the executive government, and its interaction with other stakeholders in
35

the state, society and external environment‖ and (UNDP, 2005, p. 1). OECD prefers
to focus on more generic ―capacity development,‖ as elaborated above. The World
Bank uses ―public sector reform‖ and ―governance reform‖ to refer to reforms
involving the transformation of all institutions of governance. For the World Bank,
the focus of contemporary institutional reform is not a single institution, but the
whole governance system (Girishankar, 2001).
Public administration reform is seen as central to, and the entry point for,
transforming the whole governance system. Public administrative reform is seen as
the pillar of the current development agenda and to the evolving and all-
encompassing ―governance reform.‖ Donors and academics share an understanding
that prospects of growth are slim without public goods provided by government,
such as infrastructure, basic educational institutions, and law and order (Asemogly,
2008). The government is expected to secure and maintain a favorable policy and
institutional environment for other players and institutions in a society in order to
generate social welfare. In other words, a tacit assumption underlying current
public administration reforms is that the latter would generate a spillover effect on
the broader governance environment.

Rule of Law
―Rule of law‖ stands for ―accountable, transparent government that equitably
enforces laws and regulations through an independent judiciary to create a ‗level
36

playing field‘ for economic actors‖ (Channel, 2005, p. 3). USAID defined rule of
law as:
the basic principles of equal treatment of all people before the law,
fairness, and both constitutional and actual guarantees of basic human
rights. A predictable legal system with fair, transparent, and effective
judicial institutions is essential to the protection of citizens against the
arbitrary use of state authority and lawless acts of both organizations and
individuals (n.d.).

―Rule of law‖ is often mentioned in tandem with and as a core ingredient of
―good governance‖ (Morita and Zaelke, 2005). Achieving sustainable development,
including the Millennium Development Goals (MDGs), is impossible without
developing ―adequate country capacity, the essence of which is securing rule of
law‖ (OECD, 2006a). Strengthening the rule of law is commonly pursued through
reform of the judicial branch of government.

How Does This Study Deal with the Overlaps and Ambiguities in the Uses of
These Terms?
The overview provided above indicates that there is a fair amount of overlap
between the terms ―institutional development,‖ ―institution building,‖ ―institutional
reform,‖ ―public administration reform,‖ ―administrative reform,‖ ―public sector
reform,‖ ―governance reform,‖ and ―capacity building.‖ The overview also shows
that these terms are also used liberally by different stakeholders to refer to a wide
range of phenomena. In donor literature ―institutions‖ and ―institutional reforms‖
mostly refer to ―public sector institutions‖ and ―reforms of public sector
37

institutions,‖ even though the term ―institutions‖ by definition are not confined
public sector alone. The opposite is also true: Although administrative or public
sector reform is a phenomenon that can be viewed from different angles (for
example, as an organizational development) it is also an instance of deliberate
institutional change or institutional reform in that public sector reform involves
deliberate attempts to change rules, organizations‘ structuring behavior and the
relationships between individuals and organizations in public sector.
The present research focuses on deliberate changes public sector institutions,
specifically focusing on institutions – rules and organizations – of public
administration, and uses the terms ―institutional reforms‖ and ―public sector
reforms‖ to refer to these changes. Public sector reform, with focus on
transformation of public administration, is one means of capacity building through
focusing on structural dimensions of governance process and system. Hereafter,
public sector reforms will primarily refer to the reform of public administration
institutions unless otherwise indicated.

Research Design
General Framework
In following with Creswell‘s (2002) model of research design, the present
study makes use of three basic elements of inquiry:
38

1. What are the researcher‘s worldview or assumptions on the nature of social
reality and being (ontology) and the nature of learning/knowledge
(epistemology) underlying the inquiry?
2. Which strategies of inquiry will inform the research process?
3. What methods of data collection and analysis will be used? (Creswell,
2002).
It is important that these elements are logically coherent with one another, and
inform the process and design of the inquiry. They also facilitate communication of
scientific findings given that researchers sometimes hold competing underlying
assumptions on these basic elements that can get in the way of meaningful dialog.
This section elaborates on these three components of the research design and shows
their relevance and utility for the purposes of the study, followed by discussion of
validity considerations and delimitations of the study.

Ontology and Epistemology
A combination of two related knowledge claims – critical realism and
pragmatism – constitutes the ontology and epistemology underlying the design and
questions of this inquiry. The critical realist ontology is intended to reclaim reality
from excesses of positivism focused on empirical aspects of social reality on one
hand, and the other extreme
9
for which the world is no more than pure social

9
Patomaki and Wight (2000) portray positivism and postpositivism as the two extremes of the
empiricism and subjectivism. Others (inter alia, Creswell 2002) define postpositivism differently, by
39

construction. Critical realism envisions ―a world composed not only events, states
of affairs, experiences, impressions, and discourses, but also of underlying
structures, powers, and tendencies that exist, whether or not detected or known
through experience and/or discourse‖ (Patomaki and Wight, 2000, p. 223). This
reality is ―differentiated, structured, and layered, and independent of mind‖ (ibid, p.
224), and those layers may be ―out of phrase with each other;‖ i.e., not always
aligned and manifested equally at all levels (ibid, p. 223). This stratified nature and
―ontological depth‖ of social world is commonly described in sociology along the
micro-mezzo-macro level continuum both in terms of time and space:
Social world is not a flat terrain. Society consists of micro-, mezzo-, and
macro-levels of social process, each of which – though they overlap and
indirectly influence each other – have a relatively independent existence in
the sense that each exhibits distinct properties and effects of its own that are
not reducible to (that is, cannot be explained in terms of) the properties of
other levels (Sibeon, 2004, p. 171).

In this continuum, the macro end includes, among others, large scale phenomena
such as nation states, global entities, and processes operating at this level; mezzo-
level includes organizations and other inter-organizational processes and
phenomena; and micro-level refers to the phenomena involving individuals and
related small scale processes (ibid, p.173).
Pragmatism draws from the works of John Dewey, William James, Oliver
Wendell Holmes and Charles Pierce. What puts pragmatism apart from other
paradigms is its problem-centered orientation. At the same time, it shares the key

separating the latter from more subjectivist knowledge claims as constructivism, and emphasizing
greater continuity between positivism and postpositivism.

40

assumptions of critical realist ontology and epistemology. Pragmatists recognize
the different levels and contexts within which research takes place. They also hold
that the external world is independent of the mind, but at the same time rooted in the
mind (Creswell, 2002). They emphasize that ―ideas are not ‗out there,‘ waiting to
be discovered, but are tools… that people [groups of individuals] devise to cope
with the world in which they find themselves‖ (Menand, 2001, p. xi, as cited in
Scott, 2007, p. 69).
Epistemologically, given its commitment to differentiated reality, critical
realism subscribes to methodological pluralism, which holds that ―each science will
require its own methods of inquiry‖ (ibid, p. 224). Critical realists are not
comfortable with the idea of ―the scientific method.‖ In this view ―science… is not
a deductive process that attempts to seek out constant event conjunctions, but one
that aims at identifying and illuminating the structures, powers, and tendencies that
structure the course of events‖ (ibid, p. 223). Pragmatists also subscribe to
methodological pluralism. They concern themselves with application of what works
using approaches and methods that can help in addressing the problem, rather than
being committed to any one philosophy, method, or technique of data collection and
analysis (Creswell, 2002).
Epistemological or methodological pluralism is not the same as
methodological relativism or ―anything goes‖ position. Because social reality is
complex, stratified, textured, layered, and contextual, no one perspective can
illuminate a phenomenon sufficiently. Any phenomenon is the outcome of the
41

interaction of the different contexts, and each level of social reality has dynamics of
its own which can‘t be aggregated to or derived from one another (Sibeon, 2004).
Each level of analysis has different dynamics, and thus each requires different
techniques to understand them and their effect on a behavior (ibid). In this context,
the value of methods is judged not for their experimental robustness, but for their
―vitality and vigor in illuminating the ways to achieve profound understanding of
how we can create human flourishing‖ (Lincoln and Denzin, 2000, p.1062).
This stratified ontological and epistemological pluralism provides ideal
grounds for the study of institutions given that the scholarship in this field remains
fragmented and synthesis has been limited (inter alia, Campbell, 2004). While
institutions cut across all levels of social reality, different schools and disciplines
tend to focus on a specific level or aspect of institutions, and attempt to explain the
whole range of institutional phenomena from their limited perspectives. For
example, historical institutionalism tended to focus on macro level institutional
phenomena, sociological institutionalism on mezzo (organizational and inter-
organizational) level, whereas rational choice institutionalism on economics and
political science tended to focus more on micro level processes involving individual
decisions (Scott, 2007). Each of them attempt to draw generalizations about the
other levels about which they have limited insight by virtue of being grounded on
one level of analysis and limited set of assumptions.
In contrast, this study uses a differentiated and layered model of social
reality provided for by critical realism, to map the variations and levels of
42

institutions. Specifically, it distinguishes institutions regulating interactions at
governance/national (macro) levels; those operating at organizational and inter-
organizational (mezzo) levels, and institutions regulating interpersonal (micro) level
situations and interactions (discussed in greater detail in Chapter 7).
Critical realism also recognizes co-existing worldviews, as opposed to
inflexible positivist and social constructivist worldviews which stress one
homogenous social reality based on facts and ideas respectively. Critical realism
targets a more comprehensive knowledge based on the realistic understanding of
how things play out:
The social world composed of a fragmented interplay of practices based on
various partial, relational perspectives, and a more comprehensive
perspective is achieved by transcending and adapting these partial
perspectives and synthesizing them into a broader, non-reductive perspective
capable of incorporating and strengthening of all (Patomaki and Wight,
2000, p. 227).

This ontology and epistemology enable the researcher to synthesize relevant social
science disciplines.
Moreover, embracing this ontology and epistemology can also help to avoid
common problems in social sciences. Sibeon (2004) identified four ―cardinal sins‖
in social sciences. These include: essentialism (tendency to ignore the distinctions
among different levels and assume more homogeneity in the phenomena than they
actually possess); reductionism (an attempt to illegitimately ―reduce the
complexities of social life to a single, unifying principle of explanation or analytical
prime mover,‖ p. 3); reification (an ―illicit attribution of agency to entities which
43

are not actors or agents,‖ p. 5), and functional teleology (―attempts to explain the
causes of social phenomena in terms of their effects, where effects refer to outcomes
or consequences viewed as performances of functions,‖ p. 6).
Currently, all four problems abound in institutional studies, partly due to the
prevalence of the ―flat‖ model of social reality and methodological inflexibility. For
example, essentialism is evident in attempts to indiscriminately and directly apply
insights from market situations to political arenas with little regard to differences
among these arenas. Treating all institutions as homogenous phenomena also seems
to have hindered theorizing about institutional change. Reductionist efforts to
establish which single factor (geography or institutions) constitutes the driver of
development left out more interesting questions about the dynamics among those
factors. Methodological individualism is also a common instance of reductionism.
Attempts to explain macro and mezzo level social phenomena, such as voting
outcomes, using rational actor theory have been also prevalent. Reification is
especially common among practitioners who tend to attribute agency to the rules
and expect that prescribing a set of property rights or electoral rules to developing
countries would produce expected outcomes. Lastly, functional teleology
characterizes the key works that constitute the foundation of New Institutional
Economics. Coase and Williamson explain that organizations exist because they
reduce transaction and information costs, neglecting that many other factors shape
organizational goals and forms, including historical and normative pressures. Some
of these examples embody more than one of these cardinal sins.
44

Last, pragmatist ontology informs the focus of the study. Most academic
research on institutions and institutional change has been concerned with identifying
broad patterns and law-like generalizations on institutions and institutional
processes. This study takes one step beyond such practices – it is concerned not
only with better understanding these phenomena, but also with application of that
knowledge in practice for positive change. Pragmatism is also manifested in the
intent of this dissertation. Instead of singling out any specific stakeholder‘s
wrongdoings and/or limits of the aid system as many other works have done, this
study attempts to find answers to a more important and pragmatic question: What
can be done to improve the reform success rates keeping in mind the drawbacks and
limits of the existing aid system and recipients?
The sections that follow elaborate on details of the research design that build
on these ontological and epistemological premises.

The Strategy of Inquiry
The epistemological pluralism means that the approach and methods
employed in inquiry should be selected based on their suitability for answering the
research questions. Qualitative inductive strategy serves the research goals of this
study well for a number of reasons. This strategy is well-suited for illuminating a
poorly explored and complex subject and generating propositions and hypotheses.
This study intends to generate propositions on institutional change and applicable
guidelines for institutional reforms drawing from a combination of the historical
45

overview of public sector reforms and synthesis of interdisciplinary scholarship on
institutional change. Theory generation – in this case theory is defined broadly – is
indeed often the end result of most qualitative studies. In contrast, quantitative and
deductive strategies on inquiry are better suited for testing hypotheses, and, as such,
are seen as the second stage of qualitative inductive studies (Poole et al. 2000;
Trochim, 2009).
Specifically, qualitative design is especially useful for the following research
purposes: (1) to understand the meaning (interpretive approach); (2) to understand
particular context and ―how events, actions, and meanings are shaped by the unique
circumstances in which these occur;‖ (3) to identify influences and generate new
―grounded‖ theories about the phenomenon in question; (4) to understand the
processes by which phenomenon unfolds; and (5) to develop causal explanations
(Fankfort-Nachmias and Nachmias, 2000). The purposes of the study encompass all
of the above except for the first one. The first research questions seeks an in-depth
and detailed historical examination of donor-promoted public sector reforms, their
outcomes over time by placing those policies in their policy context, with specific
focus on the role and impact of knowledge informing the reforms. The second
research question entails drawing insights and propositions (causal explanations) on
institutional change through developing a set of analytical/theoretical tools
synthesizing scholarship in different disciplines. The third research question
attempts to understand how actual public sector reform processes unfold using a
46

case study of a one country, and analyses those reforms using the tools and
propositions.
In addition, a qualitative approach is better suited for this study because it
traces and analyzes the processes of how knowledge and ideas influence
institutional reform outcomes and how institutions change overall. Institutional
change typically involves a large number of reinforcing factors, dynamic processes,
long time periods, and unwritten norms and cultural prescriptions which are hard to
observe. That is why institutional change studies may benefit more from research
designs that ―support attention to examining the interdependence of factors
operating at multiple levels to affect the outcomes of interest‖ with focus on process
and interaction (Scott, 2007, p. 124). The strengths of the process approach include
its ability to generate strong causal inference, access to details of process, ability to
weigh individual causal factors, and the possibility of unexpected discoveries (Poole
et al., 2000, p.15). The qualitative process approach is superior to variance
approach (which traces how variables are related) in studying such complex
processes, because the latter tends to be deterministic and omits influences not
captured by selected variables and the dynamics among those variables which the
former is better able to account for (ibid, p. 4).
Quantitative deductive approaches offer some great methods for testing
theories. But such theories have yet to be established and developed to a usable
level. Because it is impractical – actually impossible – to test what we do not have,
the present research therefore focuses on the logical generation of sound theory in a
47

manner that has not been done to date. This work provides a systematic, rigorous,
and logically cohesive approach to filling the theoretical gaps identified above. The
further addition of quantitative inquiry would expand this work into an enormous
undertaking – well beyond the scope of this project. As discussed in the concluding
chapter, this work is rich with future opportunities for follow-up research.

Methods of Data Collection and Analysis
This three-part study uses different sets of data collection and analysis
methods to answer each of the three research questions. To answer the first research
question in the first part of the dissertation, this study conducts temporal
comparative analysis of donor-promoted public sector reforms over five decades.
Leading scholars of institutional analysis stress the need for comparative studies
because ―analysis of institutions and institutional processes in comparative setting
might bring more insights to institutional change scholarship not captured by the
previous studies of institutional change‖ (Scott, 2007; see also Ostrom, 2005; North
1993). In addition, ―comparison extends our knowledge of how to explore, reflect,
and better understand universal administrative attributes, instead of being confined
to ethnocentric views. Thus, comparative information and analysis have a balancing
effect that reduces internalized biases and prejudices‖ and ―expands their choices‖
(Jreisat, 2005, p. 232) and is essential to good analysis (Collier, 1991, p.7). In fact,
a comparative approach is ―the methodological core of the humanistic and scientific
methods‖ (Almond et al,. 2000, p. 33, as cited in Jreisat, 2005). Comparative
48

method is thus well-suited for the purpose of this study. It helps to identify how
knowledge and ideas on institutional change have evolved over time, to improve
understanding of how institutions change, and to generate practical knowledge for
engaging in effective institutional reforms. This part of the study relies on the data
collected by the author from leading donors‘ official documents, combined with
independent accounts of relevant events and ideas from other scholars, experts, and
practitioners.
The study then employs a combination of coding (the main categorizing
strategy in qualitative research) and contextualizing strategies to analyze this data.
10

Coding in qualitative studies is different from that in quantitative studies. In the
latter coding is used to generate frequency counts or measures of items in each
category by applying pre-established set of categories to the data using clear-cut
rules. In qualitative design the goal of coding is not to produce counts of items, but
―to ‗fracture‘ … the data and rearrange it into categories that facilitate comparison
between items in the same category and between categories‖ (Fankfort-Nachmias
and Nachmias, 2000, p. 89). Such categorization of the data helps to organize,
analyze, and retrieve the data, and identify themes and assist in the understanding of
the subject of study (ibid). In this study the historical overview of public sector
reforms are coded using distinct categories. These categories have been inductively
generated and include the following: key theories informing the reforms; policy

10
Common strategies in qualitative analysis include categorizing (coding or thematic analysis),
contextualizing, and memos and displays (Nachimas and Nachimas, 2000).

49

context of the reforms; the content and approach to reforms; outcomes of the
reforms; and the lessons learned. But coding ―can lead to neglect of contextual
relationships among these data‖ and ―create analytic blinders‖ (ibid, p. 89). Thus, to
remedy this potential drawback the coding procedure has been supplemented by
contextualizing strategy. In other words, in this study the categories listed above
that have been used to code the data have been placed in their respective policy
contexts. The following figure illustrates this analytical framework.

Figure 1: Analytical Framework for Tracing the Role of Knowledge
in Donor-Promoted Public Sector Reforms

50

This analytical framework is consistently applied to each of the three waves
of reforms identified above to map these elements in each wave (Chapters 2, 3, and
4). This information is then systematically analyzed subject to changes in the state
of the knowledge informing reforms and their effects on the reform outcomes
(Chapter 5).
Part two examines the second research question, which asks what can be
researchers and practitioners learn from analysis of how those donor-promoted
public sector reforms played out in a specific country context? The study selected
the case study of Kyrgyzstan‘s administrative reforms over the last twenty years,
from the time that the country gained independence from former Soviet Union.
Post-Soviet republics present a useful case study to understanding the phases of
institutional reform, thus the administrative reforms of the former Soviet republic of
Kyrgyzstan will be examined. Kyrgyzstan‘s experience presents a good window for
exploring and improving understanding of the design and implementation of
institutional reforms. The Kyrgyz government‘s eagerness to ride donors‘ second
and third waves of reforms makes this an interesting case for this inquiry.
Yet this is a difficult case of institutional reform. Kyrgyzstan was one of the
republics of the former Soviet Union with a planned economy and totalitarian
regime for about 70 years. It has only been a sovereign state for the past twenty
years after achieving independence in 1991. Institutional reforms undertaken since
independence attempted to move it to the other extreme, by introducing free market
principles and institutions of democratic government. At the same time, this case
51

presents a good opportunity for illustrating, contextualizing, and clarifying existing
theories and assumptions, and sharpening the conceptual and analytical approaches,
used in institutional analysis. It is not possible or desirable to isolate an
administrative system from its broader political environment given the highly
politicized nature of public administration. For these reasons, administrative
reforms in Kyrgyzstan will be described and analyzed in the context of the broader
governance system and the reforms undertaken there.
The present study makes use of primary and secondary document analysis,
including legislative and other documents and articles from various local and
international information sources (including local newspapers, books, journals, and
websites), information obtained from in-person and/or phone interviews with
stakeholders and knowledgeable subjects conducted by the author from May 2006
through January 2007 (in total 30 individuals have been interviewed; the list of
respondents is attached in the appendix), as well as from relevant local and
international scholarly articles and books.
It should be noted that gaining access to information and interviews in the
Kyrgyz case study was extremely challenging, primarily due to the secretive nature
of the bureaucratic culture as well as the notable dearth of such information. The
author has been unable to obtain essential and up-to-date statistical information on
performance of civil service and even basic descriptive data and internal regulations,
either because such information was not available and/or responsible officials were
unwilling to share such information. The information that the author collected from
52

officials and from publicly available sources was frequently either outdated and/or
too general. Most important interviews/surveys, such as interview of the head of the
State Service Agency, did not take place because the author was given a continuous
stream of excuses to delay such a meeting.
To answer the third research question - what can researchers and
practitioners learn from interdisciplinary scholarship on institutional change – the
study critically analyses and synthesizes the key insights from the existing
scholarship on institutional change. These insights have been used to develop a set
of analytical lenses and draw propositions on institutional change and to draw
practical implications for addressing the key problems of the public sector reforms.

Validity Considerations
Threats to the validity of this study arise mainly from two sources:
researcher‘s personal bias and influence on the subjects (Fankfort-Nachmias and
Nachmias, 2000). In this study the second threat is not a concern, but the first is.
The data collection and analysis can be distorted by the preconceived assumptions
and values of the author. This study uses a number of strategies to reduce the
potential effects of researcher bias. Specifically, this study relies on synthesis of
data from various sources and using different methods, known as triangulation
(Denzin, 1978, as cited in Fankfort-Nachmias and Nachmias, 2000). Detailed
summaries of leading donors‘ official documents on the reforms have been
supplemented and juxtaposed by data from independent sources whenever possible.
53

Although these sources and methods do not necessarily arrive at identical outcomes,
they provide multiple perspectives to the same phenomena. This reduces potential
limitations of any given method, source, as well as the bias of the researcher, and
also deepen the level of understanding. The use of an interdisciplinary approach
also has the added value of reducing potential bias. Other means of reducing bias
include systematic coding described above, as well as feedback from peers and
mentors from different fields and practice areas.

Limitations of the Study
The author faced several challenges in the process of research and writing up
this study. One such challenge is the different uses and translations of various
terms. Without a clear and agreed upon terms it was difficult to carry out the
analysis and even summarize the broad consensus in the field. This study will add
some clarity in the uses of the terms.
Articulating and analyzing the intangible concepts pertaining to values and
norms was also a challenging part of this study. Again, the models and frameworks
developed in this study will help to move the dialog forward.
In addition, collecting data and writing about politically sensitive and
evolving events and processes also poses a considerable challenge, especially on
public sector reforms in Kyrgyzstan, which has received little attention in Western
social sciences. Mapping the outcomes of reforms has been a difficult task: Most of
the reform assessments of the government and donors are embellished n order to
54

justify the spending and receipt of money respectively. Furthermore, most
publications of the government and donors lack specific details on the
implementation of reforms. The author addressed these challenges by drawing from
a variety of sources.

Delimitations of the Study
The following delimitations of the study are in order. First, in terms of the
practical implications, this study is primarily geared towards informing donor
agencies, given their scope of work and potential impact globally, as well as their
relative openness to questioning their own record and improving their work.
Therefore it devotes less attention to what should be changed by recipient
governments and is more concerned with what donors can do in the face of
challenges with promoting public sector reforms in developing countries.
Specifically, the study traces what knowledge informs donor-promoted public sector
reforms – both in terms of the content and approach to reforms – and their effect
generated in interaction with other factors such as the aid system itself and
recipient‘s political and cultural environments. To this end, the first part this study
paints a macro level picture of the leading donors‘ policies and activities over five
decades. In the second part it selected one case study, since it is impossible to study
the reform process in all recipient countries within the framework of this research.
Second, the study does not survey all public sector reform initiatives of all
donors – this task would be far too ambitious for the scope of this project. Instead,
55

this macro level study focuses on broad policies of the leading donors which set
overarching trends in the development field and exerted an impact on developing
countries worldwide. While mapping and examining initiatives of all donors
working on institutional public sector reforms is an impossible task, it is feasible to
study the initiatives of the donors that have had the widest reach in developing
countries and on other donors, to grasp the prevailing influences and macro-level
trends. The study does not focus on the other international and/or nonprofit donor
organizations whose policies and activities target specific countries and/or regions.
The study also does not focus in great detail on specific country or organizational
levels.
Third, the survey and analysis capture only the most influential schools of
thought and ideas on the reforms. It does not claim to include all relevant
knowledge and ideas in any given timeframe. Such attempt would be unrealistic for
the scope of this research.
Fourth, this study examines the five decades of donor-promoted public
sector reforms in developing countries as one instance of institutional change.
Other types of institutional reforms intended to transform other types of institutions
(e.g., political institutions or markets, etc.) is not the focus of this study, unless they
have been treated as an unalienable part of public sector reforms.
Fifth, the study does not delve into development theory per se by taking
sides about its benefits or harms. Treating the whole development industry and
diverse types of donors and interventions under one umbrella would be
56

reductionistic and would go against the pragmatist and stratified ontology this study
is based on. The study focuses on one specific form of donor aid
11
– public sector
reforms promoted by donors mainly through technical assistance. The study does
not focus on other forms of donor assistance unless they are tightly connected to
those reforms.
Sixth, and related to the previous point, this study does not intend to
deliberately focus on and/or paint a gloomy picture of systematic failures of
reforms, and attribute those failures to donors or the recipients as the sole source of
the problem. Blaming any one factor or stakeholder would violate the key premise
of this study which is grounded on critical realist and pragmatist ontology – that
multiple factors and their dynamics result in any given outcome in matters of
institutional change. While successes have been uneven, and some countries
benefitted from the donor-promoted public sector reforms more than others, the
consensus is that most of these reforms do not deliver expected outcomes (whether
due to unrealistic expectations and/or due to confluence of large number of other
factors both at the supply and demand sides of the reforms). With this in mind, this
study takes a pragmatic approach assuming that one can learn as much from
examining the failures and reasons underlying them as from successes.

11
Donor assistance comes in different forms. Common forms include loans, grants, and technical
assistance (TA), sometimes referred to as technical cooperation (TC). The latter includes donor
assistance provided in the form of information, skills, and expert/policy advice through trainings and
supplying consultants to help recipients strengthen capacity of their institutions/organizations and
improve policies in wide range of areas.
57

This dissertation does not intend to single out any specific stakeholder‘s
wrongdoings, as many other works have done, but rather attempt to find answers to
a more important and pragmatic question: What can be done to improve the reform
success rates keeping in mind the drawbacks and limits of the existing aid system
and recipients? This study is more interested in exploring donor-promoted public
sector institutional reforms with the focus on the role and quality of knowledge: It
therefore focuses on the body of knowledge and ideas informing the reforms by
placing them in respective contexts and examining its dynamic interactions with
other key factors shaping the reform outcomes.
Last, this study itself does not assess effectiveness of reforms. Assessing the
outcomes of institutional reforms, let alone a comparison of the reform experiences,
is a daunting and insurmountable task for the scope of this project. In part, this
challenge comes from a combination of various factors, including a lack of a clear
and agreed definition of what constitutes ―institutions‖ at any given time period; the
differing uses of the key terms; the difficulty of isolating the effects of reforms from
other factors (―attributional problem‖); and the long timeframes needed to observe
institutional change (―temporal problem‖) (Goldsmith, 1992).
The ultimate purpose of the study is not to make a definite judgment on
whether the reforms have been effective. Rather, it aims to identify ways in which
donor-promoted public sector reforms – both in content and process – can be
improved to promote recipient countries‘ development in broad meaning of this
term.
58

Still, one needs to determine what effective or successful institutional/public
sector reform is to be able to identify the potential for improvement. Effectiveness
or success of reforms in public sector institutions, according to the generic
definition of effectiveness, would be measured by the extent to which such reforms
result in expected outcomes. In Cortell and Peterson‘s (2001) words,
Successful or effective institutional reform, then, refers to those changes that
achieve the procedural and/or policy goal(s) the reformer sought, do not
create unintended policy or procedural consequences
12
that detract from the
reformer‘s goal(s), and endure over time. The least successful, in contrast,
are those that do not achieve the reformer‘s objectives, quickly produce
significant unintended consequences, and are reversed in the short run (p.
772).

Expected output of these reforms is a replacement of ineffective old and/or
creation of new rules and organizations in public sector. The ultimate outcome of
these reforms, according to donors (inter alia WB 1997a, 2000a), would be
improved functioning of the public sector institutions, which came to be seen as the
driver of development broadly defined. UNDP‘s Human Development Index
13

(HDI) could be seen as one of the tools to trace countries‘ progress on broadly
defined development indicators because it goes beyond the usual income per capita

12
―Unintended outcomes‖ of institutional reforms are ―those policy, procedural, and/or institutional
consequences that diverge from the goals sought by the agents who originally established or altered
the institution‖ (Cortell and Peterson, 2001, 771). The same authors propose the following four ways
of measuring the extent to which an institutional change produces unintended consequences: ―(a)
whether the agent of change achieves his or her procedural and/or policy objectives, (b) the incidence
of unintended procedural and/or policy consequences that detract from the reformer‘s original goals,
(c) whether the unintended consequences emerge in the short or long run, and (d) how long the new
institution endures‖ (ibid).

13
More information on UNDP‘s Human Development Index can be found at http://hdr.undp.org/en/

59

statistics and includes measurements for three basic aspects of human development,
which are health, knowledge, and a decent standard of living. Transparency
International‘s Corruption Perception Index
14
also could be used as alternative tool
to trace the outcomes of the reforms. Worldwide Governance Index
15
- a more
recent effort to measure quality of governance across countries and over time
developed by World Bank‘s - would be another, more targeted tool, for this purpose.
But, drawing a direct link between reform interventions and development
outcomes measured by any or all of the instruments above can be misleading due to
a number of important peculiarities of this type of reforms listed above. In
addition, because institutional reform is an extremely complex task, some warn that
artificially changing institutions to produce desired outcomes at the societal level is
an unrealistic task (March and Olsen, 1989). If it is hard to plan and execute such
processes according to a script, then, perhaps effectiveness of deliberate institutional
change efforts could be measured less ambitiously by the extent it produces better
outcomes than original institutions do. But, even then it would be hard to know
with certainty what kind of development outcomes would have resulted without
donors‘ reform interventions.
Thus, instead of assessing the reforms‘ effectiveness using one specific
instrument, the study identifies the points of consensus among practitioners,

14
More information on Transparency International‘s Corruption Perceptions Index can be found at
http://www.transparency.org/policy_research/surveys_indices/cpi/2009

15
More information on World Bank‘s Worldwide Governance Index can be found at
http://info.worldbank.org/governance/wgi/index.asp

60

beneficiaries, and academics to and thereby triangulates the disparate qualitative
data to identify how those reforms played out in practice and affected the
development outcomes. The data will be drawn from original policy documents and
evaluations of the leading and influential development agencies. The donors
involved in institutional reforms have been increasingly investing in research and
evaluation of their reforms; thus their research and official documents serve as the
primary empirical data for this dissertation. These evaluations are juxtaposed with
the findings of independent scholars.

The Outline of the Study
The purpose of the present study, as mentioned in the beginning of this
chapter, is to improve understanding of institutional change and advance the theory,
scholarship, and practice of deliberate institutional change. While a comprehensive
review of all reforms and institutional change theories and scholarship is impractical
within the framework of this study, the intent is to relate the key aspects of
institutional change scholarship from different disciplines to each other and to the
practice of donor-prompted public sector reforms for the last five decades. This
purpose is pursued in a sequence of three steps.
Part I – chapters two, three, four, and five – is dedicated to the first question:
―What can researchers and practitioners learn about institutional reform through
systematic analysis of the five decades of donor-promoted public sector reforms in
developing countries?‖ It provides a historical overview of the five decades of
61

donor-promoted public sector reforms tracing how theoretical and practical
knowledge (i.e. lessons from experience) informed the practice and outcomes of
reforms, and synthesizes the lessons from them. This part of the dissertation
consists of four chapters that survey these three waves of the most influential and
widespread donor-promoted institutional-administrative reforms (chapters two,
three, and four) and then analyze all three waves (chapter five). Specifically, the
second chapter surveys the reforms in 1950s-1960s; the third chapter surveys the
reforms in 1980s-early 1990s; and the fourth chapter surveys the reforms since the
late 1990s through the present time. While the donors‘ priorities vary, it is possible
to identify the major themes, trends, and points of consensus with regards to the
process and outcomes of reforms by looking at the most influential donors‘ policies
during each wave, which this section will do. The observations apply only to those
donors that are explicitly mentioned, unless stated otherwise. Each of these three
chapters follows the same structure. Each identifies the main body of knowledge
and ideas informing each wave of reforms, provides an overview of the content
(what the reforms intend to do) and the approach to the reforms (how the reforms
were pursued), as well as outcomes and lessons learned from each wave of reforms
by placing these themes in their respective policy contexts (as captured in analytical
framework provided in figure 1 above). Because the first and the second waves
have been extensively discussed in the literature, the overview of the first and
second waves will be less detailed. The third wave of reforms has received less
62

attention in the literature. Therefore, chapter four is lengthier than the preceding
two chapters.
The second part of the dissertation, chapters six, seven, and eight, answers
the second research question to illustrate how the donor-promoted reforms have
played out in a specific country context, and what outcomes they generated. The
post-Soviets republic present a useful case study to understand the phases of
institutional reform, thus the administrative reforms of the former Soviet republic of
Kyrgyzstan will be examined. The chapter six reviews Kyrgyzstan‘s governance
system, specifically focusing on its history, major changes, and the current state of
affairs. Then, chapter eight provides an overview of the administrative reforms.
Chapter eight analyses what role those donor-promoted reforms played in the
country‘s public sector reforms and how they influenced the outcomes of reforms.
It traces the drawbacks in donors‘ approach to public sector reforms to various
factors. One of such factors is the knowledge deficiency, such as the limitations in
analytical frameworks informing donors‘ understanding of what institutions are how
they change, as well as limited learning from past experiences.
The third part of the dissertation, chapters nine and ten, presents a critical
overview of commonly used conceptual frameworks and institutional change
theories in economics, political science, and sociology, and proposes a set of
theoretical tools and propositions to facilitate understanding of institutional change.
Rather than provide another all-encompassing review of the existing studies – this
task has been carried out by others (inter alia, Scott, 2007) – the present study shall
63

instead identify limitations and address them, to build bridges and synthesize
insights from different disciplines, as well as from practitioners and academics into
a more coherent whole that would be greater than the sum of the parts. The study is
interested in drawing connections and generating propositions and practical
guidelines. It thus in chapter eight critically reviews the existing analytical and
theoretical tools used in analysis of institutional change processes in a number of
disciplines. The chapter reveals the inadequacies of the existing analytical tools for
inquiry into institutional reforms. In chapter nine the dissertation proposes a set of
new analytical tools including a theoretical framework for institutions and two
models that elaborate on key dimensions of institutions. The tools draw from the
synthesis of the institutional analysis scholarship from multiple disciplines,
including comparative public administration, political science, economics,
sociology, organizational studies, law, and psychology, as well as insights from the
analysis of the public sector reforms from Part I. The framework is then used for
drawing several preliminary propositions on deliberate institutional change. These
analytical tools and propositions address some of the theoretical flaws underlying
the past and current institutional reforms and facilitate interdisciplinary cross-
pollination to advance institutional analysis scholarship. These propositions should
be viewed as early attempts at improving the understanding of the nature of
institutions and institutional change process. To be a meaningful contribution to the
scholarship, these propositions need to be further subjected to criticism and
64

modification and treated as raw material for drawing more precise hypotheses to be
tested using empirical data.
The final (tenth) chapter pulls the main findings from this dissertation
together and concludes by highlighting the key contributions of this study to
research and practice.
65

PART I

Historical Overview and Analysis
Of The Five Decades of Donor-Promoted Public Sector Reforms

Chapter 2

Overview of the First Wave of Institutional Reforms in the 1950s-

1960s: Development through the Modernization of

Administrative Institutions

The first wave of institutional reforms in official international development practice
was launched with Truman‘s 1949 inaugural speech. In it, he presented his Point 4 Program
modeled after the Marshall Plan:
We must embark on a bold new program for making the benefits of our
scientific advances and industrial progress available for the improvement
and growth of underdeveloped areas… For the first time in history, humanity
possesses the knowledge and the skill to relieve the suffering of these
people. The United States is pre-eminent among nations in the development
of industrial and scientific techniques. The material resources, which we can
afford to use for the assistance of other peoples are limited. But our
imponderable resources in technical knowledge are constantly growing and
are inexhaustible.

66

This chapter reviews the theoretical knowledge and ideas that informed these reforms, how the
reforms evolved and were carried out, and what lessons were learned by placing all this in the
policy context of this time.
Policy Context
During this wave of reforms, the United States emerged as the leading nation
shaping development reforms in the developing world for a number of reasons.
First, all other economically advanced nations were preoccupied with their post-war
reconstruction, while the United States was bound with its promises to free the
colonies of both its enemies at that time (Germany, Japan, and Italy) and its allies
(Great Britain, France, Holland, Belgium). The United States sent technical and
professional advisers to the countries that requested its help to replace their colonial
type administrations with locally designed arrangements. The United States was
also particularly well placed to advise other countries considering the successful
institutional reforms and recovery led by the United States in post-war Germany and
Japan – these successes in institution building led the US to believe that such
effective transformation is possible in other countries as well, even though, as
discussed below, the conditions in these two countries were very different from
those in most developing countries. Last, the advent of the Cold War that launched
a global competition for spheres of influence also contributed to the fact that the
United States became the leading promoter of development reforms in developing
countries. The United States Agency for International Development (USAID) and
67

the Ford Foundation were the key donors funding and designing development
assistance programs abroad in this period.
The design and approach to the reforms promoted in developing countries
through development assistance projects in this decade closely followed the popular
ideas about development and governance in the United States, thus shaping
international development policy at that time. In this era, development was
associated with improved social and economic conditions in the ―underdeveloped
areas‖ through modernization of governmental institutions. The influence of an
increased government role in mitigating the effects of the Great Depression in the
United States in the 1930s, in managing the war economy of the 1940s, and helping
to produce a recovering economy in the European states through the Marshall Plan
in the 1950s shaped the idea of how development should be achieved in the
developing world. The idea that desirable results could be obtained through the
creation and building of large, modern and strong government institutions was
highly persuasive (Esman, 1988). The economic thought of that time also favored
consolidated government effort: ―big push‖ theory (Rosenstein-Rodan, 1943),
―balanced growth,‖ (Nurkse, 1953), ―take-off into sustained growth‖ (Rostow,
1956), and ‖critical minimum effort thesis‖ (Leibenstein 1957) all saw economies of
scale in basic industries and industrialization as a the engine of economic growth
(Thorbeke, 2007). Last, but not the least, the post-WWII period was also marked
with heightened enthusiasm for helping other countries, especially those that were
gaining independence from colonial powers.
68

Influential Schools of Thought
Ironically, while the content of reforms was shaped under the combined
influence of rationality, modernization, and scientific management paradigms, the
approach to reforms was based more on a belief and optimism that reforms will
succeed. The international development agencies started designing and
implementing reforms in the wake of this optimism, although they had no adequate
knowledge concerning how institutions change or information on how their reforms
might work in recipient countries (Riggs, 1964, 1971). In Siffin‘s words, the 1950s
was ―a time of faith – faith in the developmental power of administrative tools
devised in the West. It was a sanguine year in a time of hope – hope that public
administration could lead countries toward modernization‖ (1976, p. 61). As Jones
observed, in this wave of reforms, characterized with a great deal of optimism in the
power of public administration to transform so-called backward societies, scarcely
anyone raised doubts about its positive effects:
The 1950s was a wonderful period. The ―American Dream‖ was the ―World
Dream‖ – and the best and quickest way to bring that dream into reality was
through the mechanism of public administration… The net result of all this
enthusiastic action was that in the 1950s public administration was a magic
term and public administration experts were magicians, of a sort. They were
eagerly recruited by the United States‘ aid giving agencies and readily
accepted by most new nations, along with a lot of experts as well (Jones,
1976, pp. 99-100).

The view that humans can determine and build their future using reason and
rationally designed mechanisms, technologies and institutions, instead of relying on
fate was the underlying assumption of the reforms in the developing countries
69

informed by modernization perspective (Eaton, 1972, p. 11). Modernization theory
in turn drew heavily from scientific management theories that saw organizations as
closed systems and emphasized efficiency and control in bureaucratic organizations
(Turner and Hulme, 1997).
The scholarship modernization perspective also tended to juxtapose
rationally designed modern institutions against traditional social institutions, favor
the former over the latter (inter alia, Huntington, 1969; Migdal, 1988).
Furthermore, recipients‘ culture was seen as a ―sources of bureaucratic
dysfunctions‖ and an impediment to ―smooth functioning of Western tools and
dominant Weberian models of bureaucracy‖ which development administration was
to overcome (Hulme and Turner, 1997, p.13). Imported Western institutions, they
predicted, would replace traditional institutions in developing countries despite any
opposition from pre-existing institutions that soon would be sidelined.
Modernization‘s two key features are particularly evident in development
reforms at this stage. According to Esman (1988, p. 25), one of them is the belief in
the ―universality and inevitability of the spread of Western values and practices such
as instrumental rationality, secularism, individualism, and science-based
enlightenment in all the areas and people of the earth.‖ Another is its ―elitist bias‖ –
an assumption that ―the agents of modernization would be an enlightened minority
endowed with Western education and committed to transforming their societies
along Western lines for benefit of all… through the state bureaucracy‖ (ibid).
70

Scientific management embodied the ideas of both modernization and
elitism. Its main tenet – that one best way could be identified for any job – was
highly influential in American public administration at that time and directly shaped
the approach to institutional development. As Turner and Hulme (1997) put it, ―the
implicit assumption [underlying development administration] was that there was
one form of development as expressed in developed countries that underdeveloped
societies needed to replicate‖ (p. 6). It was assumed that designing administrative
institutions in developing countries was possible and desirable through the power of
knowledge and technical assistance. Poor and disadvantaged nations would develop
by adopting rational practices and importing modern institutions, organizations,
technologies and values of advanced societies that were deemed desirable and
superior to their local equivalents (see also Heady, 2001; Eaton, 1972). That such
superior practices and institutions in the West incrementally evolved through trials
and adjustments was overlooked. It was only a decade later, once it became evident
that reforms had been launched without a clear understanding of how to change and
design institutions in new contexts, did researchers start asking more specific
questions about how institutional change comes about.

Inter-University Research Program in Institution Building
To address these questions, the Inter-University Research Program in
Institution Building was set up by public administration scholars from the American
universities of Pittsburgh, Michigan State, Indiana, and Syracuse. Although they
71

did not challenge the key assumptions underlying the reforms, they hoped to
provide solid research knowledge about the process of institutional change.
Members of this group had served as consultants or researchers on overseas
development projects and shared the concern about development specialists‘ lack of
knowledge on the process of institutional development assistance and a desire to
remedy this problem (Eaton, 1972, p. 12). In 1964, the Ford Foundation funded this
initiative to pursue this research. The U.S. Agency for International Development
(USAID) later contracted out to this group the conduct of four different case studies
on institutional change projects.
This group borrowed the sociologist Parsons‘ definition of institutions as
―generalized patterns of norms which define categories of prescribed, permitted, and
prohibited behavior in social relationships‖ (1954, p. 177). This group then
modified this abstracted norm-based definition into an organization-based one by
redefining institution as ―change-inducing and change-protecting formal
organization‖ (Landau, 1972, 93, as cited in Eaton, 1972). This shift can be
explained by the group‘s desire to make the definition of institutions applicable for
practitioners by focusing on the more tangible framework (organization) within
which those norms were to grow and take root.
Institution building was seen by this group as an induced social innovation
by change-oriented elites through formal organizations so that these organizations
could take root, gain acceptance, and become normative in new environments; i.e.,
become institutionalized. The goals and the end state of institution building were to
72

create a ripple effect in changing that environment. As such, it had elitist, top-
down, and social-engineering tendencies. As Esman observed, institution building
consisted of
planning, structuring, and guidance of new or reconstituted organizations
which (a) embody changes in values, functions, physical, and/or social
technologies, (b) establish, foster, and protect new normative relationships
and action patterns, and (c) obtain support and complementarity in the
environment (as cited in Eaton, 1972, p. 22; see also Blasé, 1986, p. 332).

The key elements of this institution building model were categorized under
―institutional variables‖ and ―linkages.‖ Institutional variables included: leadership;
doctrine (―specification of values, objectives, operational methods underlying social
action‖); program (―actions… related to the performance of functions and services
constituting the output of the institution‖); resources; internal structure, and
―processes established for the operation of the institution and for its maintenance‖
(Esman, as cited in Eaton, 1972, pp. 22-23). In addition, the following four types of
linkages have been distinguished:
 enabling (―with organizations and social groups which control the
allocation of authority and resources‖),
 functional (―with those organizations performing functions and
services which are complementary‖),
 normative (―with organizations that incorporate norms and values…
relevant to the doctrine and program of the institutions‖), and
 diffused (―with elements in the society which cannot clearly be
identified by membership in formal organization‖) (ibid, pp. 23-24).

The group engaged in studying the linkages between these elements and in drawing
generalizations about the institution building process.
73

Some practitioners and researchers found this model of institution building
useful and relevant as it brought together important, although not new, elements.
But this model was not extensively used. In part, the model was abandoned as the
interest in and funding for institution building dwindled after less than a decade.
The model was also criticized as being a-priori (vs. drawn from observations), un-
testable (i.e., did not qualify as a theory), static (did not tell how the various
elements were interrelated), and prescriptive, based on wishful thinking rather than
testable assumptions and observations (Siffin, 1972, as cited in Eaton, 1972).
Practitioners also noted that it was too abstract and failed to stress important factors
in order to be useful (Barnett and Engel, 1982).

Comparative Administration Group (CAG)
The group of scholars that challenged the Inter-University Research
Program in Institution Building‟s approach emerged under Fred Riggs‘ leadership.
Riggs summarized his view as follows:
There were two basic patterns for public administration, the first had evolved
in traditional empires and kingdoms where pre-industrial social and
economic conditions prevailed, and the second was a product of modernity
following the industrial revolution and the emergence of the post-
Westphalian state system. ... I rejected the escalator model of the new
modernization literature. ... in which ―traditional‖ societies were expected to
respond to the fresh breezes of ―modernity‖ by embracing changes that
would, sooner or later, bring them into the new world of opportunity. ... It
struck me that most societies would adhere tenaciously to many of their most
valued ancient traditions and cultural norms while simultaneously importing
and accepting a façade of practices and patterns that would, hopefully,
enable them to maintain their distinctive cultures while benefitting from the
autonomy and material goods offered by the outside world. Instead, curious
74

amalgams would be formed in which agraria and industria would combine in
unstable mixtures. In the prism of my imagination, the white light of
undifferentiated social systems would mingle with the rainbow hues of
highly differentiated social structures as found today in every industrialized
society (Riggs, n.d., as cited in Frederickson, 2008, p. 977-978).
The CAG scholars‘ intent, in contrast to the orthodox American public
administration, was to study ―bureaucracy and public administrative systems across
countries… based on their unique underlying sociopolitical and cultural trends and
conditions‖ (ibid). This process was intended to address the research questions
posed by the development administration. Riggs‘ call for ―a clear understanding of
the forces which lead to administrative transformations‖ was in line with this agenda
(1964, p. 3). The CAG scholars, many of whom had been engaged in development
assistance and institution building also intended to correct what Riggs called the
―fundamental intellectual flaws of traditional development administration –
ethnocentrism and ignorance‖ (Riggs, 1988, as cited in Jones and Klinger, 2007). In
other words, they wanted to overcome the ―erroneous assumption of superiority of
Western techniques and structures to their indigenous counterparts‖ and a ―lack of
awareness or ignorance of the unique contextual - cultural and historical – factors
that shaped the success of Western management techniques‖ (ibid).
Unfortunately, the CAG did not get to fulfill its ambitions. The interest in
their subject matter significantly faded over time due to a number of constraints.
Insiders mention among the main obstacles the competing agendas of the
―development administration‖ and ―comparative administration‖ and the different
expectations of the funders. The Ford Foundation that provided funding for this
75

group was interested in a prescriptive development administrative (how to)
approach, whereas the CAG was more interested in scientific inquiry and synthesis
of their observations based on in-depth empirical evidence (Riggs, n.d.). Still, the
CAG approach left an important trace by paving the way for the emergence of a
new discipline – comparative public administration.

Content of and Approach to the Reforms
The reforms in developing countries promoted by donors – primarily by
USAID and the Ford Foundation in the United States – focused on building and
strengthening the administrative capacities of governments, especially public
administration systems in a number of newly independent post-colonial states in
Africa, the Middle East, and South East Asia. Scholars traced the dawn of this
movement, known as ―development administration,‖ to 1955 (Jones and Klinger,
2007). Institutional development, especially in public administration, was viewed as
the primary means of promoting this vision of development. ―To a large extent, and
as an outcome of developmental pressures, administrative reform was forced to the
top of the agenda for action in many countries‖ (Jreisat, 2005).
The donors‘ technical assistance programs attempted to build and/or change
organizations and laws in the receiving countries by replicating Western institutions
in these developing countries:
It was generally presumed that the laws, policies, structures, and procedures
in developed Western countries were superior to those indigenous and
developing countries because of their greater rationality, efficiency, and
76

relationship to democratic ideals…Their diffusion and adoption was
considered both necessary (given the ―evolutionary superiority‖ of reforms
introduced by Western consultants) and purposive, in that Western lenders
often mandated administrative reforms as a condition for continued loans
(Jones and Klinger, 2007).

This transfer of organizational structural arrangements, human resources
management, budgeting, and other Western models and technologies to developing
countries was done without concurrent changes in political, economic and social
institutions. In part, the donors and their consultants assumed that bureaucracies in
developing countries were as autonomous as was perceived in the United States
(Heady, 2001, p. 40). They believed that the spillover from the changes in specific
bureaucratic organizations would gradually trigger the transformation of the whole
system. Reformers justified their technical focus and neglect of the political
environment of administrative institutions by the fact that the donors wished to
abide by self-imposed concerns of political neutrality.
Furthermore, they tried to apply the generic scientific management approach
to administrative reform – such as POSDCORB. These models were what the
consultants themselves knew well and they lacked knowledge of the institutions and
of the environments they were sent to transform (Caiden, 1991, p. 60; see also
Riggs, n.d.; Jreisat, 1975; Blasé, 1986; Eaton, 1972). The limitations of the
scientific management approach to public administration, such as the assumption of
an organization as a closed rational system and the neglect of its environment as
77

well as the informal and emotional behaviors which influenced organizations, were
exposed with greater intensity abroad (Jreisat, 1975).
The approach to the reforms was characterized by the following:
First, the reforms were fragmented. It was believed that by transforming
individual organizations/agencies at the central level, reformers would be able to
affect the broader institutional environment. This proved not to be the case.
Furthermore, the design and implementation of the reforms overlooked not only
local government institutions, but also the broader context of these organizations (or
their ecology, in Riggs‘ language).
Second, the reforms were determined externally, with little input from the
beneficiaries. In other words, the reforms were supply-driven and used the same
models borrowed from the West with the assumption that those models were
universal and would fit all.
Third, the reforms were carried out without a clear understanding of what
institutions are (overall and in specific contexts) and how to change them (Riggs,
1964; Riggs, 1996). Many oversees experts did not study in depth the history and
institutional context of the local societies, did not fully understand the local people,
and were not adequately prepared to provide the expected assistance. Rather, they
were perceived as ignorant and resented by locals, yet tolerated and accepted since
they brought resources with them.
Fourth, reforms were crafted with the assumption that formal Western
organizational models would fit and work in any environment. But the design of the
78

interventions did not account for the actual realities and needs of the recipients.
Fifth, the reformers were conceived as technocratic interventions, in an attempt to
present donor interventions as neutral. But reformers neglected to understand that
administrative institutions are not neutral instruments, but are embedded within a
political environment and are subject to political dynamics. Sixth, donors tended to
focus more on inputs, neglecting the actual outcomes of the reforms and assuming,
without evidence, that the reforms would generate the expected outcomes. Little
thought was given as to what kind of unintended consequences the reforms would
generate.
Along with development administration that intended to transform
administrative institutions, a ―law and development‖ initiative emerged, focused on
transforming legal and judicial institutions. The ―law and development‖ movement
was also funded by USAID as well as by the Ford Foundation. It engaged
professors from leading law schools in the United States. The dominant assumption
underlying this initiative was that the reform of the legal and judicial systems, just
as the reform of the administrative systems for the development administration
movement, would lead to social change and modernization in developing countries
(Messnick, 1999).
Both movements shared a similar approach to institutional reforms based on
the following assumptions. First, institutions in developing countries could be
changed by external agencies via adopting or modifying formal laws and
organizational structures. Second, modeling them after Western institutions would
79

work without regard to the local context, because the knowledge about the existing
institutions is lacking and/or the imported institutions are superior.
The donors‘ vision of public sector reforms promoted during this wave of
reforms can be illustrated through the figure that follows.

Figure 2: The Vision for Public Administration Reforms in the First Wave

Assessment of the Outcomes of the Reforms
Practitioners and researchers involved in institutional administrative reforms
in various countries observed that the institution building which focused on building
and developing public administration institutions rarely achieved expected
outcomes. Numerous studies undertaken by comparative public administration
80

scholars showed that such reforms produced more failures than successes (Riggs,
1964; Caiden, 1991; Heady, 1998; Farazmand, 2001; Jreisat, 2002; Tummala,
2003).
Moreover, some institutional reforms generated unforeseen negative side
effects, as they facilitated the use of government resources and foreign aid by
unpopular regimes and post-colonial political leaders to promote and serve their
personal and political interests. What reformers overlooked was that:
Administrative techniques when transplanted or installed can be bent to the
interests of established elites or survive as formalisms without producing
new capabilities or substantive reforms. Even when new, rationalized
capabilities are produced with the help of foreign technical assistance, they
can be used to enhance regime objectives, which few observers would define
as developmental (Esman, as cited in Otenyo and Lind 2006, p. 348; see also
Steiner, as cited in Otenyo and Lind, 2006).

Those state institutions that had been getting technical assistance, instead of
demonstrating the expected improved performance, exhibited dysfunctional features
such as political repression, economic stagnation, flourishing corruption and
enduring poverty (Heady, 2001; Riggs, 1964; Caiden, 1991; Jones and Klinger,
2007; WB 1997a, pp. 1-2; Farazmand, 2001; Jreisat, 2001; Tummala, 2003). As a
result, as Loveman (1976) observed, by the 1970s,
Administrative development and development administration has become
euphemisms for autocratic, frequently military, rule that, admittedly,
sometimes induced industrialization, modernization and even economic
growth. But this occurred at a great cost in the welfare of the rural and
urban poor and substantial erosion if not deletion of political freedoms
associated with liberal democracy (p. 619).

81

These changes rendered the centralized and elitist social engineering approach to
development of the 1950s increasingly irrelevant; and along with that, development
administration and comparative public administration lost their appeal (Jones and
Klingner, 2007).
By the mid 1970s, the focus of the reforms promoted by the United States
started to shift away from government institutions. Policy makers, disillusioned
with the outcomes of the reforms, lost interest in administrative reforms. Increasing
criticism of big, inefficient, and corrupt governments and the ascendance of the
neoclassical economic paradigm also significantly influenced Western social
sciences and development policies (inter alia, Esman, 1988). The resemblance of
statism to the increasingly totalitarian Socialist regimes, and the emergence of new
priorities in the United States, such as addressing the unpopular Vietnam War,
contributed to the shift away from public administration to localized projects and the
private sector.
The donors reacted by pulling back from modernizing government
institutions and focusing on more visible and tangible economic projects (Heady,
2001; Israel, 1987). The development community turned its attention to economic
growth theories focused on technological changes and physical and human capital
accumulation. Highly paid experts sent oversees were replaced by volunteers, such
as from the Peace Corps. The ―New Direction‖ focused on the basic needs of the
poorest of the poor and was concerned with economic development and agricultural
82

policies focused on localized projects and programs. The United States started
turning inwards, reducing its engagement in international development.

Lessons from the Reforms
The reforms generated invaluable lessons for practitioners and researchers of
administrative institutions reforms. The first wave of reforms made it clear that
reformers could not transform the governments and societies of developing
countries by transforming select government organizations. Overall, this wave of
reforms challenged all the assumptions that informed the approach to reforms.
Lessons for Practitioners
The period from the 1960s to the 1970s was a time of reflection and of a
search for better ways of promoting development. For example, Caiden (1991, p.
11) observed that administrative reform – ―artificial inducement of change against
resistance in human systems‖ – is an extremely difficult process; it often challenges
the status quo and faces resistance from bureaucrats who are expected to implement
those reforms. Administrative reform requires long timeframes and a significant
commitment of resources that many developing countries cannot always afford, and
it is hard to evaluate the results or even to grasp their significance (ibid). Caiden
counted twelve common and major obstacles to successful administrative reforms.
This list includes the following: starting off badly, failing to adjust to situational
imperatives, diagnosing incorrectly, following hidden agendas, being indecisive
83

about key issues, planning poorly, thinking too conservatively, commanding
insufficient resources, omitting feedback, neglecting monitoring and ignoring
evaluation and displacing goals (ibid, pp. 6-7).
Esman (1972) also distilled the following common themes and lessons from
the works of practitioners and theorists of development administration:
 Governments were limited in their capacity, and these limitations should
be incorporated into the design of public programs.
 Because governments cannot do all, alternative and complementary
channels need to be identified and fostered.
 Program designers recognize and capitalize on the pluralistic properties of
public administration.
 Participation is an important dimension in the administration of public
services.
 Societal contexts provide both specific opportunities and special
constraints for development administration.
 The need for enhanced appreciation of the uncertainties and contingencies
inherent in deliberate efforts at developmental change.
 The renewed pressures on governments: (a) to extract greater productivity
from continuing expenditures, and (b) to reorient government
bureaucracies to serve large disadvantaged publics more responsively.
84

A series of conferences in the United States and elsewhere that brought together
practitioners and academics to discuss what could be learned and improved in
administrative reforms arrived at similar conclusions. Three major points could be
highlighted from those deliberations. First, administrative reform has to be country
specific: the universal formula for administrative reform, based on foreign (i.e.,
Western) models, concepts, and ideas, is unlikely to work in developing countries,
unless it is adjusted for the local ecology.
Second, administrative reform is more than changes in management: it is
―concerned not only with organizational performance per se but with improving the
performance of the whole public sector‖ (Caiden, 1991, p. 30). Thus, administrative
reform is a broader process that has to account for its ecology (in Riggs‘ words) –
i.e., its political and social context and the dynamics among these forces, in order to
accomplish its purpose. As emphasized in the 1967 joint conference of the
Comparative Administration Group and Social Science Research Council‘s
Committee on Comparative Politics in Italy,
Transnational efforts should aim to strengthen as many institutions, sectors,
and structures, as possible, balance the power of bureaucracy with other
institutional restraints, and transform instrumental bureaucratic
management into institutional political leadership (Caiden, 1991, p. 58).

These two lessons were summarized in the 1971 first global meeting of experts on
major administrative reforms organized in the United Kingdom by the United
Nations Public Administration Department (UNPAD):
85

Though the UNPAD seminar had not given up on the transnational
inducement of administrative improvement, it had abandoned
administrative reform as organizational reform or organizational
development in favor of comprehensive institutional reform, institution
building, and systems engineering at the country basis, adapted to the
peculiar circumstances obtaining in each country (Caiden, 1991, p. 61).

The third point that emerged from the experiments – that administrative
reform requires changing not only formal laws, organizations, and procedures, but
also attitudes, mindsets, and the cultures of those involved – has been mentioned
more in research rather than in the practitioners‘ community.
The problems in the first wave of institutional reforms also have resulted
from a number of other oversights. The elitist, managerial, top-down and
technocratic approaches failed to involve local stakeholders in the process and
account for the political aspects of the reform (Siffin, 1972, as cited in Eaton, 1972).
In addition, little attention was paid to promoting internal capacity to keep the
central governments accountable. Development assistance was directed towards
central governments, but neglected constitutionally democratic processes and other
stakeholders, including local governments and grassroots organizations.

Lessons for the Scholarly Community
The experiences with the first wave of institutional reforms identified at least
two major knowledge gaps - one on the nature of institutional change and another
on the nature of the very institutions that reformers were trying to transform.
86

Both practitioners and researchers learned that they did not understand how
bureaucratic institutions change and/or how they can be transformed. Development
administration experts and scholars admitted that they had tried to help developing
countries to modernize their administrative institutions without knowing what their
existing institutions were and how to change them (Riggs, 1964; Jreisat, 2005; Blasé
1986). Fred Riggs, a leading scholar of comparative public administration and
development practitioner, based on his experience in South Korea and Thailand,
concluded that ―without a sound understanding of the dynamics of what exists one
might easily fall into the error of prescribing harmful remedies based on irrelevant
experiences‖ (n.d.).
Practitioners and researchers also found that they had a poor understanding
of the local contexts and of the very institutions they were trying to change (Riggs,
1964; Riggs, 1998, as cited in Jones and Klinger, 2007). In developing countries, it
was much easier to adopt laws and formal organizational structures than to
institutionalize corresponding behavior. Formal administrative structures in these
entities often served as façades, while the actual behavior remained a latent function
of other institutions and other contextual (historical, cultural, and like) factors,
which were not sufficiently understood by Western practitioners and academics
(ibid). In light of this, Riggs called for an ―urgent need for research,‖ noting,
Ironically, the United States government has been prepared to spend billions
for action programs, involving military and civil action, without being
willing, with but few exceptions, to invest even thousands in research
designed to test the validity of the basic premises on which these large
expenditures have been made. Although enough is clear to justify raising
87

some fundamental doubts about the effectiveness of our activities in terms of
our own purposes, the evidence is scarcely available to justify any
alternative course of action, including the termination of existing programs
(1971, p. 31).

Alas, this call not only was overlooked, but the research in comparative and
development administration dwindled just when important research needs have been
established. Comparativists faced extensive criticism from American public
administration and political science disciplines for ―conceptual diffusion,‖ for
generating theoretical models that were hard to apply, and too abstract, and for
failing to synthesize the fragmented scholarship in comparative public
administration (Jreisat, 2005). Furthermore, comparative public administration was
seen as lacking focus and attempting to cover too many diverse themes. Others
faulted comparative public administration for failing to keep up with related fields
not only in theory building and testing but also in methodological aspects. There
was concern especially for lack of cross-country comparisons, for insufficient use of
―more powerful‖ quantitative techniques (Sigelman, 1976) and for lack of scientific
rigor (Peters, 1988). All of these factors combined to contribute to the loss of this
movement‘s momentum.
The experiences taught a sobering lesson that the experts sent to help
―underdeveloped areas‖ did not have the ―knowledge and the skill to relieve the
suffering of these people‖ but the lesson was wasted. Both practitioners and
researchers chose a tactic of hiding their heads under the sand, until these lessons
came to haunt them a few decades later. Practitioners decided that focusing on
88

more tangible projects had better payoffs. The mainstream policy sciences chose to
live with the false assumptions about the universal applicability of Western
knowledge, and marginalized those who challenged this view.

89

Chapter 3

Overview of the Second Wave of Reforms in the 1980s and

Early 1990s: The Downturn of Government Institutions and

the Market as the New Driver of Development

The period between the 1980s and the early 1990s was the height of the
second wave of institutional reforms. In contrast to the first wave of reforms,
intended to build government institutions, this one was concerned with cutting and
downsizing government institutions and capitalizing on the energy of market
institutions to bring about development. How did this wave come about and how
was it carried out? What theories and ideas informed the content and approach to
reforms? How did it play out in practice? What lessons were learned and to what
extent were lessons incorporated from the previous wave of reforms? This chapter
addresses these questions.

Policy Context
In this period the International Monetary Fund (IMF) and the World Bank
(WB) emerged as the most influential IDA shaping this wave of public sector
reforms. During this time, the reforms promoted by these IDA in developing
countries were dedicated to freeing markets from government‘s regulatory grip. It
was believed that unleashing entrepreneurs‘ creative energy would induce growth.
90

During this wave of reforms, development was primarily measured by the level of
economic growth driven by the private sector rather than by government, as had
been previously assumed.
This wave of public sector reforms – which were curtailed as part of the
broader macroeconomic restructuring – intended to cut down the size and influence
of government bureaucracy on the economy and adopt principles and practices from
private sector management. The expected outcome of these reforms was to secure a
small and efficient government bureaucracy.
Among the main factors that contributed to this shift were, in addition to
those mentioned in the previous chapter, the rise of neo-liberalism and the changing
role of the state in the West. At the peak of the Cold War, governments had greatly
expanded. They were increasingly criticized for being overly centralized, bloated,
inefficient, and unresponsive to the demands of the changing environment. In this
context, proponents of the neo-liberal ideology argued that markets are more
flexible and superior to government institutions in producing social welfare. The
pro-market leadership in the United States and the United Kingdom (i.e. the Reagan
and Thatcher administrations) and the weakening and eventual dissolution of the
Soviet Union emboldened those advocating for the virtues of the minimalist state.
The failures of the previous development initiatives also lent support for this shift.
These earlier initiatives were seen as solely government-driven and their failure was
believed by the neo-conservatives to have come as a direct result of ‗too much
government.‘
91

The key principles underlying this wave of reforms were captured in the so-
called and much discussed ―Washington Consensus,‖ a term coined in the early
1990s by economist John Williamson.
16
He observed that ―‗political‘ Washington
embodied by the US Congress and President‘s Administration, and the
―technocratic‖ Washington embodied by the IMF, World Bank, and the think tanks,
converged which policies should be promoted in developing countries to induce
growth. These policies referred to simultaneously initiating and implementing
macroeconomic reforms strategy. The latter consisted of (1) liberalization of prices
and elimination of trade barriers; (2) macroeconomic stabilization - the process
through which inflation is brought under control and lowered over time; (3)
restructuring and privatization – the processes of creating a viable financial sector
and reforming the enterprises in these economies to render them capable of
producing goods for free markets and of transferring their ownership into private
hands, and (4) legal and institutional reforms, needed to redefine the role of the
state in the economy, establish the rule of law, and introduce competition policies
(IMF, 2000).
The IMF emerged as the chief authority on macroeconomic policy reforms,
while the World Bank initially assumed the greater role in promoting institutional
reforms. Between them, they set the tone in the development field, owing to their

16
Williamson (1990) called a set of their ten prescriptions as ―Washington Consensus‖ that included:
1] Fiscal discipline, 2] Redirect public expenditure, 3] Tax reform, 4] Financial liberalization, 5]
Adopt a single, competitive exchange rate, 6] Trade liberalization 7] Eliminate barriers to foreign
direct investment 8] Privatize state owned enterprises 9] Deregulate market entry and competition
10] Ensure secure property rights (as cited in Moises, 1999).

92

extensive funding and their expanding in-house expertise. Backed by the U.S.
presidential Administration and the U.S. Treasury, the IMF was especially forceful
in promoting the tenets of the Washington Consensus through its conditionality
loans (Stiglitz, 2000). The IMF‘s role became even more prominent with the fall of
the Berlin Wall as the bankrupted countries one after the other turned to the IMF for
loans. In fact, the IMF took on a new mission to support the former Soviet
republics‘ transition from planned to market economies.
The vastness of this task strained even the IMF‘s financial resources, which
is why the World Bank was brought in to support the IMF‘s mission (Stiglitz, 2003).
Not surprisingly, while this wave of reforms affected a large number of countries in
Africa, Asia and Latin America, the scale and intensity of these reforms has been
most significant in the countries of the former Socialist bloc due to their unique
institutional legacy.

Influential Schools of Thought
In contrast to the 1950s, this time around the public sector reforms were
heavily influenced less by public administration experts and specialists, but by
economists who have populated and influenced the leading development agencies at
this time. During this wave neoclassical economics established itself as the most
influential discipline in the development community. The theories aligned with the
prevailing political sentiments at thus time have been bolstered at the expense of
those who presented divergent views on the role of the state (Thorbecke 2007,
93

Sitglitz 2000
17
). Modernization came under attack, as did Keynesian economics,
while the Chicago school‘s influence on policy makers increased (Krugman, 2009).
The influence of the schools advocating ―the invisible hand‖ of market forces as the
driver of economic development ascended across the social sciences disciplines,
including in public administration. The growing dissatisfaction with the actual
embodiment of the Weberian bureaucratic model in Western institutions also fueled
the growing anti-government and anti-bureaucratic sentiments.
18

Public choice theory has exerted prevailing influence on public
administration since the 1970s. Drawing on the assumptions of rational choice
theory,
19
public choice literature is concerned with the problems of the ―free riders‖

17
In the early 1990s two schools of thought from economics competed for influence among policy
makers in the powerful financial IDA. The debate was particularly fierce with regards to the content
and approach of economic reforms in post-Soviet Russia, and by extension to other former socialist
republics. The first school advocated taking an incremental approach to macroeconomic reforms.
They argued that proper institutional infrastructure – including legal structures for contract
enforcement and regulation of financial systems – needed to be developed to support a market
economy before launching those macroeconomic reforms. The opposing school supported the so-
called “big-bang” or ―shock therapy‖ approach based on the assumption that a market economy is
self-regulating (via the ―invisible hand‖) and a belief that ―the stronger the medicine (and the more
painful the reaction), the quicker the recovery.‖ The second group had the greater influence on the
policy makers (Stiglitz, 2000).

18
As Robertson and Tang summarized, Weberain model that was emulated in developing countries
via institutional reforms has been criticized in the West for producing ―pathologies‖ such as member
alienation (Argyris, 1957), dysfunctional self-protective behavior (Kanter, 1977), excessive
conformity to hierarchical goals (Merton 1957), goal displacement and focus on internal
organizational goals (March and Simon, 1958; Selznick, 1949) among others (1995, p.70). See also
Caiden (1993) for a long list of bureaupathologies.

19
Rational choice theories (RCT) assume that people are rational actors with clear and consistent
preferences, and that they act on their economic self-interests. The theories holding this assumption
are criticized for neglecting the competing and unclear preferences people hold, as well as their other
motives – besides economic self interests – including those based on their values and obligations.
These a-priori assumptions, although extensively used by many economic and game theories used in
other disciplines, have been refuted by many psychological experiments. The recipient of the 2002
Nobel Prize in economics Kahneman is among those scholars who demonstrated that people‘s actual
behavior systematically diverges from the predictions of the RCT. More recent findings in
94

who take advantage of the opportunities provided by government institutions.
Bureaucracy came under particular attack as a self-serving category that takes
advantage of policy makers by virtue of controlling information (―principal-agent
problem‖). The researchers of this school inferred that cutting down bureaucracy
and subjecting it to greater external checks and control is needed. The donors came
to promote this recipe, assuming that exposing government organizations to
pressures and competition would result in leaner and more efficient government
institutions.
The ―New Public Management‖ (NPM) that embodied prescriptions of the
public choice theory was instrumental in translating them into practice. As
summarized in Terry (2005), besides public choice literature, NPM was also shaped
under the influence of managerialism, transaction-cost economics, and principal-
agent theory (p. 431). In addition to the underlying model of the rational calculative
actor, these schools also share the assumption of the logic of consequences,
methodological individualism, and the neglect of the normative aspects of
institutions.
Although different interpretations exist as to what constitutes the core of
NPM, the common claim among proponents of NPM is the call for using the
insights and principles that worked well in the private sector – such as competition,
decentralization, flexibility, and pay for performance – to induce efficiency,
economy, and effectiveness in the public sector. Their major argument in favor of

behavioral economics (Aieli, 2009) and psychology (Zak, 2008) further contributing to the erosion of
popularity of this school of thought in economics and other disciplines.
95

their approach is that traditional public administration institutions are deficient. As
Bevir, Rhodes and Weller summarized,
The term [NPM] refers to a focus on management, not policy, and on
performance appraisal and efficiency; disaggregating public bureaucracies
into agencies which deal with each other on a user pay basis; the use of
quasi-markets and of contracting out to foster competition; cost-cutting; and
a style of management that emphasizes, among other things, output targets,
limited term contracts, monetary incentives and freedom to manage….It is
said to be a global phenomenon (2003, pp.1-2).

The NPM was first popularized in the United States, the United Kingdom,
Canada and New Zealand and spread its influence over public administration
reforms in other countries around the world, especially in the Commonwealth
countries (Gjelstrup and Sorensen, 2007). OECD, representing wealthy countries‘
perspective, has been instrumental in developing and disseminating best practices
informed by NPM (Hansen et al., 2002). The relative success of NPM in these
countries can be partly explained by the fact that it was launched on the basis of
already solid governing institutions. In these countries, constitutional democracy
and the rule of law was already firmly established. In addition, there has been a fair
amount of adaptation of NPM principles to realities of OECD countries that have
adapted them as evident in the variation in the content/scope, process, and outcomes
of reforms observed in these countries (OECD 2005a). In contrast, in many of the
developing countries where these conditions did not exist, NPM‘s contribution has
been questionable (ibid).
96

The Content of and Approach to the Reforms
While the content of the donor-promoted public sector reforms for
developing countries changed, the approach remained strikingly similar to that of
the previous wave of reforms.
The Content of the Reforms
The content of the reforms projected the main tenets of the Washington
Consensus and NPM. While the language of IDA emphasized macroeconomic
policies, implementing them required eliminating, changing, and creating
governmental institutions such as to support those reforms, especially in the
countries that did not have market economies. In this manner, institutional
development was an essential component of this wave of reforms in policy.
In practice, however, reform of government institutions was given minimal
attention; they were overshadowed by the prevailing focus on revamping economic
policies. In addition, these reforms were not perceived to directly relate to macro-
economic functions of the government. In the case of former socialist countries, the
complexity of the institutional reforms and their political nature, as well as a ―lack
of precedents for the political and institutional ‗transition from socialism,‘ combined
to keep the donors away from closer involvement in institutional development
(Goyal, 1994, p. 166). The attention paid to public sector reforms was also minimal
in view of the perceived urgency of the political and economic reforms and the
growing anti-bureaucratic sentiments. As Nunberg observed,
97

Perhaps the most salient feature of donor efforts in supporting administrative
transformation has been the limited extent of assistance in comparison with
privatization, macro-stabilization, or social safety programs. Administrative
reform programs were the stepchildren of the transition; most donors have
not viewed them as critical to initial or even overall reform success (1999, p.
262).

Nevertheless, the most important reason why the reforms paid minimal
attention to public sector reforms is that donors naively assumed that effective
institutions would fill in the ―institutional vacuum‖ once the macroeconomic
reforms were implemented. This is not surprising because this wave of reforms was
shaped under the influence of the laissez faire doctrine which holds that unleashing
market forces would institutionalize the new types of behavior and lead to more
efficient institutions and more economic growth. Initially, few questioned the
consequences of this thinking. In sum, administrative reform was subsumed under
this new market-oriented paradigm during this wave of institutional reforms. The
leading IDA argued that development is best achieved not through government –
which, it was believed, actually hinders development – but through market forces
that need to be freed from the grip of government regulation via the right
[macroeconomic] policies.
The reform of the bureaucracy during this wave turned out to be much
narrower in scope than traditional administrative reform. Although public sector
institutions were supposed to be the object of institutional development, little effort
was invested in institutional development. The reforms exclusively focused on
formal and technical aspects of institutions, overlooking their normative and
98

political dimensions. The civil service system was the main target of these
initiatives; pay and employment, and within those, reducing numbers were the chief
concerns (WB 1997a, p. 96). Little attention was paid to the improvement of its
recruitment, management, performance and ethos, while cutting its rules,
regulations, and bureaucracy‘s role in policymaking constituted the crux of this
wave of public sector reforms. For example, in the case of the former socialist
countries, as summarized by Goyal, there was ―inadequate consideration given to
restructuring the public sector beyond privatization efforts, and as yet no explicit or
emerging consensus on a strategy for transforming the public sector to play a new
and quite different role in market economy‖ (1994, p. 166).
Thus, although the ultimate goal of the reforms was to improve the
institutions and management capacity of the civil service by inducing principles and
practices from the private sector, in practice the reforms have been largely limited to
downsizing through short-term cost containment measures such as employment cuts
and wage reforms (World Bank, 1997a, 2000a, Goyal, 1994, Girishankar, 2001,
Kotchegura, 1997).
20
At the same time, the broader term ―public sector reforms‖

20
For example, Kotchegura (1997) summarized the situation of Russia as follows:
Within the substantial donor aid programme of assistance for institutional development in
Russia, only a very modest amount of resources has been allocated so far towards public
administration reform and improvement. The main multilateral-agencies in this area are the
European Union, OECD and the World Bank. The major bilateral assistance to Russia in
this field comes from Germany, USA, France, Canada. The experience of Russia shows that
the international assistance to public sector management and civil service reform has been
so far focused mainly on achieving short term results without considering longer term
consequences. External assistance could also be more systematic and better coordinated in
future.

99

began to replace the previously used ―administrative reforms.‖ The former was
more convenient and provided more room for including reforms to public
enterprises that did not comfortably fit within the boundaries of traditional
―administrative reform.‖ Thus, the scope of institutional public sector reforms
expanded to encompass the private and, indirectly, the political institutions, via
promoting deregulation, decentralization, downsizing and structural reforms. These
changes affected the context of the bureaucracy and the distribution of power in
society more than the previous wave of reforms.
The overarching vision of public sector reforms promoted by donors in the
second wave could be illustrated through the figure that follows.

Figure 3: The Vision for Public Sector Reforms
in the Second Wave of Reforms

100

Donors’ Approach to the Reforms
While the content of the public sector reforms had changed since the first
wave, the approach to the public sector reforms did not depart much from the
accustomed practices. In the same way as with the overarching macroeconomic
reforms, public sector institutional reforms, when they received attention, were
limited mainly to importing ―best practices‖ and policies, and changing formal
organizational and internal rules and regulations with the help of external
consultants paid by the donors. The donors still assumed that the same set of
policies would benefit every country regardless of the individual countries‘
circumstances.
The key macroeconomic and political decisions were made by the donors
with little consultation with the beneficiaries. While the loan conditions constituted
the new element in the approach to the reforms promoted by IDA during this wave
of reforms, they were accompanied by technical assistance (TA) projects, which
employed the same approach to reforms as did the experts in the first wave of
reforms. In addition, the technical assistance segment is characterized by many
problems of its own.
Typical problems of the TA at the design stage include insufficient
involvement and commitment on the part of the beneficiaries, inclusion of too
many complex components into the project, short preparation time, inadequate
assessment of the beneficiaries‘ needs and sociopolitical environment, vaguely
drawn terms of reference, an inability to measure outputs, and selection of
101

inappropriate instruments. At the implementation stage, many TA projects suffer
from delays in recruitment and problems finding suitable experts and counterparts,
inadequacy in donor supervision, coordination problems with other donors, and
deficiencies in the borrowers‘ commitment. More importantly, the effectiveness of
the TA programs has been stifled because of lack of flexibility, short timeframes,
frequent turnover of the staff, as well as high costs and poor selection and
monitoring of consultants (World Bank, 1991, p. 32; Jenkins and Plowden, 2006).
Donor assessments identified that only a quarter of TA projects have been
considered successful (OECD, 2006a).
Since institutional reforms were focused mainly on changing formal
institutional and organizational frameworks and modeling them after those
borrowed from the West, ―legal fetishism‖ – copying and passing laws without
regard to their institutionalization – prevailed. Little attention was paid to the
human and organizational factors that should give meaning to those laws (Lamb,
1994, p. 131). During this wave, donors still showed little regard for understanding
beneficiaries‘ needs; the reform agenda was externally determined. In fact, this
aspect has become even more pronounced during this wave of reform as the donors‘
influence grew along with the countries‘ need for external assistance. Beneficiaries
still did not have much input in selecting the content of the reforms in part because
those reforms came for free and was a condition for receiving the much-needed
loans from the donors.
102

There was widespread ignorance of the beneficiaries‘ institutions and how
the reforms would affect them. The donors tended to stick to their generic formulas
also because it is more convenient to go with the accustomed way. The donors still
advised countries on the content of budget allocations and on the number of people
that would need to be laid off. The IDA sometimes even provided supplementary
wages and focused on the direct supply of physical infrastructure and social
services. Yet few initiatives were concerned with helping the beneficiaries to
develop those capabilities provided by experts in-house (World Bank, 2000a, pp. xii
and xiv).
Despite the change in terminology from ―administrative‖ to ―public sector‖
reforms, the fragmented and technical approach to reforms was still evident in the
piecemeal focus on the aspects of the changes that were easiest to implement in
short time frames. Pay and employment reforms in the civil service and the
privatization of public enterprises were carried out without a clear strategy to
account for the broader institutional context. The donors also poured in funding and
emphasized efforts to send experts who would advise local technocrats on policy
reforms mainly in the financial aspects of government. As the institutional reforms
attached to policy reforms and loans increased, the lack of clear benchmarks for
evaluating the reform outcomes became acute. Given the difficulty of measuring
institutional reform outcomes, the donors tended to focus on inputs (funds, hours,
etc) and outputs (laws, procedures, etc), while reforms‘ actual outcomes did not
receive much attention (Israel, 1987).
103

The increased use of conditionality to promote macroeconomic reforms, and
along with that the downsizing of the public sector, contributed to the deepening of
these problematic approaches to the public sector reforms. In addition, the other
problems present in IDA‘s previous wave of institutional reforms – poor
understanding of the beneficiaries‘ existing institutions and how institutions change
overall, as well as the ignorance and ethnocentrism of the donors – combined with
the recipients‘ desire to secure external legitimacy by adopting influential donors‘
models and frameworks and the desperation of their officials to find ways out from
their crises, contributed to the persistence and entrenchment of the discredited
approach to the reforms. In sum, although the donors changed the focus of reforms
in terms of content, they overlooked the main lessons learned from the previous
wave of reforms that the way reforms are promoted is as important as the content of
reforms. The same set of problems in donors‘ approach to public sector institutional
reforms from the first wave of reforms persisted during this wave of reforms, even
after having been previously discredited.

Assessment of the Outcomes of the Reforms
The leading donors and independent observers agreed that overall this wave
of reforms, despite some successes, had failed to live up to its promises (IMF 2000,
Caiden 1991, Sachs 2006).
21
The overall consensus among observers of these

21
Other donors also report similar outcomes. For example, USAID found that 40% of a sample of its
recent projects scored negatively in terms of improving institutional capacity in recipient countries
104

reforms was that despite some bright spots, donors‘ aid at times encouraged
―incompetence, corruption, and misguided policies‖ (Dollar and Pritchett, 1998).
In positive terms, summarizing the first ten years of the transitional reforms
in the countries of the former Socialist bloc, the IMF outlined some prudent
outcomes that included extensive trade liberalization which helped to redress the
economic distortions inherited from central planning. It had also brought the
geographical and commodity composition of trade in line with each country‘s
specific resources and comparative advantage, thus helping to establish a relatively
stable inflation rate. The IMF also mentioned in this regard some of the Eastern
European countries that have been able to gain access to foreign capital markets and
attract foreign direct investments, thereby quickly reducing reliance on official and
multilateral financing (2001).
At a broader scale, Caiden (1991) summarized that the results of the
institution-building reforms in 1980s were ―disappointing, the impact has been
limited, and the strategies had not delivered on their promises,‖ and the ―major
oversight had been lack of public accountability, meaning a lack of the general
public‘s ownership, as reform has not enjoyed political (leadership) support, has
lacked sufficient investment and detailed planning, has been foiled by corruption,
rigidity, inertia, and lack of incentives, and has excluded ‗ordinary people‘ from the
process‖ (p. 247). For example, the transitional economies experienced increased

(Kean et al., 1988, p. 34, as cited in Goldsmith, 1992). See also similar findings in World Bank‘s
and other relevant publications (World Bank, 1997a, 2002a, UNDP, 2004).

105

corruption, a rising level of inequality and poverty, and sustained high rates of
unemployment.
Donors belatedly realized that they had overlooked the importance of
developing workable government institutions for markets to operate effectively.
With the lack of viable government or other alternative institutions to provide the
rule of law and enforce policies, the macroeconomic and public sector reforms
created opportunities for a few vested interests – the new entrepreneurs who
emerged from former government elites and their allies – to concentrate government
assets in their hands, and even tailor the new government regulations for their own
benefit. These processes closely tied newly emerging business sector and
government elites together in illicit informal networks (IMF 2001).
The IMF, explaining the particularly poor performance of some of the
transitional economies, cited a number of obstacles to the reforms, including the
lack of a ‗new Marshall Plan;‘ the disintegration of the Soviet Union and the
associated collapse of trade and of demand for the products of key industries
(especially in the military and industrial complex); termination of large implicit
transfers from energy rich to energy poor regions; weak political support for the
implementation of serious policies of stabilization and structural reform; the
outbreaks of armed conflicts in some countries that created particularly unfavorable
initial conditions for involved economies; and finally the donors‘ poor
understanding of the institutions and practices of the market economy. On the last
point, the IMF also admitted that
106

The importance of institutional reform was recognized at the beginning
of the transition, but in practice it was given too little attention relative to
macroeconomic developments by both policymakers and advisors alike,
probably because the difficulties of implementing these reforms had
been underestimated and there was a lack of experienced personnel…‖
(2000, ch. 3, p. 120).

Among the many critics of the IDA policies, former chief economist at the World
Bank Joseph Stiglitz (2000) faulted both the content and approach of the reforms
prescribed by the IMF for contributing to and furthering financial crises in
developing countries that followed its advice. He argued that the content of the
reforms was informed by outdated and simplistic economic models. They were also
misguided because they did not account for the peculiarities of each country.
Moreover, the IMF‘s approach to policy making furthered these problems and
prevented it from adjusting even when the mistakes became obvious. This approach
is characterized by several features. One of them is a certain degree of
ethnocentrism of its experts. In Stiglitz‘s (2000) words, ―IMF experts believe they
are brighter, more educated, and less politically motivated than the economists in
the countries they visit.‖ In addition, the IMF‘s closed-door and top-down policy
making system and culture did not allow time and opportunity for the beneficiaries
to formulate and agree on their preferences. The IMF experts are typically
dispatched to the beneficiary countries and expected to draft a program for a country
in very short amount of time with little understanding of its actual conditions and
―taking cookie-cutter approach to economics‖ (ibid).
107

Other donors are also faulted for their ethnocentric policies and practices
(Jenkins and Plowden, 2006). Jeffrey Sachs (2006), another insider to these
reforms, similarly characterized the IDA prescriptions as ―based on a simplistic,
even simpleminded, view of the challenge of poverty.‖ Ethnocentric attitudes were
still present: ―poverty is your fault; be like us,‖ i.e. market-oriented. He argued that
the reforms designed by the IMF and World Bank as part of their structural
adjustment programs missed the actual economic causes of underdevelopment, and
instead they were ―self-serving and ideological.‖ Coupled with disastrous
implementation, these reforms resulted in ―failures of advice and insufficient help‖
(Sachs, 2006, p. 81). Other critics emphasized the contrast between the IDA‘s
macroeconomic policy outcomes with the approach that led to the ―the Asian
miracle.‖ East Asia‘s fast-growing economies owed their success in part to stable
government institutions and the active intervention of the state in promoting
economic development.
The outcomes of the reforms specifically targeting the inner working of the
public administration system, not surprisingly, also were not encouraging. As
mentioned above, the World Bank mainly focused on downsizing civil service and
paid little attention to institutional and capacity building aspects of the reforms. The
review of the World Bank -supported civil service reforms for the period of 1980-
1997 concluded that despite some gains, these reforms were ―largely ineffective in
achieving sustainable results in downsizing, capacity-building, and institutional
reform‖ (1999). Among the main obstacles to effectiveness of the reforms, the
108

World Bank listed ―the poor quality of information on CSR [civil service reforms];
the limited role afforded to strategic management and cultural change; the absence
of checks and balances on arbitrary action; and a failure to appreciate labor market
and institutional constraints. The Bank‘s approach was too technocratic; it relied on
a small group of interlocutors within core ministries that promoted one-size-fits-all
CSR blueprints in diverse country settings‖ (ibid, front page).
Overall, donors faced harsh criticism on many accounts from various
governments, civil society organizations, businesses, and individuals on how this
wave of reforms has been handled (Escobar, 1995, Easterly, 2002a, Crush, 1995).
Many argue that donor interventions indiscriminately used technical cooperation
(Berg, 1994, as cited in Bossuyt, 2001) and placed excessive demands on weak
public administrations thereby undercutting the effectiveness of the reforms
(Hirschmann, 1994). Others criticized donors for providing short-term projects
when and where long-term institutional development was needed; for not being
responsive to changing and local contexts due to their centralized decision making
and management; for focusing on outputs rather than outcomes; for not prioritizing
institutional/capacity development in recipient countries, and for failing to learn
from past experiences (Bossuyt, 2001, see also Hulme and Turner, 1997, Stiglitz,
2002, Ostrom, 2005). Critics also point out a lack of accountability in the IDA
system as a key factor undermining their effectiveness: ―investment was without
pressure from mass demand… and resulted in wasteful spending on luxuries for an
even more powerful ruling class‖ which altogether led to the failure of development
109

policies (Hartmut, 2002). In addition, the entire international development system
has been accused of turning into a ―big business preoccupied more with its own
growth and imperatives rather than with the people it was originally created to
serve‖

(Korten, 1990). As a result, the failures and negative unintended
consequences of the big bang macroeconomic reforms, the increased criticism of the
IDA approaches, and successes of alternative models of development combined to
challenge the leading donors‘ minimalist state arguments. Thus, those donors were
forced to reconsider the assumptions informing their development interventions.

Lessons from the Reforms
Various soul-searching attempts on behalf of the donors generated valuable
lessons, most of which, not surprisingly, were not new; they painfully rediscovered
the lessons from the first wave of institutional reforms. For example, the World
Bank‘s (1991) inquiry into the lessons from the experience of the public sector
management reforms emphasized the promise and importance of effective public
sector institutions and recommended that the Bank strengthen its efforts in this
direction. The key lesson the authors of the study drew was that reforming public
sector institutions takes a long time; that it is hard to attribute the outcomes of the
reforms to one causal factor; but that given the strategic importance of the reforms
the Bank should allocate sufficient resources, longer time-frames, and sufficient
flexibility for these reforms to succeed. They also recommended investing more
effort on the design stage of the TA projects and to better understand the local
110

sociopolitical context, intensify the supervision of the selection of consultants and
the implementation of projects, to work more closely with local governments and
other donors, and better diagnose borrowers‘ ability and commitment to put TA into
good use.
The authors of the same study concluded that the Bank should focus on (1)
designing institutional development strategies tailored to country needs and (2)
stimulate recipient government‘s commitment to policy and capacity-building
reforms. Lastly, given the limited resources, the study also recommended that the
Bank should select and concentrate on those organizations and governments that
have sufficient commitment and would benefit from its assistance (World Bank,
1991).
Another important report critically examining the IDA approach to
development assistance came from the World Bank‘s introspection of its
institutional capacity-building in the most troubled region – Sub-Saharan Africa – in
the 1990s. The Africa‘s Management in 1990s (AM90s) research program led by
Mamadou Dia concluded that the problem with reforms in this region was not the
lack of capacity. Rather, the problem was in the misguided donor approach to
institutional assistance that tended to focus excessively on formal aspects of
institutions and failed to account for and link the formal with the pre-existing
informal institutional components:
(a) The widely lamented crisis of capacity building in Africa is more a crisis
of institutional capacity (capacity utilization) than a crisis of technical
capacity (availability of skills, methods, systems, and technology); (b) that
111

this institutional crisis is essentially due to a structural and functional
disconnect between informal, indigenous institutions rooted in the region‘s
history and culture than formal institutions mostly transplanted from outside;
and (3) that institutional reconciliation [i.e. convergence between adaptive
formal institutions and renovated informal institutions] is the key to
resolving the crisis… Institutional crisis affecting economic management in
Africa is a crisis of structural disconnect between formal institutions
transplanted from outside and indigenous institutions born of traditional
African culture (Dia, 1996, pp. 1-2).

The culminating study on donors‘ lessons from this wave of reforms was the
1997 study produced by the expert group on aid evaluation convened by the
Development Assistance Committee (DAC) of the Organization for Economic Co-
operation and Development (OECD). This study synthesized leading donors‘
experiences and lessons in promoting participatory development and good
governance. Specifically, this study focused on donors‘ support of legal systems,
public sector management, decentralization, human rights and participation.
Despite the difficulty of measuring performance, ―compounded by lack of theory or
conceptual framework for PD/GG [participatory development and good governance]
assistance that makes it difficult to clearly articulate program,‖ the study
summarized the donors‘ achievements and lessons in these five areas. The relevant
lessons included the following:
 Reform efforts require political commitment and local constituencies
supportive of change and able to hold officials accountable,
 Donor advocacy of ‗home grown‘ initiatives is likely to be more
successful than donor-driven reform efforts,
 Projects need proper balance among, and clear definition of, their
objectives,
 Use a process, not a blueprint, approach that allows for an evolving
agenda, emphasizes flexibility, and learning from experience,
112

 Participation and participatory approaches should be important
ingredients in all donor PD/GG assistance efforts,
 Traditional institution-building approaches (e.g. commodities, training,
long-term resident expatriate technical assistance) are less important and
effective than changing organizational procedures, structures and
cultures,
 More attention needs to go to demand-driven strategies and to building
political and organizational cultures conducive to accountability and
transparency,
 Too much attention has gone to ‗administrative structures‘ and not
enough to ‗political processes‘ in PD/GG assistance,
 Introducing new structures may, in some cases, be more successful than
reforming old ones,
 PD/GG reform often requires appropriate assistance at both the local and
central level - and paying attention to the linkages,
 Donors should consider ‗clustering‘ PD/GG activities in ways that are
supportive of each other and of broader strategic objectives,
 Donors should pay more attention to ‗mainstreaming‘ PD/GG
approaches, especially in promoting human rights and participation,
 Donor experience with using policy dialogue to promote PD/GG is not
well documented,
 Similarly, little information is available on exerting ‗conditionality,‘ and
 Donor monitoring and evaluation (M&E) of PD/GG activities should
consider both quantitative measures and complementary qualitative
measures, and should take better advantage of participatory evaluation
techniques

Out of these the lessons which were taken to heart were the following three:
1. Government institutions matter
The donors underscored that without strong and capable government
institutions, markets cannot effectively function. The reform failures demonstrated
that governments in many developing countries did not have the skills, capacity, and
accountability to implement complex macroeconomic structural adjustment reforms
properly and make effective use of aid. They also noted that in corrupt
113

environments, those reforms, especially privatization of government assets in
former socialist countries, have been further derailed to serve private interests,
which undermined the already weak legitimacy of these governments (Holmes,
2006).
Moreover, government institutions were also found essential for dealing with
social issues such as poverty and education that topped the donors and world
leaders‘ agenda in the last decade of the 20
th
century. The IMF, for example,
recommended that the transitional economies needed to keep pursuing ―sound
macroeconomic policies‖ (the ‗first generation reforms‘) and at the same time build
―the institutions required to underpin a market economy‖ (i.e. the ‗second
generation reforms‘) (Holmes, 2006). Similarly, the World Bank allocated a
strategic role for PSR in its programs (1991; 1997a; 1999; 2000a).
2. One size does not fit all
The one-size-fits-all approach was also challenged by all stakeholders.
Instead, understanding and tailoring reforms to specific contexts of recipient
countries came to be emphasized (World Bank, 1997a, 1999, 2000a, OECD, 1997,
OECD, 1997, OECD, 2002, Stiglitz, 2002, Terry, 2005). The IDA learned that the
reforms need to be tailored to a specific context; and even that ―‗best practice‘ in
institutional development is a flawed concept‖ (World Bank, 2002a, p.2). Yet little
guidance existed for figuring out how reforms need to be tailored to the local
context, what that local context means, and how to map it.

114

3. Participation from beneficiaries is essential
The reformers also noted the importance of beneficiaries‘ involvement in the
design and implementation of reforms to secure that the changes effected by
interventions sustain. Thus, instead of a supply of experts and equipment from
abroad, reformers started looking at the ways to improve local capacity by
increasing the involvement of the beneficiaries.

Conclusion
This wave of reform, although completely the opposite of the first wave of
reforms in terms of the assumptions of what drives development, had the same
approach to promoting reforms. But the donors failed to learn the lessons from the
first wave of reforms and painfully rediscovered most, but not all, lessons from the
analyses of the previous experiments. Donors concluded that (1) government
institutions matter in terms of development; (2) one size does not fit all; and (3) the
reform interventions need to be tailored to beneficiaries‘ contexts with their active
participation. Unfortunately, these were not new ideas and simply repeated the
lessons derived from the previous wave of reforms.
A more alarming finding is that despite the crucial significance of the
knowledge deficiency underlying the failure of the reforms, the need to improve
understanding of institutional transformation processes has not been as strongly
emphasized as in the aftermath of the first wave of reforms. This is ironic because
donors and especially recipient societies paid heavily for accepting a-priori and
115

naïve assumptions on what is best for developing countries and how they should
transform their governance institutions.

116

Chapter 4

Overview of the Third Wave of Institutional Reforms since 1997:

The Re-emergence of Institutional Development and

Government as a Facilitator of Good Governance

By the end of the 1990s, a new consensus emerged in the development
community emphasizing the important role of the state and of effective government
institutions for development. The World Bank‘s 1997 World Development Report
(WDR) marked the dawn of the most ambitious wave of institutional reforms,
whereby governmental, private sector and societal institutions were to embark on a
reform to result in efficient and effective institutions (World Bank, 1997a).
22
As the
shortcomings of the 1980s market-promoting reforms mounted, the leading IDA,
particularly the financial development agencies such as the IMF and the World
Bank, started acknowledging the primary omission of the so-called ―first-generation
reforms.‖ They saw that these reforms, which had been informed by the
―Washington Consensus,‖ were not wrong-headed, but that the institutional
environments in developing countries were not ready for those policies. Thus, for
those ―right policies‖ to work, developing countries needed to pursue economic
reforms through effective institutions – i.e. by changing the ―rules of the game‖ to

22
Donors, as external actors, try not to interfere openly in reform of political institutions of sovereign
nations. This is one of the reasons why administrative reform has been one of the key components of
the reforms of state institutions. Reform of other institutions such as judicial reform, development of
institutions supportive of private, non-profit, and community-based organization are secondary to the
administrative reforms.

117

make their governing environment more conducive to growth. In other words,
―getting institutions right‖ became a new formula for pursuing development. This
approach has been referred to in IMF and World Bank circles as the ―augmented
Washington Consensus.‖ Now, IDA hold that developing countries need to change
their governing institutions to secure poverty reduction, environmental
sustainability, and private sector development (World Bank, 2000a).
This chapter reviews the same set of questions asked in the previous ones:
How and why this wave has emerged, what theories and ideas informed this wave of
reforms, what was the content and approach to the reforms, how they played out in
practice, and what lessons have been learned from the preliminary analyses of the
reforms. In contrast to the previous two, this chapter is more detailed, because so far
few studies have analyzed this wave of reforms in depth.

Policy Context
A confluence of several factors influenced donors‘ decision to launch a new
wave of institutional reforms, which on the surface appears to be the opposite of
what the second wave of reforms were about. One of the main contributors to this
shift was the increasing amount of evidence pointing at the limits of relying purely
on market-regarding policies. Contrary to donors‘ prescriptions, not all the countries
that followed the ―Washington Consensus‖ prospered as a result of the reforms. If
anything, evidence from the Asian crisis, the experiences of transition from
command to market economy, and situation in much of the poorest regions of the
118

world provided examples of human costs of neglecting the proper role of institutions
(Thorbecke, 2007).
The problems IDAs are facing in their own governing institutions further
increased the focus on institutional reforms. The OECD countries, similarly, had
been experimenting with large-scale institutional reforms trying to respond, among
others, to the challenges of changing environments, the expanding globalization,
and the fiscal crisis of the welfare state (OECD, 1995, OECD, 2005a). For donors,
the recognition of their ―sobering track record‖ of importing Western institutions,
and the increasing criticism of their elitist, ethnocentric, undemocratic, and top-
down approaches, among other factors, forced them to launch their own institutional
reforms internally. These reforms directly and indirectly influence the content and
approach to the reforms the donors promote in developing countries.
A set of other factors further highlighted the emphasis on the quality of
governance institutions. One of them is the growing concern with aid effectiveness.
The donors noted that the governments with better institutions made more effective
use of development aid, while in countries with poorly functioning government
institutions aid did not make much positive impact. The worldwide social issues
and humanitarian emergencies also drew attention to the capacity and quality of
governmental institutions. The widening income gap between countries and
individuals, especially in the poorer countries, and other pressing social issues such
as education and health also played a role in shaping the new content and approach
to this new wave of reforms. The adoption of the Millennium Development Goals
119

targeting the reduction of poverty necessitated sustainable development strategies
that would take into account not only economic growth, but also the social and
political dimensions of development.

Increased Alignment of the IDA’s Development Interventions
A distinct characteristic of the policy context of the current wave of
institutional reforms is that the major IDA involved in promoting institutional
reforms are converging in their assumptions on and approaches to the delivery of
development assistance (Girishankar, 2001, pp. 19-21
23
, World Bank, 1997a, IMF,
2003, UN, 2001, OECD, 2005a, OECD, 2005b). From the late 1970s until the late
1990s, the World Bank, IMF, and USAID favored neo-liberal policies, while other
IDA such as the UNDP and European Commission (EC) tended to favor a more
balanced approach accounting for both government and market institutions. For
example, in the former Soviet republics, where the first group of IDA had more
influence, the public sector institutional reform was perceived as a ―poster child‖
until the late 1990s (Nunberg, 1999), while in Central and Eastern Europe, where

23
In 2001 the WB‘s Operations Evaluation department (OED) issued this paper Evaluating Public
Sector Reforms: Guidelines for Assessing Country-Level Impact of Structural Reform and Capacity
Building in the Public Sector, authored by Navin Girishinkar. Responding to the WB‘s intent to
switch to systematic institutional development of public sector institutions, the growing emphasis on
measurement of relevance and efficacy of donors‘ ID interventions, and the difficulties of carrying
out such measurements at country level, this paper offers ―basic analytical tools that evaluators can
use to assess—in a standardized manner—the impact of Bank policy advice and lending operations
on a key component of a country‘s institutional endowment, namely, its system of public
management‖ (p.3). This proposed tool/methodology draws from new institutional economics
literature. The author concluded the paper with recommendation to mainstream this methodology
into OED‘s existing evaluation system.

120

the EC had a greater presence, public administration reform had been initiated in the
early 1990s.
These differences among donors diminished in several steps. First, the
World Bank‘s 1997 World Development Report moderated this tension by
recognizing that ―institutions matter‖ (1997a). As made clear by the title of its 2002
World Development Report ―Building Institutions for Markets,‖ financial
development institutions such as the World Bank still uphold the importance of
market over government institutions (2002a).
24

The next step was the Millennium Development Goals unanimously adopted
by almost all countries in 2000. It focused donors‘ interventions on the roots of
poverty and social issues requiring greater government involvement.
Finally, in the 2005 Paris Declaration on Aid Effectiveness, 120 donors,
countries, and international organizations agreed on five principles of improving aid
effectiveness: ownership of developing countries to set their own poverty reduction
strategies, alignment between donor and recipients‘ objectives, harmonization of
donor efforts to avoid duplication, managing results of interventions, and mutual
accountability shared by donors and recipients (OECD, 2005b). This means that the
developing countries would assume greater responsibility, and donors and recipient
countries would improve reporting their results, and donors would coordinate their
efforts in aid delivery.

24
See also Knack, for whom ―good governance‖ is a function of ―right institutions‖ that establish ―a
predictable, impartial, and consistently enforced set of rules for investors‖ that can promote sustained
rapid growth in poor countries (2000, 1).
121

OECD, as a communication forum for developed countries on the questions
of what policies, institutions, reforms, and practices are conducive for effective
governance, assumed greater role in facilitating and generating relevant ideas. It too
has moved on from NPM ideas to embracing complexity of reforms and unique
needs of the recipients, as demonstrated by the stark differences in its key
publications Governance under Pressure (1995) and Modernizing Government
(2005a).
In sum, since 1997 the new consensus that emerged among IDA is that
development interventions need to secure good governance to generate political,
economic, and social development, and that building government‘s capacity via
institutional development/change is the prevailing approach/means of pursuing these
ends. Another important but subtle change took place in this wave in the
vocabulary of donors. Most donors started talking more about capacity building and
capacity development, instead of the previous institution building and institutional
development.

The Most Influential IDA in Public Sector Reforms during this Wave
In this wave, the World Bank and the United Nations consider themselves
the leading among the IDA supporting public sector institutional reforms (World
Bank, 2000a, UN 2001). Most other donors involved in institutional reform,
including the European Union (EU), Asian Development Bank (ADB), United
States Agency for International Development (USAID), UK‘s Department for
122

International Development (DFID), and Swedish International Development
Cooperation Agency (SIDA), have either a regional or bilateral focus and narrower
program scope, while the World Bank and UNDP have worldwide reach and a
broad reform agenda.
The World Bank emerged as the most influential think-tank and donor in
institutional and governance reform since the late 1990s. The World Bank‘s public
sector reform agenda has been evolving over a period of time and became more
focused since the late 1990s. Since then, the World Bank has changed its aim to
align it with its mission of reducing poverty as it was becoming increasingly
apparent that its previous market-oriented focus was not well-suited for promoting
this mission. The World Bank exerts greater influence on the actions and policies of
developing countries and other donors owing to its large grants and loans along with
its extensive knowledge-generating research network (inter alia Hulme and Turner,
1997, p. 229).
The United Nations historically focused on the institutional development of
public administration in its core support areas. Institutional development (ID) – the
process of planned reforms undertaken to artificially change the existing and/or
devise new institutions – has been ―tacitly accepted as a major effort [for UN] in
promoting consistent accelerated economic, social and political progress‖ in
developing countries since the emergence of the official development assistance
field at the end of WWII (UN, 1982, see also Blasé, 1986, Bossuyt, 2001, Caiden,
1991, Eaton 1972, Goldmith, 1992, Grindle, 1997). In the last decade, when the
123

institutional development movement reemerged, the UN also re-established itself as
the chief authority in public sector reforms among donors.
Within the United Nations, the Division for Public Administration and
Development Management of the Department of Economic and Social Affairs of the
United Nations (DESA) focuses on analytical work and policy setting reforms. It is
entrusted with developing and running the online United Nations Public
Administration Network (www.unpan.org). Moreover, DESA provides logistical
support for the Committee of 15 experts in public administration and disseminates
and synthesizes knowledge by other means, including through organizing high level
conferences. The UN DESA also has published the biannual World Public Sector
Report since 2001. These reports focus on the emerging issues and innovations in
governance and public administration. They target policy makers, practitioners, and
civil society, especially those in developing and transitioning countries. The first
report issued in 2001 was titled Globalization and the State, followed by E-
Government at the Crossroads (2003), Unlocking the Human Potential for Public
Sector Performance (2005)and the most recent focused on People Matter, Civic
Engagement and Public Governance (2007).
UNDP – an important arm of the United Nations – is involved in
implementing public administrative reforms (PAR) because it has a mandate to
design programs with the highest long-term impact on the poor and disadvantaged.
Public administration is seen as most suitable tool for pursuing this mandate. ―An
efficient, responsive, transparent and accountable public administration is a central
124

part of democratic governance‖ and ―the basic means through which government
strategies to achieve the MDGs can be implemented‖ (UNDP, 2004, p. ii). Public
administration is incorporated within its Democratic Governance program. As of
2004, the UNDP was supporting 380 projects in 112 countries in various aspects of
public administration reforms (UNDP, 2004). This mandate also implies that
UNDP in its interventions pays special attention to empowering and ensuring
participation of the most vulnerable.
How do the World Bank and UNDP compare and contrast? Public
administration reforms (PAR) or public sector reforms (PSR), as used by the UNDP
and World Bank respectively, broadly refer to a similar set of reforms. The
UNDP‘s PAR includes four main categories of reforms concerned with improving
(1) civil service, (2) policy-making system, (3) the machinery of government (rules,
institutions, and structure of the administration, including e-governance and e-
government), and (4) public sector revenue and expenditure management system
(UNDP, 2004, p. 6). The World Bank‘s core areas of PSR include five categories of
reforms that deal with (1) the role of the public sector, (2) the structure of
government (including decentralization and intergovernmental fiscal relations), (3)
administrative and civil service reform and capacity building, (4) public expenditure
analysis and management, and (5) sectoral institution-building, that also includes
regulation of private service delivery (WB, 2000a).
While the World Bank and the United Nations both emphasize that effective
and capable public administration is essential for development and poverty
125

reduction, and claim a unique expertise, niche, and mandate in public sector
reforms, they have significant differences. On the question of how development
should be promoted, the World Bank still takes a more technical and economic
growth-based approach, and sees a capable public sector as an essential means and
precondition for effective functioning of markets, which will in turn reduce poverty
(WB, 1997a, WB, 2002a). The United Nations, on the other hand, focuses more on
political and administrative aspects of development drawing from its commitment to
rights-based approach to development. In other words, for the UNDP, development
is a right and public administration is an essential tool for promoting this right. The
main distinction between the scopes of the reforms in public administration of these
IDA is that the World Bank‘s reform is broader and pays explicit attention to the
reforms in regulation of private service delivery (WB, 2000a).
They also differ in their stance towards political issues. The World Bank has
been rather cautious of getting involved in political aspects of the reforms and tries
to deal with the political aspects of reforms indirectly. The World Bank is
concerned that involvement in the demand-side of the policy making process, such
as raising civil society awareness, constitutes political lobbying, which the Bank‘s
charter outlaws (World Bank, 2008, p.41). The World Bank‘s operational manual
accordingly states that its main purpose is to support government development
programs, and ―the Bank should not carry out activities with NGOs without
government‘s knowledge and consent‖ (World Bank, 2002e). The World Bank thus
tends to work more with the executive branch of the government in recipient
126

countries. However, its policy documents increasingly demonstrate that the World
Bank started more explicitly embracing the political nature of institutional reforms.
The UNDP has been more straightforward in recognizing and dealing with
political aspects of reforms, and claims to remain ―well placed to support
governments in the often-sensitive and inherently political area of governance‖ due
to its familiarity with and trust from a broad range of groups and players, and its
role as a neutral broker, its universal presence, and knowledge of development
concerns of local communities. These characteristics provide the UNDP an
advantage over the wealthier World Bank to engage in pressing issues of a political
nature (UNDP, 2004, p. 16).
In sum, the World Bank and the UNDP are particularly well positioned to
influence developing countries due to the worldwide scale of their work and other
donors due to their continued experience and in-house expertise on public sector
reforms. The rest of this chapter therefore mainly draws from the experiences of
these donors. In this chapter, the terms ―IDA‖ or ―donors‖ also primarily refer to
these organizations, unless specified otherwise.

Influential Schools of Thought
Two schools of thought that share similar assumptions influenced donors‘
public sector reforms during this period more than other schools. One of them is
New Institutional Economics (NIE). It shaped the overall direction and rhetoric of
leading donors‘ reform policies. Another is New Public Management (NPM),
127

discussed in the previous chapter, which informed the specific details of the public
sector reforms.

New Institutional Economics
By the 1990s, traditional theories of economic growth focused on labor,
physical and human capital accumulation as well as on technological change were
found inadequate in explaining the differences in economic growth among nations
(Orrnert, 2006, p. 450, see also Easterly, 2002a). At around the same time,
extensive research in NIE linking institutions to economic growth gained influence
among donors (Acemoglu et al., 2001, Knack and Keefer, 1995, Rodrik et al., 2004,
Kaufmann and Kraay, 2002). The NIE movement, sometimes referred to as new
political economy, has had significant influence in social sciences for the last few
decades. The NIE emerged from extensive borrowing and modification of
assumptions and analytical tools from neoclassical economics and rational choice
theory (RCT) to apply to research in political science, public administration, and
sociology (Ferris and Tang, 1993, Ostrom, 1998).
25
According to Langlois (1986),
the three themes underlying NIE are (a) a broader conception of the economic agent,
(b) shift of attention to economic processes from equilibrium states, and (c)
recognition that coordination of market activity is a matter of not only markets, but
also alternative institutional structures.

25
The rational choice neo-institutionalism needs to be distinguished from ‗old‘ institutionalism
(associated with Weber, Selznik, Parsons, and others), as well as sociological and historical new-
institutionalism schools, which hold a broader understanding of institutions that includes social and
cultural norms and processes that impact and define individual preferences (Scott, 2001).
128

Ronald Coase and Herbert Simon are considered intellectual founders of the
NIE. Coase (1937) in his ―Nature of the Firm‖ proposed his famous ―transaction
costs‖ argument: using the price mechanism in the market (that includes the costs of
negotiating and concluding separate contracts for each exchange) is costly, which
gave rise to the hierarchical structures that reduce these transaction costs. Oliver
Williamson is credited for reviving and mainstreaming Coase‘s work. Herbert
Simon (1945/1997), on the other hand, developed his theory of administrative
behavior in contrast to the conventional economic assumption of individual
rationality. He introduced the concept of ―bounded rationality‖ pointing at the
limited cognitive capacity of individuals and organizations. Hence, Simon argued,
organizational structures simplify the decision-making of individuals and
organizations, allowing them a higher level of consistent and boundedly rational
behavior that otherwise would not be possible.
While the idea of bounded rationality is acknowledged, not all NIE research
embraced it (Campbell, 2004). Even with this modified assumption, individuals‘
preferences are viewed as a-priori, individuals as utility maximizers, and
institutions as rules of the game to structure and inform strategies to pursue
individual interests. It assumes that collective action is possible only by reducing
future incentives, and creating conditions that would make it difficult for an actor to
change policies when temptation arises (Robertson and Tang, 1995), that individuals
hold their goals and preferences independently of institutional context (Ferris and
129

Tang, 1993), and counts for institutions mainly laws and formal norms, while
ignoring informal social and cultural norms (Lane and Ersson, 2000).
NIE influenced the leading donors‘ development policies through two sets of
findings: one on the role of equality and economic growth, and another on the links
between institutions and economic growth. First, this school‘s claim that more
equal distribution of income and wealth is conducive to growth run counter to the
neoclassical economics which held that unequal income was a prerequisite to
growth. This finding, along with Amartya Sen‘s capability approach, reinforced the
poverty reduction and human development policies of the leading donors like the
World Bank (Thorbecke, 2007).
NIE‘s claims that development depends on the quality of institutions also
caught donors‘ attention just when donors needed it following the backlash of its
previous wave of reforms. Students of NIE argue that institutions present that
―missing link,‖ which explains the differences in economic growth across different
countries,
26
because institutions determine how inputs – technologies, investments,
or policies – are used (Nabli and Nugent, 1989, World Bank, 1997a). For example,
North (1990) described the role of institutions as follows: ―Third World countries
are poor because the institutional constraints define a set of payoffs to

26
See Jutting (2003) for a good summary and criticism of the research that IDA its new ―institutions
matter‖ policy agenda.

130

political/economic activities that do not encourage productive activity (p.110).‖
27

They also hold that efficient institutions are those which provide the right incentives
to individuals. Such institutions are created though competition.
The World Bank‘s key policy documents that set the stage for the new wave
of institutional reforms draws predominantly from this strand of research. The
research used in World Bank‘s policy documents found that certain features of
institutions - accountability, efficiency in service delivery, transparency – are
strongly correlated with the long-term growth and poverty reduction (Fukuyama,
2008, Burnside and Dollar, 2004, World Bank, 2007b, p. 3). The 2002 World
Development Report (WB 2002), for example, opens with the quote from Douglas
North.
The key idea the World Bank took away is that by creating the right kinds of
incentives through changing institutions, reformers can change people‘s behavior.
Thus, instead of providing assistance in the transfer of skills, technologies, or policy
advice, development agencies saw they could do a better job if they focused on
developing recipients‘ institutions to make them conducive to growth. Other IDA
followed suit (OECD, 2005a, DFID, 2003, Orrnert, 2006, Bandstein 2005).
While there is agreement that good quality institutions are necessary not
only for economic development but also on other grounds such as provision of
human rights and democratic governance, and NEI‘s contribution for the improved

27
Note that North (1990) also admits that effective institutions – such as those in economically
advanced Western Europe – emerged under the influence of complex factors and are hard to design.

131

understanding of institutions has been notable, NIE‘s research on institutions has
been challenged on several accounts.
First, the term institutions itself is not always consistently used. The most
commonly mentioned example of institutions is property rights rules. This
ambiguity enables application of ideas on institutions derived predominantly from
the research on developed countries‘ economic development, to a broad set of
political, administrative, and societal institutions structuring behavior of the whole
governance system in developing countries. There is also no consensus on what the
specific components of the governance institutions are and how they are related
(Caiden 2006, Fukuyama, 2008). This direct translation of ideas from one sphere to
another may be problematic, as the experiences with the previous wave of reforms
have demonstrated.
Researchers also point out that NIE is poorly suited for understanding
institutional change, let alone deliberately designing institutional changes (Luong,
2000, North, 1993). Partly, the weaknesses of the NIE in explaining institutional
change accounts for its micro level orientation: institutions operate at different
levels of social reality, and deducting macro level changes based on limited
assumptions on individual behavior limits its capacity to account for other
influences stemming from past or organizational level factors. While NIE can tell
what kinds of institutional functions are associated with growth, even if the
causation is not firmly established, they are yet to elaborate on how those
institutions are to be introduced and rooted in developing countries. The scholars
132

whose work was being used by the IDA themselves cautioned that we do not know
enough how to change institutions in developing countries (North, 2008, Asemoglu,
2008
,
Rodrik, 2008). Researchers found that not only NIE, but also historical
institutionalism alone have been insufficient for studying the process of institutional
change (Luong, 2000).
28

The direction of the assumed causality – that good institutions cause
economic growth – is also disputed (Jittung, 2003, Girishankar, 2001, Brinkerhoff
and Goldsmith, 2005, Chang, 2001, Rodrik, 2008). But IDA tends to interpret the
existing evidence as if certain sets and features of institutions necessarily lead to
economic growth (World Bank, 1997a, 2002a, 2007b). Donors largely ignore the
research that points at alternative entry points for development (Fukuyama, 2008).
Perhaps the weakest aspect of NIE is the model of rational individual
underlying this movement. Rational choice approach which applies economics
assumptions to political behavior, is characterized by the following four emphases:
(1) a deductive theory and methodology; (2) a bias against normative and
prescriptive behavior; (3) assumptions of methodological individualism – that
individuals are the only actors, and individual utility maximization is their sole
motivation; and (4) a focus on inputs, such as votes and money to the political

28
Luong (2000), who conducted extensive empirical research on electoral processes in Central Asia
argues that ―historical and RCT dominant in the study of institutions in transition countries made
useful contributions, but unable to explain the complexity of the bargaining processes… in electoral
systems‖ because the former de-emphases power asymmetries, and the latter gives little credit to the
human agency. She concludes that scholars ―cannot understand institutional origin and change by
beginning our analysis from the initiation of transition itself…. Nor can we understand it by turning
our attention solely to the continued influence of the past.‖

133

system, to the neglect of the internal workings of the structures (Peters, 1999, as
cited in Scott 2007).
Rational choice assumptions are bolstered and reinforced by those of
scientific management which has been a constant pillar of the development
interventions from its inception. Scientific management holds that individual
behavior and the environment need to be ordered and managed by experts to
achieve the greatest efficiency, and treats institutions as a tool and an outcome of
scientific and technical interventions. Policy sciences, including development
policies, have been heavily shaped and driven by this worldview as well. Ironically,
in this version institutional analysis is turned upside down; the institutional
perspective emerged precisely to counter the extreme ideas of the rationalist
schools, to place individuals and organizations in their context as part of the larger
open system, and to show how environmental forces shape individual behavior by
influencing individuals‘ and organizations‘ preferences and defining their choices,
and how institutions take a life on their own.
Numerous findings in psychology and behavioral sciences as well as field
studies (inter alia, Ostrom 2005) add weight to the alternative socialized model of
human behavior which holds that human decisions and behavior is less a product of
rational utility maximizing tendencies and more an outcome of following social
scripts (i.e. norms and prescriptions) appropriate for a given situation and an
individual mental models. The institutional theories need to incorporate and be
grounded on empirically-established research rather than on a-priori ideas.
134

Even the assumptions of boundedly rational model of individual used in
institutional analysis leads to paradoxical outcomes. Given the self-interested
nature of individuals, achieving cooperation toward collective objectives,
institutional change becomes inherently problematic: If institutions represent
rationally constructed edifices established by individuals who seek to promote their
interests (Moe, 1984), and if all individuals are boundedly rational utility
maximizers, institutions then would be designed also by utility-maximizing agents.
This would render institutions that perpetuate the designer‘s own interests; thus
socially efficient institutions would never be established (Rothstein, 1996, pp. 146-
147). Reliance on these economic models therefore makes NIE less suitable for
addressing institutional problems such as corruption, because these models
downgrade the role of ethical motivations (Sen, 2003).
In sum, NIE and ideas informing donor policies provide a partial picture on
institutional change. This strand of research seems to have overlooked relevant
lessons and studies on transnational administrative reforms from the first wave of
reforms,
29
as well as research from other disciplines, such as anthropology,
sociology, and comparative political science, that studied institutional change
processes in greater depth. Other socialized models of the individual, concerned
with long term outcomes, the society/community, and appropriateness (versus

29
As mentioned in chapter 2, among such works are ―Institution Building and Development‖ edited
by Joseph Eaton (1972, Sage), numerous works by Fred Riggs and other members of the
Comparative Administration Group, as well as ―Institutional Development: Incentives for
Performance‖ by Arturo Israel (1989).

135

calculation) of one‘s action, and emphasize individuals‘ ability to self-organize,
govern themselves, and arrive at efficient outcomes that rely on self-evolving
informally enforced institutions and their enforcement mechanisms, have been
overlooked (Hayek, 1981, Ostrom, 2005, Robertson, 1999). This is one of the
reasons why much of the institutional discourse and reforms have been focused on
deliberately designed formal institutions as superior to the informally enforced and
self-evolving forms of institutions.
Moreover, these alternative schools have been sidelined by policy makers
and dominant schools as being too naïve and normative, i.e. unscientific
(Frederickson and Smith, 2002, Ostrom, 2005, Robertson 1999). Donor staff and
researchers employed by them, owing to their similar formal training and
socialization under the influence of a dominant scientific paradigm (i.e. positivism),
tend to favor ―technical analysis based on economics and finance and the official
avoidance of politics‖ and a belief that neoliberal policies are appropriate for
economic development (Miller-Adams, 1997, p.52). That is why for them
economists‘ formal models have had greater appeal to IDA compared to the
―essayist‖ institutional research from other disciplines (World Bank, 2001, 2002a).

New Public Management
The content and approach to public sector institutional reforms reflect these
gaps in research. The public sector is still expected to become leaner and perform
more effectively in fulfilling its core functions. The IDA‘s emphasis on incentives
136

and competition following the NIE scholars further reinforced the assumption that
public sector institutions need to be deregulated and exposed to greater competition
and accountability internally and from outside. It is implicitly assumed that the
effectiveness of government institutions is less a function of direct organizational
development, but results from changing incentives (rules of the game) that expose
them to greater competition from the private sector and demand from citizen-
customers. In sum, the principles according to which the private sector institutions
operate, when applied to public sector institutions, are expected to generate socially-
beneficial incentives and behavior.
The New Public Management (NPM) movement in public administration
and development management, that shares assumptions of the political
economy/NIE movement, similarly has not been able to specify the nature and
causal relationships among the quality of institutions, functions of institutions, the
process of institutional reform, and outcomes of reforms.
Lacking clear understanding of causal relations, NPM draws from the
institutional models and practices of OECD countries that serve as benchmarks for
practitioners, and emphasizes universal management standards as a remedy for
problems of developing countries:
On the management side, the thematic core of development management is
today's version of NPM, exemplified by the OECD's approach to public
management reform (see OECD 2005), leavened with the strategies and
tools associated with core administrative functions (e.g., budgeting, human
resources), organizational and systems change, institutional structuring (e.g.,
decentralization, subsidiarity), promoting citizen participation, and
management training (Brinkerhoff, 2008, pp. 191-192).
137

Interesting, NPM approach goes against donors‘ rhetoric to tailor reforms to the
recipients‘ contexts. The critics also caution that:
From a theory perspective, this NPM core is problematic in that, to an
important extent, it constitutes a list of actions to be pursued rather than an
analytically integrated agenda that reflects a set of causal relationships.
There are ongoing debates around necessary and sufficient conditions,
linkages, sequencing, and impacts. The one-size-fits-all managerialism of
NPM needs to be interrogated, and ultimately nuanced, by "empirical studies
covering diverse countries and regions, longer time frames, and multiple
dimensions of governance in order to review cross-national similarities and
differences in major reform trends, rationales, contexts, [and] impacts"
(Haque 2006, 319). Given the tendency toward idealized thinking about
development management that NPM embodies, it is important to maintain a
critical perspective on the underlying factors that influence outcomes and
impacts (Brinkerhoff, 2008, pp. 191-192)
In sum, the research informing donor policies has been criticized as being
partial and poorly suited for understanding, let alone informing, the design and
implementation of institutional reforms. While the key problems on the way
towards creating effective institutions involve intangibles such as values and trust
issues, the research informing donors‘ institutional reforms, namely NIE and NPM
movements, has been based on the set of assumptions on human behavior that has
little room for these factors. In addition, they are poorly suited for examining the
process aspects of reforms. Meanwhile, the extensive body of scholarship that
examined in greater depth these aspects of human behavior and institutions, the
processes of how institutions change, as well as lessons and insights from the
previous experiences, has been largely overlooked. These deficiencies are reflected
in the practice of donors, as demonstrated below.
138

The Content of and Approach to the Reforms
This wave of reforms is distinct from the previous ones in a number of ways:
donors changed not only the content of its reforms, but also are attempting to
change the approach to conducting their interventions – ―the way it does business‖
– to address their past shortcomings (World Bank, 2000a). The content of the
IDA‘s reforms shifted away from the market to promoting good governance through
sets of institutional reforms. Reforming administrative institutions is seen as a chief
mechanism for transforming other institutions in the governance system. Unlike the
reforms in 1950s, this time the state and government institutions are seen not as
direct providers of goods and services, but more as facilitators of economic growth.
The IDA now argue that the government‘s main responsibility is to create the right
conditions and incentives for the private sector and civil society, which are seen as
complementary players in the broader governance process along with the
government. Thus, IDA hold that governments should become more open,
participatory, and democratic (World Bank, 1997a).
The IDA‘s new approach to institutional reforms, at least in policy
documents, also became more aligned with what they prescribe the recipient
governments should do towards their own citizens. The IDA are now trying to
make their interventions more participatory, beneficiary-driven, and tailored to each
specific context, and they seek to design systematic public service reforms
coherently integrated with other institutional reforms. It is assumed that this new
approach will positively affect the outcomes of the development interventions.
139

Below, a brief overview of the key and shared elements in the content and approach
of the key IDA‘s public sector reforms is followed by a summary of the main policy
documents of the World Bank and United Nations outlining their public sector
reform strategies.
The leading donors‘ vision for the public sector reforms in this wave could
be illustrated as follows.

Figure 4: The Vision for Public Sector Reforms in the Third Wave

140

Content of IDA’s Public Sector Reforms
Contrary to the widely shared perception, institutional reform – changing
rules, regulations, and organizations – is not new in international development
practice. The previous reforms also explicitly or implicitly relied on changing rules
and regulations. At the same time, the current institutional reforms differ from the
previous ones in several aspects. The previous reforms paid attention to both
changing rules and promoting the capacity of organizations entrusted with enforcing
those rules and emphasized organizational capacity building (i.e. organizational
development) over rule change. The current reforms tend to emphasize rule change
over the development of capacity to enforce those rules,
30
and focus more on macro-
level/constitutive/governance institutions and on the relationships between public,
private and increasingly also nonprofit sectors. In contrast, the previous ones
focused more on [meso-level] organizational rules and resources. Second, the
current reforms intend to change not only administrative or judicial institutions, but
also economic, political, and societal institutions that together make up governance
institutions.

30
For example, the UNDP‘s survey of its current administrative reforms across its beneficiaries
showed that enactment of new laws and regulations are the dominant means of implementing
administrative reforms. UNDP surveyed all member countries about the measures they used to
revitalize their administrative systems and received response from 40 of them. The most frequent
means of implementing administrative reforms were, enactment of new laws and regulations
(mentioned by 73.7 per cent of the respondents), personnel and human resources management and
training (68.4 %), organizational restructuring (65.8 %), the adoption of anti-corruption measures
(which are often confined to changing laws or creating new organizational structures) (55.3 %) and
deployment of information and communication technologies (55.3 %). Privatization and
enhancement of the law-making capacities of the legislature were not frequently as cited (36.8 and
39.5 % respectively).
141

Integrated governance reforms
Although the previous reform interventions often contained some
components targeting improvement of the effectiveness and capacity of government
institutions, those components have been disjointed, and since the 1970s subsumed
under other priority policies (Israel, 1987, UN, 1982). Policy-makers in IDA are
finally acknowledging that institutions are interdependent and the reforms need to
account for this reality. This, at a minimum, means that changing economic or
political policies and even institutions alone will not be sustainable unless public
administration systems are also reformed (Caiden, 2006). By the same logic,
―administrative reform is no longer about transforming the administrative state per
se but transforming governance, the relationships between societal institutions that
exercise authority within a single country/state, a group of states, or a country
association‖ (Caiden, 2006, p. 17). Today‘s institutional reforms focus not on a
single institution, but the whole governance system (World Bank, 2001).
Still, among other institutions, public administration is now seen as central
to governance reforms, especially in the countries with the weakest government
capacity. For example, public sector reform is now in the heart of the World Bank‘s
overarching agenda of improving governance, which falls into three broad areas—
―rule-based operation of the government itself to improve the supply of public
goods, voice and accountability for citizens to demand better public services, and
more efficient and effective regulation of the private sector to improve its
competitiveness.‖ Similarly, the UNDP treats public administration reforms as
142

central part of its Democratic Governance program (see more on these two IDA
reform agenda below). Yet, as stated above, there is a still a huge ambiguity about
how this set of institutional-governance reforms is supposed to work (Fukuyama,
2008). If administrative reform was not vexing enough, now a complex set of
institutional reforms are going to be even more challenging (Caiden, 2006). No one
seems to even explicate and present a coherent analytical framework to guide this
ambitious wave of reforms.
Confluence of administrative reform with “rule of law” reform under
the umbrella of Public Sector Reforms
The redefinition of development as a matter of high quality ―rules of the
game‖ resulted in a confluence of administrative changes with the ―rule of law‖
reforms, both in terms of content and methods. ―Rule of law‖ is the continuation of
the previously tried and abandoned ―rule and development‖ field concerned with
improving the capacity of the judiciary. Now ―rule of law‖ is a part of the broader
public sector reforms. Moreover, this field of practice regained greater influence
among donors. If ―law and development‖ was promoted mainly by the US aid
community, this time ―rule of law‖ is deemed as an essential component of
institutional reforms by almost all IDA. Rule of law is appealing to IDA because it
is considered essential for promoting economic growth by attracting investors, as
well as for democracy, although the direction and even the existence of causality is
questionable (Carothers, 2003b, Messnic, 1999).
143

In terms of methods, law reform rests on the following three premises that
parallel the assumptions underlying other institutional, including administrative,
reforms: (1) development requires a modern legal framework resembling that of
developed countries, (2) this model establishes clear and predictable rules, and (3)
the model can be transferred to developing countries (Messnick, 1999, Garothers,
2003b). Additional factors reinforcing the confluence of PSR with the ―rule of law‖
field include the reliance on technical cooperation in the delivery of other types of
aid and institutional isomorphism.
31
Technical assistance relies on Western-trained
consultants and experts who are most familiar and comfortable with their own
institutional models. These models can be successfully imported on paper (not
necessarily in practice) due to the relative simplicity of changing laws in developing
countries. This tendency has been reinforced by isomorphism, reflected in the
eagerness of developing countries‘ leaders to adopt Western political, economic and
administrative institutions to secure legitimacy and the financial and moral support
of the wealthier and influential governments. This drive has been especially strong
in the former socialist countries attempting to join the world community.

31
Meyer and Rowan argue that formal structures of many organizations reflect the myths of their
institutional environments rather than the demands of their work activities. Although acquired
practices and procedures increase their legitimacy and their survival prospects, such isomorphism
does not necessarily promote efficiency of the organization:
Isomorphism with environmental institutions has some critical consequences for
organizations: (a) they incorporate elements which are legitimated externally, rather than in
terms of efficiency, (b) they employ external or ceremonial assessment criteria to define the
value of structural elements, and (c) dependence on externally fixed institutions reduces
turbulence and maintains stability (1977, p.511)
.

144

This mainstreaming and increasing influence of the ―rule of law‖ promotion
field over PSR is concerning, considering that all three assumptions it is based on
have been empirically defeated (Messnic,1999). The sobering record of the ―law
and development‖ movement since 1960 showed that the IDA approach to
institutional reforms focused on the transfer of formal aspects of Western
institutions do not work in the formalistic environments of developing countries, i.e.
where formal institutions and organizations are not institutionalized (Carothers,
2003b, Riggs, 1964). Legal scholars also criticize the simplistic assumptions
underlying legal technical assistance projects ―that focus primarily on improving the
statutory laws in developing countries [and] assume that supplying the right laws on
the books will enhance legality, and ultimately economic development.‖ They infer
that externally imposed laws are more likely to remain on the books, and that
internal demand is essential to make laws effective (Berekowitz et al., 2003).
Veterans of this field observe that it has become painfully clear on countless
occasions that trying to promote the rule of law by simply rewriting another
country‘s laws on the basis of Western models achieves very little, given problems
with laws not adapted to the local environment, the lack of capacity to implement or
enforce the laws, and the lack of public understanding of them. Yet externally
supported law reform efforts in many countries, especially those efforts relating to
the commercial domain, often continue to be limited to simplistic exercises of law
copying (Carothers 2003b). In sum, in terms of the content of reforms, this time
145

donors are trying to focus on a large set of institutional transformations under the
governance agenda that emphasizes the facilitative role of public administration.

Donors’ Approach to the Reforms
Meanwhile, IDA‘s approach to institutional reforms – i.e. how it promotes
the reforms in developing countries – shows a radical departure from the old
approach, but mainly in policy rather than in practice. For the last decade, IDA
have been attempting to change their accustomed approach to institutional reforms
to make the latter more cohesive and outcome oriented (i.e. less fragmented), better
tailored to local contexts, participatory, and demand driven.
32
During this wave of
reforms, their approaches to reforms was also influenced by understanding that
previous institutional reforms were confined to relying on and changing rules and
constraints did not work, and that they needed to also account for the participation
of beneficiaries to enhance the effectiveness of government‘s capability (World
Bank, 1997a, 7).

32
For example, the following seven principles from the Implementation Plan for Strengthening
World Bank Group Engagement on Governance and Anticorruption which summarizes the WB‘s
approach to development:
The WBG‘s focus on GAC is based on its mandate to reduce poverty - a capable and accountable
state creates opportunities for the poor.
The WBG‘s GAC work must be country driven.
Implementation is adapted to individual country circumstances.
The WBG will remain engaged even in poorly governed countries so that ―the poor do not pay
twice‖.
The WBG aims to engage in its GAC work with a broad array of stakeholders.
The WBG ill strive to strengthen, not by-pass, country systems.
The WBG will work with governments, donors, and other actors at the country and global levels to
ensure a harmonized and coordinated approach (2007b, p. 1).

146

Focus on outcomes rather than on outputs
In contrast to the previous wave of public sector reforms, this time donors
are attempting to focus not only on the general idea of cutting government‘s size
and role and infusing more competition through privatization, but also on specific
features of NPM such as individual performance and outcome-orientation in public
management. These elements are promoted in the place of inputs, process, and
public service culture/ethos that characterized traditional public administration
(OECD, 2005a, p. 203).
The IDA are trying to carry out more systematic reforms, paying attention to
the effect of institutional reforms on the larger governance environment, rather than
on the outputs of fragmented projects or programs, as has been the case before
(Girishankar, 2001, see also Bossyut, 2001, Bandstein, 2005, Engel et al., 2007). In
other words, projects and programs of the donors are to be evaluated against their
impact on the overall governance environment. The recipients are therefore
required to develop long-term country level institutional development strategies and
link donor projects to them, instead of simply relying on ad-hoc supply-driven aid.
Example of such country level-strategies are Poverty Reduction Strategy Papers
(PRSP) and Comprehensive Development Framework (CDF). The emerging
consensus among IDA is that the donors need to place greater emphasis on
―rigorous measurement of institutional performance, use of more flexible
programmatic lending instruments, and sequencing strategies that ensure that ID
147

[institutional development] efforts ―lock in‖ improvements in the way public
management systems work‖ (Girishankar, 2001).
Efforts to tailor reforms to their context
Meanwhile, IDA have been increasingly emphasizing the need to ―calibrate‖
reforms to the specifics of each country thorough better understanding the
recipients‘ needs. This lesson has been vividly highlighted owing in part to the
failures that followed the one-size-fits-all approach of the Washington Consensus
reforms promoted by the IDA a decade earlier.
The experiences of the OECD countries with the NPM reforms that
generated mixed results also might have influenced the IDA‘s approach. For the
first time OECD countries, similar to what developing countries have been
undergoing for a few decades, also experimented with ―best practices‖ borrowed
from other contexts. Performance-based budgeting and NPM reforms popularized
through New Zealand‘s successful example have been tried in many countries, but
led to different and not always desirable outcomes even in OECD countries. The
latter realized that best practices may not work if not tailored to the local context
and the importance of a clear understanding of the problems and desired outcomes
prior to interventions (OECD, 2005).
Emphasis on participation and local ownership
Furthermore, IDA have been trying to re-orient their policies to make the
institutional reforms more demand-driven (World Bank, 1997a, IMF, 2003, UN,
2001, OECD, 2005b, Jutting, 2003, Orrnert, 2006, Bossuyt, 2001, Bandstein, 2005).
148

It is assumed that fostering local participation, voice, and ownership will improve
not only the beneficiaries‘ buy-in and improve aid effectiveness, but also will
strengthen the quality of institutions and local capacity and accountability of
authorities. Although the World Bank still intends not to interfere in political
matters of the recipient states, this new approach implicitly and indirectly embraces
the political nature of the reforms and the need to change the existing distribution of
power for the public sector reforms to succeed. The World Bank, however, has
reservations when it comes to popular participation in macroeconomic policy (both
monetary and aggregate fiscal). It perceives that participation in these areas can be
easily captured by special interests, and ―are best carried out by organization [by
qualified experts with technical expertise] insular from the exigencies of everyday
politics‖ (Girishankar, 2001, p.9).
In sum, the traditional top-down and externally-determined approach to the
reforms, which consisted of the transfer of skills and formal elements of institutions
or organizations to developing countries, designed and implemented by foreign
experts, is falling out of favor, at least in policy rhetoric. Instead, the IDA came to
recognize that to make aid effective they need to tailor the reforms to beneficiaries‘
specific needs and make lending support locally-driven and owned. The current
consensus is that IDA should help developing countries build government
institutions capable of making sound policies themselves without relying on external
advisors. ―Only through such institution-building will countries be able to achieve
the ultimate goals of poverty reduction, inclusion, environmental sustainability, and
149

private sector development‖ (World Bank, 2000a, p. xii). Below the content and
approach of the World Bank and United Nations‘ public sector reforms are
described in detail.
The World Bank
In 1996 the Bank‘s the then president James Wolfensohn‘s ‗cancer of
corruption‘ speech at the WBG-IMF Annual Meeting brought the long awaited issue
of quality of public sector institutions to the center of its official development
agenda. The 1997 World Development Report (WDR), The State in a Changing
World, was the next step in this direction declaring that without an effective nation-
state sustainable, social and economic development was impossible. It defined the
institutional environment as the ―rules and customs that determine how [economic
and technical] inputs are used‖ (1997a, p.iii). The state is expected to reform itself
to become more effective and credible by (1) matching its role to its capability, i.e.
to cut down those functions that it cannot deliver due to lack of capacity, (2) and to
improve its capability in what it can and should do well. The latter would be
accomplished by designing effective rules and constraints, subjecting state
institutions to greater competition, and making the state more responsive to people
through increasing their participation, involvement, and decentralization (World
Bank, 1997a).
This report served as a springboard for a number of other important
documents that specified how the World Bank would carry out its new agenda.
Among them is the Bank‘s 1997 Anticorruption Strategy Helping Countries Combat
150

Corruption, The Role Of The World Bank, the 1999 Policy Research Report
Assessing Aid, What Works What Doesn‟t And Why, the 2001 WDR Attacking
Poverty, the 2002 WDR Building Institutions for Markets,
33
the 2000 Reforming
Public Institutions and Strengthening Governance strategy, the 2001 Evaluating
Public Sector Reforms, Guidelines for Assessing Country-Level Impact of
Structural Reform and Capacity Building in the Public Sector, and the World
Bank‘s Governance and Anticorruption Strategy (GAC) adopted in 2007. The last
two documents state the key principles and the priorities informing the content and
approach to the World Bank‘s public sector reforms, which is why they are
summarized below.
The Reforming Public Institutions and Strengthening Governance strategy
(―Strategy‖) moved the institutional capacity building - ―building effective and
accountable institutions to address development issues and reduce poverty in
borrowing countries‖ – to the center of the World Bank‘s work (2000a, p. xii). The
Strategy also laid out the first systematic strategy for mainstreaming and carrying

33
The World Bank‘s 2002 World Development Report (2002a), dedicated to the task of ―Building
Institutions for Markets,‖ further elaborated on the agenda set forth in its 1997 World Development
Report (1997a). It presented a set of lessons for institution building, as well as a limited empirical
evidence on institutional change. This report defined institutions more broadly compared to the 1997
one. This time the definition of institutions included to not only rules and enforcement mechanisms,
but also organizations, although it was not made explicit how they differ and relate to each other.
Institutional development is similarly broadly defined as ―the extent to which a project has improved
an agency‘s or a country‘s ability to make effective use of its human and financial resources.‖
According to this report, to ensure effective institutions capable of making markets work, reformers
need to (1) ―design them to complement what exists – in terms of other supporting institutions,
human capabilities, and available technologies,‖ (2) ―innovate to identify institutions that work – and
those that do not,‖ (3) ―connect communities of market players through open information flows and
open trade,‖ and (4) ―promote competition among jurisdictions, firms, and individuals,‖ by tapping
on their incentives

151

out public sector institutional reforms by integrating them in country settings. This
way it intended to remedy the previously fragmented efforts as part of broader
sectoral reforms, which often ―have been sacrificed to a shorter-term emphasis on
policy change or the direct provision of outputs‖ (ibid).
This Strategy also elaborated on the World Bank‘s intention to become ―one
of a very few leading authorities worldwide‖ in the core areas of public sector
reforms. These areas include ―(a) the role of the public sector, (b) the broad
structure of government (including decentralization and intergovernmental fiscal
relations), (c) core system-wide administrative and civil service reform and capacity
building, (d) public expenditure analysis and management, and (e) sectoral
institution-building (including regulation of private service delivery)‖ (ibid, p.xvii).
More recently, the World Bank has also started to focus on strengthening other
initiatives intended to secure good governance complementary to public sector
reforms, including the promotion of public participation, information disclosure, and
anti-corruption measures. At the same time, the World Bank points out that it has a
limited mandate or expertise and therefore does not envision itself to be involved in
other areas of public sector reform, including police reform, criminal justice
systems, general parliamentary processes, and political governance (ibid, p. xviii).
In addition to defining the content of the PSR, the Strategy also identified the
following problematic aspects of the World Bank‘s approach to reforms and the
ways that they would be remedied:
152

 The World Bank‘s fragmented and insufficient focus on institution building
would be reversed via mainstreaming, i.e. putting it at the center of its activities
and making it part of the country-level strategies,
 The narrow technocratic emphasis of institutional reforms would be remedied by
a greater focus on three mechanisms to promote the effectiveness of public
sector institutions and good governance: In addition to the traditional focus on
rules and regulations, the strategy calls for greater use of competition (from the
private and nonprofit sector through privatization and contracting out) and voice
and partnership (by empowering and soliciting feedback from communities),
 The inadequate ownership of the reform agenda by the beneficiaries was to be
addressed via selecting more suitable partners as well as ―putting country‘s
leaders in the driver‘s seat‖,
 The inadequate knowledge of institutional realities on the ground would be
addressed by improving the tools of analysis and conducting more in depth
institutional analysis assessments prior to launching interventions.
 The need to do more analytical work was proposed to improve the
understanding of a ―good fit‖ which increasingly is emphasized over the
traditional ―one size fits all‖ and ―good practice.‖
 The short-term lending approach, which was not conducive to successful
institution-building, would be addressed by moving towards long-term and more
flexible lending,
 Shortage of the qualified in-house expertise would be remedied by attracting
such experts from outside,
 Incomplete quality control mechanisms in the public service portfolio would be
addressed by improving the World Bank‘s work in this area and its diagnostic
tools,
 The inadequate mechanisms for sharing and preserving knowledge would be
remedied by building and sharing knowledge base among practitioners inside
and outside the Bank, including by greater cooperation with other donors (ibid,
pp. 64-66).

In March 2007, the World Bank‘s Board of Directors approved the World
Bank‘s Governance and Anticorruption Strategy (GAC), in August 2007, a plan for
implementation of this strategy was adopted. The GAC is based on the following
seven principles:
The GAC is rooted in the Bank‘s mandate to address poverty reduction, it is
not an end in itself, it must be country driven, it must be adapted to country
circumstance - no ―one size fits all‖, it requires the Bank to remain engaged
153

so that ‗the poor do not pay twice‘, the Bank would work with many
stakeholders, and it would not act in an isolated way, but with partners, and
it would work to strengthen, not by-pass, country systems through stronger
institutions‖ (World Bank, 2007b, p.1).
These attempts to change the World Bank‘s approach to promote
development are embodied, for example, in the World Bank‘s Poverty Reduction
Strategy Papers (PRSP), Comprehensive Development Framework (CDF)
34
and
Community Driven Development (CDD) initiatives.
35
While CDF emphasizes the
role of the central government and comprehensive systematic national development
policy, CDD is directed at improving local capacity and participation in this process.
In sum, for the last ten years the World Bank integrated public sector reform into its
country level strategies as the central element of the broader governance reforms. It
is attempting to change its top down, one-size-fits-all, technocratic, and enclavist

34
CDF was launched in 1999 under the leadership of the then the World Bank‘s President James
Wolfenson. This initiative is based on the following set of principles, ―long term holistic vision‖
that emphasizes ―country-specific development targets‖, ―country ownership‖ where not only
government but also civil society and private sector are involved in the process, ―country-led
partnership‖ whereby the governments exercises leadership in coordination of development efforts,
and ―results focus‖ that puts weight to the quality of and access to information, as well as importance
of country level monitoring and evaluation. These principles are geared towards making the
development efforts at country level more cohesive and effective to help the countries‘ to enhance
their capacity and reduce poverty along the lines of MDG. In medium term CDF is to be
operationalized via poverty reduction strategies. Moreover, the national CDFs are also intended to
provide framework for coordination of donor assistance on various development projects and
programs based on comparative advantage. Donors are expected to ―think less in terms of each
having its own strategy and more in terms of jointly working within a relevant national policy
framework to the maximum extent possible‖ (World Bank, 2001, p. 20).

35
WB‘s Community-driven development (CDD) initiative is viewed as a viable entry point for a
longer-term public sector reforms. Under this initiative the WB provides limited resources to locally
organized communities to help them to provide local public goods. The initiative builds on local
ownership through participation in planning, implementation, and community-based oversight. It is
expected to contribute to local capacity building, strengthen local governance systems by
encouraging close linkages with local government, and provide decentralized service delivery. At
the macro level, local initiatives and increased capacity would generate greater demand for greater
fiscal transparency and capable administration overall.

154

(fragmented) practices by increasing local participation and tailoring reforms to
their contexts. The World Bank experts are also trying to improve their
understanding of how institutions change, and come up with analytical tools to aid
development practitioners in designing and implementing the institutional reforms
supported by the Bank. The increased attention to measurement of the impact of the
reforms at country level also has necessitated improving its diagnostic tools.
The United Nations Development Program (UNDP)
Adoption of the Millennium Development Goals (MDG) in 2000 at the
summit convened by the United Nations not only brought the donors to the same
page in terms of development assistance priorities. It also reinforced the role of the
United Nations as one of the key donors specializing in public administration
reform, which is deemed essential for achieving those goals:
The Millennium Declaration recognizes good governance, of which public
administration is a central part, as the means for achieving the goals of the
declaration. Support to modernizing state institutions is linked to achieving
the MDGs in several ways. First, more resources in poor countries are freed
to be used in pursuit of MDG goals if the efficiency of public administration
is increased. Second, by increasing transparency and eradicating corruption,
fewer scarce resources in poor countries will be misdirected away from
achieving MDGs. Third, a public administration that responds to the needs
of citizens, especially women and marginalized people, is critical to ensuring
the sustainability of the achievements within the rubric of the MDGs.
Finally, increasing the accountability of state institutions is an essential
feature of governments‘ strategies to close the democratic deficit, which is
key to achieving the MDGs within the context of the broader millennium
declaration (UNDP, 2004, p.3).

In addition to the MDG and Millennium Declaration, other UN documents
highlighting the role of public administration and reform of administrative
155

institutions include the General Assembly‘s Resolution 57/277 on Public
Administration and Development. More recently, the Secretary-General‘s
November 2005 Report to the General Assembly on implementation of this
resolution renewed this commitment by stressing the need to strengthen the role of
the United Nations in public administration, particularly with respect to
collaborating with Member States and other partners in the implementation of
capacity-building and knowledge-sharing initiatives in support of public
administration reform (UN, 2006, p.8)
The content and approach of the UNDP‘s PAR is detailed in its Public
Administration Reform: Practice Note, published in 2004, outlining how the
organization goes about implementing the UN‘s administrative reform agenda. The
document is premised on the following key principles of effective public
administration: participation and transparency in decision-making, non-
discrimination, equity, and equality, empowerment, and accountability of actors
(UNDP, 2004, p.4). The UN Secretary General‘s 2005 report to the General
Assembly, based on the review of the lessons learned by the recipients of assistance
pointed at the need to switch to home-grown and demand-driven public
administration reforms. Furthermore, the report also highlighted that ―the future of
public administration lies in the institution of measures aimed not only at
reaffirming the developmental role of public administration and upholding its core
values, but also at reconfiguring public service organizations into open,
156

participative, knowledge-sharing, innovating and results-oriented service-delivery
systems‖ (UN, 2006, p.8).
As for the UNDP‘s approach to the reforms, in addition to the commitment
to recipients‘ participation, empowerment, ownership, equality and accountability,
the Practice Note lists the following four lessons that should guide PAR approaches.
First, it needs to be realistic of what is possible to accomplish and keep in mind that
rarely do all components of the reforms meets expected outcomes. Second, it calls
for keeping interventions simple and short. Third, the Practice Note cautions
against copying from ―famous models without due regard for environmental
differences.‖ Lastly, the reformers are reminded that PAR is a slow process, and
―trying to increase the speed of reforms risks jeopardizing national ownership and
long-term sustainability‖ (2004, 18). To sum up, the leading donors of this wave of
institutional reforms dramatically changed both the content of the reforms as well as
the approach – how they do business. How are these policy decisions playing out in
practice? The next section addresses this question.

Assessment of the Preliminary Outcomes of the Reforms
This section focuses on surveying early signs of how reforms are playing out in
practice, using insights from the previous waves of reforms. Although the public
sector/governance reform agenda is still evolving, and it takes time for institutional
reforms to generate outcomes, the donors have been examining the early results of
their interventions to identify what works and what needs changing. This section
157

draws mainly from the World Bank‘s assessment documents and complements it
with independent researchers‘ observation because the World Bank invested a lot
more efforts into stock taking from its public sector reforms (PSR) compared to
other donors.

As mentioned in the introductory chapter, very few studies have analyzed
the effects of public sector reforms on recipients‘ existing institutions. Donors‘
intentions to better measure the outcomes of the reforms on actual conditions and
institutions has been hindered by several factors. Inquiries into the outcomes of the
IDA‘s institutional reforms note that interventions attempting to change institutions
are highly complex. Deliberate planning and implementation of such reforms is
challenging and they rarely succeed. Such reforms also require long time periods
before tangible results can be observed (Bossuyt, 2001, p. 2, De Capitani and North,
1994). Drawbacks in donors‘ analytical and diagnostic tools, such as a lack of clear
definition of institutions and different uses of this term also contribute to the
difficulty of measuring outcomes. Isolating effects of the reforms from other factors
(―attributional problem‖) is another element (Goldsmith, 1992, see also World
Bank, 2008, Jenkins and Plowden, 2006). These are some of the main reasons why
donors have not been keen to carry out comprehensive evaluations of the actual
outcomes of their reforms.
The World Bank
A series of internal documents examined the design, implementation, and
impact of the World Bank‘s institutional reform efforts in the public sector that
158

flourished for the last decade. These documents all conclude that despite extensive
World Bank efforts to improve governance in developing countries, the outcomes
did not show significant improvements in most countries, especially in those which
had poorer capacity. Furthermore, those outcomes varied across countries and the
types of reforms. Civil service and anti-corruption reforms had significant failures,
while in some areas such as tax administration, the outcomes have been better.
While acknowledging that the reforms may demonstrate a greater impact in the
longer term, these documents identified a number of factors undermining their
success that have to do with the design of and approach to the reforms as well as the
preexisting conditions in recipient communities.
For example, Civil Service Reform: Strengthening World Bank and IMF
Collaboration (World Bank, 2002c) describes these two IDA‘s civil service reform
operations in eleven countries and examines how these reforms played out and how
these IDA collaborated. The report concluded that these reforms‘ success has been
limited due to a number of factors, including poorly defined (if not contradictory)
reform objectives, donors‘ neglect of political and institutional context of reforms,
and poor quality data to inform the reform policies. The report recommends that the
World Bank and IMF collaborate and coordinate their reform policies and
conditionalities and as well as improve data collection and exchange. The report
also recommends that these IDA should be more selective and consistent in pursing
clear reform objectives, developing a medium-term fiscal framework in support of
159

the civil-service reforms, and fostering national ownership through identifying and
involving relevant stakeholders.
The World Bank‘s the most recent and most comprehensive report to date on
the subject is titled Reforming Public Sector Reform, What Works and Why (2008).
In this document, the World Bank‘s Independent Evaluation Group (IEG is the
World Bank‘s internal watchdog agency), drawing from the database of all borrower
countries with more than 460 projects and in depth studies of 19 countries,
examined the World Bank‘s support for public sector reform for the period 1999-
2006 in public financial management, administrative and civil service, revenue
administration, and anti-corruption and transparency. It attempted to identify what
is working and what needs to be added and improved to current efforts at public
sector reform.
The authors of this report concluded that the overall performance improved
for public financial management and tax administration reforms, while civil service
and anti-corruption measures did not generate notable improvements. The
successful tax administration reforms benefited from strong government ownership
and from good diagnosis and strategy. Civil service performance improved in less
than half of the borrowers. The authors found that old strategies which were
discredited in the previous waves of reforms were still being used. For example,
emphasis on retrenchment and salary adjustments was still being advocated with a
similar lack of success in countries like Cambodia, Honduras, and Yemen.
However, in countries where civil service reforms (CSR) focused more on personnel
160

management reforms, such as merit-based recruitment and promotion, the outcomes
were better. The authors explain the frequent failures of the reforms with a ―lack of
a coherent strategy (with isolated exceptions) and of clear diagnostic tools to
address CSA issues,‖ compounded by the inherent political difficulties (ibid, p. xvi).
Anti-corruption reforms also did not show significant improvements. As
summarized on the IEG‘s website, ―direct measures to reduce corruption— such as
anti-corruption laws and commissions— rarely succeeded.‖ The authors also noted
that while transparency has increased, it was not accompanied with the reduced
perceptions of corruption. The report found that indirect measures taken to reduce
bureaucratic corruption – simplification of procedures and regulations, moving to e-
government in various areas, and rationalizing personnel management – had some
success. However, direct measures employed to reduce corruption – such as
introducing new anti-corruption laws and commissions – rarely succeeded as they
often lacked the necessary support from political elites and the judicial systems.
In terms of the analytical tools of measuring corruption levels, the report
notes that the World Bank‘s diagnostic tools tend to rely on general perceptions or
the private sector‘s experience of corruption, neglecting the risks of corruption in
the core public sector and the political factors contributing to corruption.
Furthermore, ―despite its mantra of ―no one size fits all,‖ the Bank has not
developed a framework that adequately recognizes the long duration of the process
to reduce corruption and the differences in where countries need to start‖ (World
Bank, 2008, p.xvi). The World Bank‘s 2006 Annual Review of Development
161

Effectiveness (ARDE)
36
notes that the World Bank allocated a significant share of
its support to public sector reforms since the end of the 1990s (World Bank, 2006a).
One-third out of the 48 Country Assistance Strategies reviewed included measures
for improving professionalism of the public service, and three-quarters contained
measures directed at improving public financial management and procurement. Yet,
this review also found that the ―perceived governance quality has not yet responded
to large-scale public sector reforms‖ in most of its borrowers for the last decade
(ibid).
The evaluations of Country Assistance Strategies identified three factors that
hampered the effectiveness of the Bank‘s public sector reforms: (1) ―reform
initiatives have not been aligned with political realities‖, (2) ―they have focused on
the adoption of legislation and the establishment of institutions, while neglecting the
need for enforcement capacity‖, and (3) ―they have not addressed the intersection
between the public sector and private sector [i.e. utilities, infrastructure, and
extractive industries], where there is most room for abuse‖ (ibid, p.34). As for the
factors facilitating the effectives of reforms, the review found that recipients‘
commitment matters most: ―the Bank can provide governments with the tools to
strengthen the government processes necessary to improve the governance
environment, but effective utilization of such tools remains in the hands of country
decision makers‖ (ibid, p.34).

36
The ARDE pulls together findings from the Independent Evaluation Group‘s evaluations of
poverty reduction efforts among its borrowers.

162

The authors of the Governance and Anti-Corruption, Ways to Enhance the
World Bank‟s Impact (2006b) also point out that the progress in this field has been
slow. If anything, the indicators for governance showed deterioration between 1996
and 2005 in many of the borrower countries, despite the important measures the
Bank has taken to improve governance and fight corruption during this time.
Specifically, public sector institutional reforms – such as the civil service, public
expenditure management, and public enterprise reforms – project performance
―appears to be relatively weak and sector-wide assessments show a relatively lower
success rates than any other sector‖ (p.9). The report draws attention to the
importance of understanding local conditions, especially the recipients‘ political
economy. It notes that although such institutional reforms take a long time before
outcomes can be observed, some of them have been ―more cosmetic than real‖
while ―governance deteriorates because the control of the political elite over
resource flows is largely unaffected by such reforms‖ (p.9).
In a related fact, the overview also challenges the universal applicability of
the assumption on the virtues of participation informing the reforms – that
communities‘ greater involvement would be a self-policing mechanism against
corruption (i.e. one would not steal the resources intended for one‘s own benefit).
The authors found that while community-driven approaches can be useful for
getting funds directly to people, they ―appear unable to stem corruption‖ (p.10).
This approach pays off where initiatives built on the genuine grassroots community
initiatives. Yet ―where such a grassroots mobilization does not exist, donor
163

projects—including those from the World Bank—have been usurped by local elites‖
and ―the community-driven development approach has changed the nature, but not
the level, of corruption.‖ The report warns that such an approach, when
implemented without caution, may undermine governance by weakening the local
government institutions (p.10). This overview also confirms arguments of those
who challenge the causality of improved governance and economic growth (inter
alia Brinkerhoff and Goldsmith, 2005).
In sum, although the World Bank‘s new governance and public sector
reform agenda is still evolving, and some reported positive outcomes, the
preliminary analyses show that overall it is yet to make significant progress in
addressing the most complex aspects of public sector institutions. The problematic
aspects of the World Bank‘s approach to the reforms include lack of understanding
of the context and political economy of the beneficiary countries, using technical
approaches to address political issues, fragmentation (such as the neglect of
significant dimensions of corruption or civil service system), externally determined
agenda, and application of the predetermined set of institutions drawn from Western
models, i.e. one-size-fits-all assumption (such as in the projects related to civil
service pay and promoting local participation), focus on changing formal
institutions without concern with their enforcement and with actual conditions on
the ground (present in all reviewed reforms). Another commonly mentioned
problem is the lack of practical analytical and diagnostic tools for understanding,
designing, implementing and evaluating public sector institutional changes.
164

United Nations Development Program
Meanwhile, UNDP also undertook some attempts to improve its expertise
and address shortcomings by analyzing its past reforms. However, its documents
reviewing PAR are surprisingly silent when it comes to reporting the outcomes of
its interventions, at most they present very brief and generalized findings. For
example, the PAR Practice Note (2004) has only the following carefully worded
passage on this subject:
Public administration reform is as infrequently entirely successful as it is
vitally important. While parts of programmes have achieved what they set
out to achieve, there are very few examples, in developing countries, where
the ultimate objectives of reform have been achieved in a sustainable manner
(p. 18).

One would expect to find a summary of the assessments of reform outcomes
in A Review of Current and Recent Public Administration Reform Interventions
Implemented by UNDP from 1999 through 2003 (Chowdhury, 2003). But nowhere
does this lengthy overview of the reforms mentions how reforms are playing out in
practice. The only way the reader is reminded that reforms are not going as planned
is from the long list of obstacles listed in the ―emerging lessons‖ sections that
mostly repeat the lessons learned from the previous waves of reforms. Some of the
boxed examples of the reforms in the review, when examined more closely, suggest
that they are far from being exemplary. For example, the functional reviews in
Kyrgyzstan, presented in the review as an example of this category of reforms, has
been criticized by the local experts in Kyrgyzstan as being superficial and
165

unsustainable (Koichumanov, 2006
37
). No other publication was found that
described how UNDP‘s PAR reforms are playing out in practice.
To conclude, both the UNDP and World Bank found that outcomes of the
PSR they promote were uneven, and the most significant drawbacks were in civil
service and anti-corruption reforms. None of the reviewed studies paid significant
attention to how those reforms have impacted local existing institutions.

Lessons From the Reforms
While the current wave of institutional reforms is still evolving and it takes
time for institutional changes to demonstrate effect, it is possible to summarize the
emerging lessons. Most of these lessons are not new, but they became
mainstreamed, since evidence backing those is increasingly becoming available and
harder to ignore. The World Bank and United Nations‘ analytical papers, as
summarized in the first half of this section, repeat the already known lessons from
the previous wave of reforms.
The World Bank
The World Bank‘s documents surveying the lessons from the past
experiences with institutional administrative reforms tend to make generalized
statements and draw from ad-hoc cases rather than from systematic and robust
analyses. For example, the Reforming Public Sector Reform, What Works and Why
(2008) lists as the first lesson the need to be realistic about political and institutional

37
Personal interview, September 2006, Bishkek, Kyrgyzstan.
166

feasibility of reforms and at the same time being opportunistic, by proposing the
reforms which may not be on the table. The second lesson simply reiterates the
existing maxim in the development community – that enacting technological
changes is easier than changing behavior and organizational culture – without
offering suggestions about the latter. The third lesson – to deal with basics first
before introducing sophisticated initiatives – reflects common sense (2008, p. xv).
Another World Bank publication – Strengthening World Bank Group
Engagement on Governance and Anticorruption – drew lessons from the
experiences of Europe and Central Asia (2007a). It concluded that institutional
reforms can succeed when leadership is committed, a coalition of reformers exists,
and the World Bank works with those leaders and a broad range of stakeholders.
However, it does not say whether reforms should be attempted when such
leadership is missing and how poor leadership interferes with the reforms. The
authors also pointed out that different governance challenges require differentiated
strategies based on local knowledge, innovation and consultation and collaboration
with local stakeholders (see also 2007b, p.8).
United Nations Development Program
The UNDP‘s Public Administration Reform: Practice Note distilled similar
points as summarized in the World Bank documents. The lessons include the need
to keep reforms well-focused and set realistic and well-defined targets, understand
that reform takes time, secure full understanding and support for reforms form
leadership and, management, civil servants, and the public, publicize ‗good results‘,
167

―make sure there is continued political will and support throughout all phases of
public administration reform,‖ and keep in mind that donor support can have
undesirable effects on political economy and generate more resistance to change in
public management (UNDP, 2004, p. 23).
The UNDP‘s 2002 study of its capacity building efforts through technical
cooperation focused on six countries and concluded that the technical assistance
―has often failed to strengthen capacity, especially when considered in light of the
amounts that have been invested over the years.‖ The three main reasons identified
are ―institutional weaknesses in the recipient country, continuing TC [technically
cooperation] practices that are not conducive to capacity development, although
there are some promising changes, and the failure to mainstream capacity
development‖ (UNDP, 2002, p. 20, italics added).

Conclusion
This wave of reforms attempted to address the key obstacles in the content
and approach to the reforms, identified from the previous waves. But translating
them into action is taking time. All documents from the United Nations and the
World Bank emphasize the importance of understanding the local context, involving
stakeholders in the process of reforms, as well as the need to tailor reforms to the
needs of the recipients as a precondition for effective design and implementation of
institutional reforms. However, they do not articulate how these could be done.
Recommendation to invest more in analytical work to improve the understanding of
168

a ―good fit‖ instead of ―one-size-fits-all‖ and ―good practice,‖ as proposed by the
World Bank‘s PSR Strategy, has yet to translate into practice. If changing formal
policies that influence the IDA‘s approach took four decades, changing their actual
practices is likely to take some time. The next chapter analyses the three waves of
reform to distill lessons on what worked and did not work and why, and takes the
next step in addressing the key obstacles.
169

Chapter 5

Analysis of the Three Waves of Public Sector Reforms

Donor activity often amounts to sending „experts‟ who operate
institutions in „Denmark‟ to design institutions in „Djibouti.‟ At best,
this would be like sending a cab driver to design a car.
Pritchett and Woolcock, 2004

Those who cannot remember the past are condemned to repeat it.
Santayana, 1905

This chapter analyzes the five decades of reforms promoted by leading donors to
improve and build public sector institutions in developing countries by identifying
and tracing the knowledge and ideas that informed reforms, and how they affected
the reform outcomes. The chapter also pulls together the lessons from these reforms
on institutional change. This chapter answers the first research question: What can
researchers and practitioners learn about institutional reform through systematic
analysis of the five decades of donor-promoted public sector reforms in developing
countries?
These reforms have been reviewed in the previous three chapters by
identifying three waves of reforms, each based on distinct ideas on the nature and
role of public sector institutions. Each wave was described and analyzed with
specific attention to their respective policy contexts, the main body of knowledge
and ideas informing each wave of reforms, the content (what the reforms intended
170

to do) and the approach to the reforms (how the reforms were pursued) and
outcomes (summarized in table 1 below) and lessons learned (table 2 below).
The chapter starts by identifying overall patterns in the reforms by focusing
on the content and approach to donors‘ public sector reforms, tracing the role of
knowledge in both. Next, it elaborates on the key lesson neglected by donors
throughout all three waves of reforms –deficiency of practical knowledge – which
fuels the challenges of translating into practice the renewed content and approach to
the reforms. It identifies four flawed assumptions – referred to below as myths –
that fill this knowledge gap and inform how donors‘ policies are promoted. The
next part - chapters six, seven, and eight – then illustrate how these myths played
out in practice, using the case of public sector reforms in Kyrgyzstan for the last
twenty years.

Table 1: Three Waves of Public Sector Reforms in International Development
Waves Development is
seen as…
Perceived causes of
underdevelopment
Development is a
function of…
Influential schools of
thought
Reform focus and scope
(see details in table 3)
Approach to reforms
(see details in table 3)
Most influential
donors
1
st
wave:
1950 -
1960s
Modernization Lack/weakness of
government
institutions and their
capacity
Modern
government
institutions
Modernization

Scientific
Management
Organizational
development in public
sector
Administrative development:
Importing Western
institutional and
organizational models via
foreign experts to create
ripple effect on the whole
system
USAID
(US)
2
nd
wave:
1980s-1997
Economic
growth
Big government that
stifles market
Perverse incentives
that use government
institutions
Free markets
(i.e. minimal
government
intervention)

Neoclassical
Economics

Public Choice Theory

New Public
Management

Increasing effectiveness of
public administration
through infusing principles
and practices from private
sector management

Freeing and strengthening
private sector; fostering
competition within and
between the public and
private sectors; downsizing
government

Deregulation;
Decentralization;
Privatization,
Macroeconomic
liberalization;
Downsizing bureaucracy;
Focus on results

Importing Western
institutional models and
idealized private sector
principles

IMF and World Bank
3
rd
wave:
1997 –
present
Good
governance

Weak or lack of
effective
government
institutions

Perverse incentives

―Right
institutions‖
―Good
governance‖
New Institutional
Economics

New Public
Management
Transforming government
institutions via
strengthening of and
participation from business
and civil society

Importing best practices of
OECD countries:
Strengthening government
institutions‘ capacity,
accountability, and
transparency;
Deregulation and
privatization; Voice and
participation
UNDP and World
Bank
171
172

Key Findings from the Systematic Overview and Analysis
of Five Decades of Public Sector Reforms
The key finding from the analysis of the three waves of donor-promoted
public sector reforms in developing countries is that until the third wave of reforms
donors did not see a direct link between how they promoted reforms and the
outcomes of the reforms. Instead, donors have done a better job identifying and
addressing content-related problems in each wave, i.e. what targets and objectives
the interventions should accomplish. They have not been as good at recognizing
that how they promote reforms is as important as what targets they promote in
shaping the outcomes of the reforms. Moreover, they have overlooked the lessons
generated on the process of reforms.
Thus, while donors changed the content of their reforms in every wave in
response to the combination of factors – including poor outcomes of the reforms,
major ideological shifts, and influential academic theories – they retained their
primary focus on pursuing formal structural changes as well as the approach to
promoting those reforms. Only by the third wave of reforms did leading donors
start acknowledging that they need to change the way they do business, and
rediscovered the lessons from the first two waves. But the donors‘ are yet to
address cultural/normative aspects of reforms and address the limitations of their
approach to reforms.

173

The Content of the Reforms Changed and Expanded with Each Wave of
Reforms, But Donors Retained Their Primary Focus on Formal Structural
Changes
The leading donors promoting public sector reforms in developing countries
in the second and third waves of reforms have been responsive to some of the
limitations in the content of reforms, and refocused their reforms every time their
interventions failed to deliver expected outcomes. The focus of reform gradually
expanded from capacity development of organizations and individuals in the 1950s,
to reorganizing the public and private sectors in the 1980s, to reshaping the whole
governance system since the late 1990s. In other words, over time donors
recognized that developing the capacity of individuals, organizations or specific
sectors will not work if the governance system in which they are embedded remains
the same. As a result, a very complex agenda of reforms has emerged.
Yet the ideas in each subsequent wave of reforms did not replace those from
the prior waves which have been refuted, but instead built upon them. Since the
first wave of reforms, donors retained the assumption that they have definitive
solutions for making governments of developing countries work effectively. From
the second wave, donors kept the idea that the private sector is the driver of
development. Meanwhile, the third wave is based on the idea that effective
government institutions drive development. As a result, the current wave of reforms
has turned into an elaborate and ambitious policy agenda, which encompasses
174

elements from all three waves of reforms, the contradictions in them
notwithstanding.
Meanwhile even the basic concepts lack clarity; different notions are being
used to say the same things and identical terms are used to connote different things,
as demonstrated in the definitions section provided in the first chapter. Donors have
yet to sort out these issues and generate a common language and framework for
analysis and action. The current wave of reforms thus resembles a patchwork that
combines multiple logics and paradigms, ideas, and methods, without a clear shape
and pattern. Reforming institutions is difficult enough; this patchwork adds even
more confusion for practitioners.
Moreover, donors retained their emphasis on changing institutional hardware
- formal laws and organizational structures – while neglecting the institutional
software – i.e. normative and cultural changes – which determine how the
institutional hardware performs in practice. The efforts of early comparative public
administration scholars to draw attention to the normative foundations of the
reforms and need to transform the culture, norms, and mental models of civil
servants along with the changes in the formal organizational structures and rules,
discussed in the first wave of reforms (chapter two), have been overlooked in the
second and third wave of reforms.
175

Donors are Rediscovering Lessons on the Process of Reforms from the
Previous Waves
Until recently, few in the development assistance field saw the connection
between the manner in which donors promoted reforms and the actual outcomes of
the reforms. For example, the following aspects of donors‘ efforts to improve the
capacity of public sector institutions were problematic: the lack of understanding of
the political and socio-economic context of the recipient countries; favoring
technical approaches to address political issues; a failure to account for crucial
problems such as corruption or a flawed civil service system; one-size-fits-all
assumptions; a focus on changing formal institutions without concern for their
enforcement; and a lack of practical, analytical and diagnostic tools for
understanding, designing, implementing and evaluating public sector institutional
changes. Yet, donors and some academics tended to assign the reforms‘ failures
mainly to recipient countries‘ conditions, such as their culture, backwardness,
history, and weak capacity. The approach to reforms – the way the reforms have
been promoted – was rarely acknowledged among the factors influencing the
outcomes of reforms.
More recently, donors started to acknowledge that their approach to reforms
has been misguided and sometimes even harmful and that they need to adopt
changes. The increased internal and external criticisms of how reforms have been
promoted, triggered, and fueled by the accumulation of data and growth of
independently funded NGOs, among others, gradually forced donors to reconsider
176

how they carried out their activities. Indeed, the findings of both the UNDP and the
World Bank from the assessment of their public sector reforms agree that the way
assistance is provided, including legal reforms, makes a big difference to the
outcomes of the reforms.
Alas, these lessons were readily available from the analysis of the first wave
of the reforms, but have not been put into use. These lessons suggested that the
reforms need to: (1) be systematic, i.e. transform the overall system to have an
impact, instead of focusing on isolated parts of the system; (2) be participatory, i.e.
involve beneficiaries‘ input at all stages of the reform process as opposed to being
top-down, supply driven, and externally determined; (3) account for the political
nature and context of the reforms; (4) be tailored to recipients‘ unique context and
needs, as opposed to importing formal models from select developed countries; (5)
attend to the reforms‘ actual outcomes, impact, and consequences, instead of
focusing mainly on inputs and outputs; and (6) be based on a good understanding of
the process of artificial institutional change, design principles, and the consequences
of such interventions, as opposed to guesses and unfounded assumptions and beliefs
(summarized in table 2).

Table 2: Key Obstacles to the Reforms in Each Wave

Main
problems
found in each
wave of
reforms
Fragmented approach:
Neglect of the context of
institutions;
focus on select central
government institutions;
neglect of local
government institutions

Top-down/externally
determined agenda:
Little input from
beneficiaries; supply-
driven reforms
(disbursement pressures)

One size fits all;
focus on formal
external models of
Western institutions

Technocratic approach:
Reforms are treated as
technical (non-political)
interventions
Neglect of the
reform’s actual
impact:
Main focus on
inputs and
outputs;
little concern
with the
reform
outcomes and
unintended
consequences
Knowledge deficiency:
Poor understanding of
what institutions are and
how to build/redesign
effective institutions
1
st
wave:
1950-1960s

Present

Present
Present Present Present Present
2
nd
wave:
1980 – 1997

Present

Present
Present
Present Present
Present
3
rd
wave:
1997 - present
Partly changed:
Donors claim to change
the whole governance
system, but they lack
clarity and consensus on
what it means
Partly changed in countries
with stronger capacity, but
those with weak capacity
face more pressures than
before
The problem has been
acknowledged, but not
yet acted upon
The problem has been
acknowledged, but not
yet acted upon
The problem
has been
acknowledged,
but not yet acted
upon
The problem has been
acknowledged, but little
progress was made in
addressing it
178
179

These lessons were readily available even at the beginning of the second
wave of reforms, but have been overlooked. Partly this happened because the
leading donors for public sector reforms at that time were the World Bank and the
International Monetary Fund (IMF). Each favored experts and ideas from
economics and the primacy of market over bureaucracy. In addition, they did not
see the continuity between the first and second waves of reforms, although the target
of both waves of reforms was the reconfiguration of public sector institutions. They
referred to the second wave of reforms as the ―first generation reform,‖ and the third
wave of reforms as the ―second generation reforms‖ as they discounted the previous
wave of donor-promoted institutional reforms. If anything, in the third wave of
reforms, one more obstacle has been added – the increased number of unrealistic
conditions that the recipient countries were expected to fulfill – which exceeded
their capacity (Grindle, 2004). Most of these lessons have been painfully
rediscovered in the process of the second wave of reforms. Currently, donors are
attempting to apply them in the third wave of reforms.

The Third Wave of Reforms: Donors’ Approach Changed Mainly in Policy but
Less in Practice
For the last decade, donors have been undertaking serious efforts to change
their accustomed approach to reforms. In line with the expanded content of
reforms, the donors are trying to design systematic, coordinated, and integrated
reforms, focused on improving the whole governance system that structures
180

organizations‘ and individuals‘ performances. They also realized that the new
expanded scope of reforms could not be promoted by relying purely on the
accustomed technical transfers of knowledge and organizational models from the
Global North to the Global South through experts. Thus donors are now trying to
make their interventions more participatory, beneficiary-owned and driven, tailored
to each specific context, and more systematic by strengthening public sector
institutions and internal demand for them from the private sector and civil society.
It is assumed that the modified approach will positively affect the outcomes of the
development interventions.
At last the warning from the Marshall Plan‘s architect seems to have finally
reached its intended audience. In his commencement speech at Harvard University,
George Marshall gave three pointers for practitioners of foreign aid. First,
assistance "should not be on a piece-meal basis as various crises develop," but
"should provide a cure rather than a mere palliative." Second, "there must be some
agreement among the countries of Europe as to the requirements of the situation and
the part those countries themselves will take in order to give proper effect to
whatever action might be undertaken by this government.‖ And finally, an
"understanding of the people of America of the character of the problem and the
remedies to be applied‖ and that ―political passion and prejudice should have no
part" in this enterprise (as cited in Johnson, 2002, p.1).
Unfortunately, these important guidelines have largely been overlooked for a
long time. More recently these ideas have been rediscovered through trial and error,
181

but the declared changes have taken place mainly in policy documents. The
elements of the new approach still co-exist with those of the accustomed approach
to promoting reforms, when the latter does not overshadow the former. This is more
so in the poorest countries with the weakest capacity. The reform outcomes, not
surprisingly, were more favorable in countries with relatively strong capacity –
where country officials have taken advantage of the invitation to make the reforms
participatory, actively collaborate with donors, and tailor reforms to their own
context and needs. Yet in the poorest countries with the weakest capacity, the new
approach has been hard to apply.
Still, the expanded agenda of transforming the whole governance system by
changing its institutions is implemented in many countries through the donors‘ old
development-promotion methods. Institutional constraints shaping the design and
implementation stages of the reforms on both the supply and recipient sides mold
the new ideas into the old practices. At the design stage, the donors‘ staff is still
forced to act in short timeframes and is pressured to spend money and demonstrate
results which are visible and quickly obtained. This is a common practice, partly
because donors are mildly accountable for their reform initiatives in developing
countries; their performance is measured primarily by their ability to spend (Ostrom
et al., 2002, Jenkins and Plowden, 2006). These factors, among others, force donors
to use generic formulas foregoing careful study of each case and specific needs of
individual beneficiaries (inter alia Stiglitz, 2000, Bossuyt, 2001, Ostrom et al., 2002,
Jenkins and Plowden, 2006). The problems inherent in the culture of the donor
182

agencies also contribute to the increasing gap between policy and practice. While
the new governance agenda emphasizes dialogue, collaboration, voice and
participation, the culture within donor agencies remains ―geared to risk-aversion and
bureaucratic accountability‖ (Bossuyt, 2001, p. 5).
Furthermore, even when one component of the new approach is
implemented, the rest remain intact. For example, donors claim to put countries in
the driver‘s seat, but expect them to comply with the conditionalities drawn from
idealized Western institutional and policy patterns. In addition, putting countries in
the driver‘s seat in the context of corrupt governments implies that the donors
support the authority of corrupt and illegitimate officials rather than bringing the
public closer to the decision-making process.
If in the past, donors used to promote transplanting organizational models
and policy prescriptions from the developed to developing countries, now their
reform efforts often rely on transplanting laws and reform patterns on a larger scale
(Evans, 2004, Carothers, 2003a and 2003b). Strengthening institutions is thus
equated with importing ―institutions that worked well elsewhere.‖ Changing laws
thus became a popular currency in the current wave of reforms for donors who are
more concerned with putting checkmarks on the existing projects and moving on to
the next one (Ostrom et. al., 2002). Donors tend to evaluate success of the reforms
primarily by their impact on changing formal laws and institutions (Cooley, 1999,
World Bank, 2006a, World Bank, 2008, Messnick, 1997). Passing laws and
changing organizational structures, with occasional staff training and equipment
183

delivery, do not lead to expected results; but they can make officials and the donors
sponsoring those reforms look impressive in the short term (DFID, 2003,
Girishankar, 2001, Spink, 1999, Shepherd, 2003). Evans explained the minimal
impact of development theory‘s new focus on institutions as follows:
Specification on the basis of the basic institutional insight occurred along a
―path of least analytical effort‖ that assumed that we already knew what
institutions were needed. The development establishment seized on
unreflective, ideal-type versions of particular subset of supposed Anglo-
American institutions as the ―one best way.‖ Using technocratically
designed blueprints backed up by global political and economic pressures to
impose this vision produced the strategy of institutional monocropping, the
pitfalls of which are not plain (2004, p. 44).

Both the World Bank and United Nations acknowledge that while the efforts are
being made to change their approach, there is still a mismatch between the way they
have traditionally carried out their activities and the demands of successful
institutional reform (UNDP, 2006). The new elements did not replace, but still co-
exist with the older accustomed quick-fix approach. The ―quick fix‖ approach
involves their tendency for excessive focus on formal rules and technical issues
foregoing extensive analysis of the local conditions, imported wholesale blue-print
solutions without adaptation for local needs, with disbursement of large funds with
expectations for quick results (Skoog 2007, p.18).
Although one of the touchstones of this wave of reforms was the rejection of
a one-size-fits-all template for development and the importance of wider
participation in the formulation of development goals, there is surprisingly little
diversity in either the discourse or the prescriptions regarding the legal reforms
184

needed for development. In part this may be due to the way the process of
participation itself is imagined. As one World Bank publication (2003) put it,
enhancing participation involves first diagnosing the problem and then designing
reforms according to the relevant known best practices. At this point, it becomes
important to get a local buy-in regarding the priorities and sequencing. Despite the
reminders that context matters, there is no evident pluralization in the reform
proposals. The question of whether one-size-fits-all, especially with respect to
economic rules and regulations, still seems to be a matter of internal dispute within
the Bank. Thus, the donors still use their accustomed one-size-fits-all or best
practices approach assuming that certain institutional forms that achieve certain
functions in developed countries will do the same in developing ones, without
affecting its interaction with other elements of the governance system (Rodrik,
2008, Grindle, 2004). Similarly, the UNDP acknowledges that the old approach to
capacity building and institutional development still persists along with the new
approaches (UNDP, 2002).
The World Bank holds that it needs to undertake a governance assessment
prior to launching public sector reforms, and takes a political economy perspective
as essential for illuminating beneficiaries‘ actual processes and institutions. Yet, the
efforts to understand the governance and institutional environment in recipient
communities via Institutional and Governance Reviews (IGR) do not pay sufficient
attention to political economy of the public sector reforms (World Bank, 2008). In
addition, as mentioned above, the World Bank‘s charter prohibits it from being
185

involved in political matters, although the policy-setting speeches of its leaders and
the actual practices increasingly acknowledge the need to address the political
aspects of the public sector reforms (ibid).
It should be noted, however, that the need for tailoring reforms to recipients‘
context through greater beneficiary participation and input in designing and
implementation of reforms worked better for select countries that already possessed
relatively effective capacity. Berkowitz and his colleagues (2003) propose that the
way assistance is provided makes a big difference in the outcomes of the reforms:
the reform outcomes were more favorable in countries with relatively greater
capacity – where country officials have taken advantage of the invitation to make
the reforms participatory and actively collaborate with donors and tailor reforms to
their own context and needs. Indeed, in Russia, Kazakhstan, and Brazil, the donor-
promoted public sector reforms are better tailored to their own context since the
local experts are better informed about the needs and peculiarities of their own
countries as compared to the outside experts that influence the design of such
reforms (Jenkins and Plowden, 2006). The UNDP and World Bank reports
summarized in chapter four also support this finding.
It is in the poorest countries with the weakest capacity where the new
approach is hard to apply and make it work. Thus, the supply-driven and one-size-
fits-all approach, and focus on technical and formal aspects of institutional reforms
is still prevalent in countries with weaker capacities, which are found to hurt such
governments most. Even when some of these approaches translate into practice,
186

they are held back by other approaches. The donors partly revisited their
fragmented and sub-priority stance toward institutional reforms, and started
advocating the need for broader governance reforms and paying more attention to
public sector reforms. But this expanded governance reform agenda triggered a
number of tensions in the aid system. The range of reforms prescribed to
developing countries has drastically expanded in this wave of ambitious governance
reforms. An analysis of the World Development Reports over time shows that a list
of ―what must be done‖ for developing countries to achieve good governance
increased from 45 characteristics of good governance in 1997 to 116 in 2002. These
characteristics of good governance include institutions, laws, policies, services, and
strategies (Grindle, 2004). On the one hand, donors declare their commitment to
making reforms beneficiary-driven to secure the sustainability of aid and promote
local capacity, but in practice ―they cheerfully overload partner countries with top-
down development targets, conditionalities and centralized management processes,
all of which tend to work against local self-reliance and ownership‖ (ibid).
The countries with the weakest capacities thus face a double curse. Not only
do they lack the capacity to design the tailored reforms, but also that ―donors more
often insist on a full array of public sector reforms‖ which they cannot implement.
As mentioned above, donors design reforms based on developed countries‘
idealized models of governance ―which are too complex for still-developing
countries,‖ and ―the expectations and objectives in heavy budget-support projects
tend to be more ambitious and global, reflecting the donors‘ list of things that need
187

fixing rather than the government‘s list of things it is ready to do‖ (World Bank,
2008, p. 40). Countries that have the weakest government institutions, are most
vulnerable to political disruption, are the poorest, and lack legitimacy, face the most
prescriptions, although they have the least capacity to implement them. Many of
them ask for debt relief from the IMF and the World Bank‘s Highly Indebted Poor
Countries (HIPC) initiative. To receive debt relief from the World Bank,
governments of these countries are expected to produce Poverty Reduction Strategy
Papers (PRSPs) connected to their Comprehensive Development Framework (CDF)
outlining a broad set of commitments to reform in a range of policy and institutional
arenas. To assist them, the World Bank produced another ―what must be done‖ list
– PRSP Sourcebook – that outlines the kinds of reforms that are expected to reduce
poverty (ibid). Consequently, the public sector reforms of countries that borrowed
from the International Bank of Reconstruction and Development (which are already
more advanced countries) had better outcomes than the borrowers from the
International Development Association which lends to the poorest countries (World
Bank, 2008).
One of the reasons why donors have been slow to change its approach in
practice is that the donor community is itself gradually undergoing institutional
change to transform the accustomed practices and rules informing them. This
process is not likely to be fast given that institutional change normally is a long term
process. This is more so in an elaborate system with deeply entrenched interests at
every level, including at the recipient ends, which have a vested interest in
188

preserving the status quo. Additional reasons for the continuation of the old
approach are that it is easier to stick to habits, whereas the new approach requires
more effort, it is not immediately rewarding, and it is hard to evaluate and
demonstrate its results.
Ultimately, this study observes that the key but overlooked reason why
donors have been slow to change this approach in practice and improve reform
outcomes is the lack of clear understanding of how deliberate institutional changes
should be promoted by donors. This knowledge deficiency seems to be among the
key factors preventing donors from both effectively reforming themselves and
promoting reforms in developing countries, while fueling other obstacles, some of
which have been mentioned above. The next section focuses on this problem.

The Main Lesson from the Previous Waves of Reforms – the Deficiency of
Practical Knowledge on Deliberate Institutional Change – has been Overlooked
Out of all the lessons generated through the five decades of reforms, the most
important but least talked about one seems to be the problem of deficiency of
practical knowledge. This problem consists of the donors‘ ambiguous and
inconsistent concepts and ideas on the nature of institutions and institutional change,
and a lack of clear and practical analytical tools for understanding and mapping
institutions and their context and designing implementable and effective
institutional reforms. These obstacles make policies difficult to understand, let
alone operationalize in practice, i.e. predict, design, carry out, and evaluate
189

institutional reforms (Orrnert, 2006). Moreover, these failings also make it hard for
donors to learn lessons from the mistakes and successes of institutional reforms
(Bossuyt, 2001, Bandstein, 2005, Orrnert, 2006, Jutting, 2003, DFID, 2003, Skoog,
2007).
Donors acknowledge the need to tailor reforms to recipients‘ needs and
contexts, rather than copying solutions generated for other countries‘ political,
administrative, and cultural realities, and also the need to understand cultural
aspects of the reforms; however, few know how to accomplish this and
consequently, fail to act on this call (OECD, 2005a).
The influential theories which informed the content of donors‘ interventions
in all three waves (see table 1 above) have largely been weak in explaining how
these reforms can be carried out on foreign soil to maximum effect.
As summarized in the introduction, institutional change, especially
deliberate macro level institutional reform, is still poorly understood in social
sciences. In addition, as mentioned above, practitioners have not done well in
learning lessons from previous reform experiences (Spink, 1999, Shepherd, 2003).
But, instead of addressing this problem, donors have been doing just the opposite –
they are attempting to implement more and more ambitious reforms.
As a result, despite recognition of the limitations in the content and approach
to reforms, most institutional change reforms remain confined to copying formal
elements of institutions and reforms from developed to recipient countries by
190

changing laws and organizational structures with little impact on the actual behavior
of the targeted population.
This knowledge deficiency has not received adequate attention from donors
and academics until very recently. Donors still tend to attribute failures of
institutional reforms mainly to poor capacity on the ground. Researchers add other
factors, including the short timelines of donors and local politicians while reforms
demand longer timeframes (Jenkins and Plowden, 2006; Ostrom et al., 2002); weak
accountability and a lack of incentives for improvement both on the donor‘s side,
including their contractors (Jenkins and Plowden, 2006), and the recipient side,
which allow officials to tailor reforms to promote their own or their organizational
needs as opposed to the public interest (Easterly, 2002, Cooley, 1999).
As mentioned in the introduction, only a few donors have invested serious
effort to analyze the conceptual and theoretical underpinnings of their institutional
development efforts. One study did an overview of institutional development
approaches of eight donors: World Bank, OECD, Canadian International
Development Agency (CIDA), DANIDA (Denmark‘s aid agency), DFID, NORAD
(Norwegian aid agency), the Netherlands aid agency, and USAID. The study found
that although donors adopted institutional components in their interventions to
promote capacity development, they all suffer from a weak conceptual and
analytical base which is not even always acknowledged. According to this
overview, in these donors‘ policy documents ―institutions mostly are described in
191

general and abstract terms,‖ and ―explicit approaches to support for the development
of institutions‖ are almost nonexistent (Bandstein, 2005).
The leading donors in public sector reforms – the United Nations and World
Bank – have not paid sufficient attention to this problem except for mentioning in
passing the need to exert more effort toward this goal. Moreover, the World Bank
has done more work on this than UNDP, but even then the efforts of the former
have mainly been directed to developing diagnostic and measurement instruments.
Thus, for many stakeholders, ―institutional development remains a rather
obscure concept, lacking an agreed definition, a clear analytical framework and a set
of practical guidelines for implementation‖ (Bossuyt, 2001). Still, even those
donors which have invested significant efforts to identify and address this
knowledge deficiency have not advanced much in this effort. For example, a
comprehensive overview of SIDA‘s support for institutional development (ID) in
several developing countries concluded:
SIDA support for ID is comprehensive, deliberately provided and broad in
scope, but…theories of change, strategies and methods for dealing with the
characteristics of ID are not well articulated. Even less is known about the
performance and long-term impact of such support. An essential lesson is
that ID is a dynamic process of complex interactions and calls for deeper
understanding of the complex process of institutional change…the adoption
of a process-oriented approach and developing common concepts and
analytical frameworks (Litman, in foreword to Skoog 2007).

192

Limited Knowledge of Institutional Change Hinders the Practice of Donor-
Promoted Public Sector Reforms
As the previous chapters illustrate, to date no clear answers exist based on
robust theory and empirical evidence for these difficult questions of deliberate
macro level reforms of public sector institutions. Unfortunately, there is no clarity
and agreement even on what institutions are, let alone on more complex questions of
what makes institutions effective and how to design and maintain them. Academics
admit that ―we know a lot about polities but not how to fix them‖ (North, 2005, p.
67). Why is this significant? Because, as the chapters two through five illustrate,
when practical and applicable conceptual and theoretical tools are lacking, donor-
promoted administrative institutional reforms have been informed by limited
knowledge. Investigations into the theoretical underpinnings of donors‘ institutional
development efforts found that although they adopted institutional components in
their interventions to promote capacity development, they all have a weak
conceptual and analytical base, which few donors openly acknowledge (Bandstein,
2005). According to this overview, donors‘ policy documents often describe
institutions in vague and abstract terms
38
(ibid). Ambiguous and inconsistent
concepts and ideas on the nature of institutions and institutional change, and a lack
of clear and practical analytical tools for understanding and mapping institutions
and their context and designing implementable and effective institutional reforms,

38
This ambiguity in terminology made the research conducted for this dissertation extremely
challenging.

193

make policies difficult to understand, let alone operationalize in practice, i.e. to
predict, design, carry out, and evaluate institutional reforms (Orrnert, 2006).
Moreover, these failings also make it hard for donors to learn lessons from the
mistakes and successes of institutional reforms (Bossuyt, 2001, Bandstein, 2005,
Orrnert, 2006, Jutting, 2003, DFID 2003, Skoog, 2007.
In the words of another scholar who has worked closely with practitioners,
while academics are faced with a difficult task, practitioners‘ task is even more
daunting:
In the academic world, the understanding of the importance of institutions
has been reached as a result of a large body of theoretical and empirical
work. In the policy world, it has been reached more painfully, as a result of a
long stream of reforms around the world that failed mainly because they did
not pay attention to institutions and governance issues. We now know better.
And yet, what we know is only the tip of the iceberg. As academics, we can
hope that we will be able to learn more in the years to come. Policymakers
do not have this luxury, and must give policy advice on the basis of what we
currently know (Asemoglu, 2008, p. 1).

Some scholars caution that economists should not attempt to give advice
about building and reforming governance institutions due to lack of expertise, and
leave it to those who specialize in these matters (Rodrik, 2008). But the rule of law
field also suffers from the same knowledge problems and has little to contribute to
the knowledge problem of institutional reform. Obstacles to legal reforms are
similar to those faced by public sector reform practitioners: the inherent conceptual
and practical complexity of the enterprise of changing institutions; great variance in
institutions across countries contracted with limited expertise and resources of
194

donors; donors‘ internal resource allocation and fast rotating personnel system
poorly suited for accumulation of knowledge, and a lack of adequate knowledge
generated in other disciplines (Carothers, 2003b).
Given their limited understanding of how governance institutions change
and how effective institutional change can be designed and implemented, currently
key donors‘ institutional reform practice is often informed by the best practices
model (discussed in greater detail in the subsequent chapters). This model
…presumes it is possible to determine a unique set of appropriate
institutional arrangements ex ante and views convergence towards those
arrangements as inherently desirable… This mode of thought is grounded in
a first-best mindset which presumes the primary role of institutional
arrangements is to minimize transaction costs in the immediately relevant
domain—without paying attention to the nature of the binding constraint or
the potential interactions with institutional features elsewhere in the system
(Rodrik, 2008, p. 22).

Although the best practices model has been widely criticized, and the need
to tailor reforms to the particular contexts of the recipients is frequently emphasized
even by key donors themselves, the calls for and intentions to tailor best practices to
the local context have not translated into practice. This is not to suggest that models
of institutions or reforms borrowed from developed countries are always irrelevant.
The donors‘ ―best practices‖ (which actually encompass not only ―best policies,‖
but also ―best institutions‖ and ―best reforms‖) reflect what works in the countries
that the policies originated from, and are formulated in response to those countries‘
own political, economic, administrative, and cultural realities. But the problems and
needs of the recipient countries require policies, reforms, and institutions tailored to
195

addressing their often different sets of problems and conditions. Solutions or best
practices generated for the one set of problems and context and prescribed to
address a different set of problems and context may not necessarily be beneficial.
In sum, to move away from superficial copying of solutions, practitioners
need to better understand what makes those solutions effective and act on that
knowledge in crafting reform interventions. Donors still cling to the ―best
practices‖ model partly because no better alternative has been proposed to replace
this model.

The Knowledge Gap
The review above, elaborated in greater detail in the previous three chapters,
suggests that the frequent failures of donor-promoted public sector reforms can be
partly traced to the deficiency of practical knowledge of what makes public sector
institutions effective and how to reform them. Practitioners did not always
systematically analyze lessons from the past experiences and apply them to the
subsequent waves of reforms. Donors also tended to overlook institutional analysis
scholarship generated in social sciences, with some exceptions. Comparative public
administration made limited use of institutional analysis scholarship from other
disciplines. Researchers interested in institutional analysis in other disciplines also
largely overlooked the goldmine of data generated from donors‘ public
sector/institutional reform experiences in developing countries. Overall, other
disciplines are also yet to gain an in-depth understanding of institutional change, let
196

alone generate applicable knowledge for practitioners of macro level deliberate
institutional change efforts.
Practitioners and institutional analysis researchers have been held back by a
number of factors. These include a lack of agreement on basic definition of
institutions, which hinders analysis and collaboration and synthesis of knowledge.
The structure and components of institutions remain ambiguous, and so there is no
way of examining what happens when the institutions change. Thus, from this
standpoint, institutional change remains a black box. Inadequacy of the existing
conceptual frameworks is another problem – the most commonly used frameworks
go with the assumption that institutions/rules are self-enforceable, which
undermines their relevance to contexts where enforcement is problematic.
Disciplinary fragmentation and essentialism has also added to slow progress toward
understanding institutions and institutional change: Different schools and disciplines
have tended to focus on different levels and aspects of institutions, whereas
institutional change cuts across those levels. Methodological problems also pose
significant challenges for students of institutional change.
In sum, while the ambitions and scope of public sector reforms have
expanded and turned into a challenging and complex enterprise involving a host of
governance institutions cutting across different levels of social structures,
practitioners still lack guidance for conducting these reforms informed by robust
empirical and theoretical scholarship. Artificially induced institutional change
197

processes in international development practice, including administrative reforms,
are poorly understood, let alone subject to effective design and implementation.

Four Myths Informing Institutional Reforms
If donors cannot even agree about what institutions are and do not clearly
understand how to promote deliberate institutional change, then what ideas and
assumptions inform their institutional reforms instead? The donors‘ reforms and
practices are grounded in layers of unjustified explicit or implicit assumptions on
the nature of institutions and institutional change, rather than on robust empirical
research and analysis of lessons from previous reforms. Instead of being corrected
through analyses of the experiences, these assumptions have been accumulated for
the duration of the development interventions and passed on to newcomers in the
donor community. These assumptions are referred to below as myths. Some of
these myths have been discreetly acknowledged by donors and researchers; but all
of them continue to be prevalent and pervasive. These myths are mutually
reinforcing and build on each other, which makes correcting them a challenging
task. Identification of these myths requires subjecting them to critical analysis; this
is the first necessary step to correct them.

198

Myth 1: Donors Know How to Design Effective Institutions and Fix Developing
Countries’ Ineffective Institutions
The prevailing assumption upon which the development industry is built is
that donors and their experts know how to design effective institutions, what is
wrong with developing countries‘ institutions, and how to fix them. Their answers
are often presented in blueprints of Western governance institutions that recipient
countries are expected to emulate.
This assumption was ingrained in the foundations of the official international
development infrastructure at least since U.S. President Harry Truman‘s 1949
speech. Donors also tend to believe that development hinges on one magic bullet,
which changed shape several times over the past five decades. In the first wave of
reforms in the 1950s, it was a bureaucratic organizational form and tools of
scientific management that were expected to transform and modernize government
institutions, which would in turn drive development. This idea was subsequently
abandoned.
In the 1980s, free market, which emphasized capacity of the private sector
and creating the right incentives, was the new magic bullet. It was naively assumed
that exposing government institutions to pressures and checks from private sector,
and creating appropriate incentives for private and public sector institutions, would
generate more efficient outcomes and promote development. But few knew how to
generate such incentives. The competition among institutions that was supposed to
199

lead to more efficient outcomes did not materialize. This magic bullet also did not
perform as expected, and went through significant modifications in the third wave.
The current magic bullet, in the third wave, is ―high quality institutions.‖
This time high quality government institutions are back as drivers of development,
but the espoused means of building such capacity are slightly different. This time
donors stress not only technical changes and opening up of government to private
sector principles and competition, but also collaboration with and checks and
balances from civil society organizations as well.
Unfortunately, this is the most challenging type of institutional change
because, as discussed in the previous chapter, the scale of the current wave of
reforms is unprecedented as it targets wholesale changes in institutions in all
sectors. This claim – that quality of institutions determines development – rests on
weak empirical grounds (Brinkerhoff and Goldsmith, 2005, Jutting, 2003). The
studies tracing development outcomes (measured mainly in terms of economic
growth) to the quality of institutions lack an agreed definition of institutions, which
makes it hard to synthesize their findings. Moreover, they also lack clear and robust
analytical frameworks explaining how institutions are influenced by development,
and in turn influence the development process itself. Thus, policy recommendations
that draw from those studies rest on assumptions about causality that are not
empirically proven – the causality may go the other way (Jutting, 2003, p. 9,
Brinkerhoff and Goldsmith, 2005). Influential economists caution: ―We must be
modest and admit that we are still at the beginning of the process of understanding
200

how exactly specific aspects of institutions influence economic outcomes‖
(Asemoglu, 2008, p. 2). In addition, as mentioned in the previous chapter, the
research that donors draw from to back their claims mainly comes from economics;
donors often neglect scholarship from other disciplines and schools.
Moreover, donors‘ and researchers‘ failure to recognize and explore the
distinction between endogenous and exogenous factors, as well as evolutionary and
deliberately induced institutional change processes, led to misguided interventions
and unrealistic expectations from developing countries, and wrong blueprints.
Donors that claim to know how to build effective institutions could use
Hayek‘s (1981) caution against ―anthropomorphic mode of thinking.‖ The latter
mistakenly assumes contemporary Western good governance institutions, which
have emerged through incremental adjustments over long periods of time, have been
created through rational design‖ (Hayek, 1981, p.10). Indeed, most of the rich
countries‘ exemplary institutions – such as the bureaucracy, judiciary, and property
rights – promoted by donors for adoption in developing countries – emerged
through endogenous and evolutionary processes that involved a lot of trial and
errors and adjustments. Developing countries are expected to recreate them by
copying their models over a long periods of time (Chang, 2001). A note of caution
comes from a review of civil service reforms in Latin America for 70 years, which
found that planned reforms almost always failed (except for those carried out under
authoritarian rule), whereas adaptive and incremental reforms resulted in better
outcomes (Spink, 1999). But instead of encouraging incremental and adaptive
201

institutional reforms, most donors‘ reform initiatives have been criticized as being
top-down and inflexible.
It is also commonly assumed that public sector institutions and their contexts
are similar in different countries, while in actuality they have important distinctions
(Riggs, 1964). Developing countries and industrialized countries have differing
capacities for designing and implementing deliberate institutional reforms. While
the capacity of the governments may not matter as much in self-emerging
institutional change processes, governmental capacity matters to a great degree for
deliberate institutional change. Deliberate institutional reform is the most
formidable (if even possible) task a government can undertake (March and Olsen,
1989; Caiden, 1991).
In sum, this trial and error method of picking magic bullets has not worked;
significant investments of resources have not paid off. Meanwhile, experience and
alternative research suggests that it is not a single factor, but rather many
interdependent variables and their dynamics that need to be accounted for in order
to understand and explain social outcomes. So far, few researchers had attempted to
tackle such complex research questions (Riggs, 1964).

Myth 2: Western Models of Formal Institutions are Universally-Applicable and
are Superior to Recipients’ Informal Institutions
Mainstream research and practice for several decades has operated with
another unjustified assumption – that Western formal institutions are universally
202

applicable, effective, and conducive to good/democratic governance (World Bank,
2000a, O‘Donnell, 1996). This myth was also instilled as the official international
development field emerged, and can be further traced back to prior colonial
practices. Donors and their consultants assume that imported Western institutions
will replace traditional institutions in developing countries because the former are
superior. In the 1950s, Western government/bureaucratic organizations were
deemed superior to local informal or semi-formal post-colonial governance
institutions. In the 1980s, Western (U.S.) style market institutions were juxtaposed
with corrupt government institutions of developing countries. Currently, an
idealized set of Western democratic and ―good governance‖ institutions are
presented as models that developing countries should recreate (Grindle, 2004).
This thinking is especially prevalent in public sector reforms since
bureaucracy has been viewed as the main conduit of modernization since the
emergence of official development aid (inter alia Huntington 1968, Migdal 1988).
This relic has not disappeared. If anything, it has been revived and amplified by the
growing significance of institutions (Grindle, 2004; Caiden, 2006). As the review
of public sector reforms demonstrates (see the summary in tables 1 and 2 above), all
three waves of reforms are informed by this assumption. Although the rhetoric has
changed in the third wave of reforms, in practice, donors‘ relationships with the
poorest countries still conform to this myth.
This perspective has internal contradictions. For one thing, this view suffers
from reification – donors and researchers backing this view tend to attribute agency
203

to one or the other institutional arrangement. For example, according to
Strengthening World Bank Group Engagement on Governance and Anticorruption
(2007a), among the lessons learned from its experiences was that ―excessive
regulatory burden and unwieldy public sector enterprises can be associated with
poor governance and corruption. A thriving, competitive, and responsible private
sector can be a strong source of support for better governance‖ (p. 4). Meanwhile,
private sector arrangements that rely on individual self-interest can also lead to
extensive damages, the most recent example being the 2008 financial crisis that
affected the entire global economy. Similarly, bureaucracies can turn into rigid and
dysfunctional prisons that limit human potential and deprive persons of individual
responsibility (Merton, 1957). At the same time, the experiences of the majority of
OECD countries suggest that both arrangements can be adequately managed to
serve the public well-being. In other words, both private and public sector
arrangements may be used and misused: A continuous stream of corruption cases
from both developed and developing countries show that formal modern
government institutions can be misused easily by those who know how they operate.

Myth 3: Institutions are Formal Mechanisms for Regulating Behavior
The policy-setting documents reviewed in the previous three chapters show
that donors still hold a thin and simplistic notion of institutions as homogenous
fragmented pieces of formal – that is, government-made – rules and/or
organizations, concerned with regulating the behavior of individuals and
204

organizations. The prevailing assumption in the current policy literature is that
formal rules shape incentives (Helmke and Levitski, 2004). Western public
administration especially has been concerned with the ―formal institutional structure
with authoritative decision-making powers‖ of government (Horrocks and Bellamy,
1997).
Donor-promoted public sector reforms reflect this assumption – they are
largely confined to changes in formal laws and organizations at the national level.
This emphasis on regulatory aspects of institutions at the expense of normative and
cognitive dimensions can be explained by the prevalence of rational choice models
of human behavior in the social sciences and in the donor community. This model
treats individuals as rational beings devoid of values and programmed to respond to
external incentives that affect their well-being measured mainly in terms of
monetary gains or losses. This perspective discounts other layers and dimensions of
institutions and their enforcement mechanisms.
Excessive reliance on the formal design of institutions to explain
development outcomes overshadows other important factors in the working of
institutions, such as the actors‘ predispositions and the dynamics between different
factors. For example, the literature suggests that without appropriate values
informing human behavior, such as values of responsible public service (vs. serving
the politicians or the organization) or ―loyalty that argues back‖ (Heclo, 2007, as
cited in Pffifner, 2007), bureaucracies have been misused to pursue narrow ends.
But this myth renders normative and cultural components of institutions to be
205

considered as irrelevant at best, and sometimes even categorized among the factors
undermining reforms. Alas, some schools – for example the transitology approach
in comparative political science – still uphold such misguided assumptions,
reinforcing donor policies. Among those who have studied institutional reforms of
the third wave, the commonly asked questions are: Why did developing countries
not adopt the modern formal institutions as was expected? What explains the
differences in their trajectories? The answers vary. In the case of the former Soviet
republics, for example, some scholars attempt to explain the failure of smooth
―transition‖ toward democracy and the rule of law by the negative effect of the pre-
existing informal institutions that undermined democracy (Collins, 1999,
O‘Donnell, 1996) and by the dynamics of political forces, economic structure, and
historical contingencies (Cooley, 1999).
But such an exclusive focus on formal components of institutions cannot
provide sufficient understanding and resolution of institutional problems. This
orientation fails to account for the significant share of actual behavior that does not
always fall directly under formal constraints (Riggs, 1964, Helmke and Levitsky,
2004, North, 1993). Yet the gap between formal policies and actual practices rarely
bothers external donors. Although this myth has been discredited, it is still alive
partly because no robust alternative has been proposed in place of it.
The emerging consensus in academia and practice is that there is more to
institutions than externally enforced prescriptions/rules or even norms, that other
constraints also play an important role in the behavior of individuals and officials, as
206

they affect how and which laws get enforced (Scott, 2007, Berkowitz et al., 2003).
Institutions are webs of prescriptions enforced by various government and social
mechanisms. Individual behavior is simultaneously subject to a broader set of
prescriptions including those of the family, church, and society. In many
developing countries, government-backed rules and organizations often have less
legitimacy and enforceability, compared to those of informal organizations and
groups. Scholars studying institutions in the former Soviet Republics, for example,
characterize governance systems in these countries by the weak links between state
and citizens, where informal aspects of institutions play a more important role
(Kubicek, 2000, Cooley, 1999, Collins, 1999). Kubicek (2000) described this as a
―wall of indifference‖ to explain that formal authority has less legitimacy than
informal social mechanisms.
This assumption rests on an artificial dichotomy between formal and
informal institutions. This view overlooks the fact that informal norms have
variations, are pervasive, and are essential for the operation of formal institutions.
Informal components of institutions are pervasive not only in traditional/developing
countries, but, in fact, are also essential components of institutions in the West.
Most public sector institutions in developing countries also already encompass
formal elements often borrowed from elsewhere.
Institutions also operate in different realms (political, economic, social, etc.)
and at different levels (national/macro, organizational/mezzo, interpersonal/micro)
of social reality. Institutions are also nested systems; for example, administrative
207

institutions are embedded in political ones. Institutions have not only regulatory,
but also normative and cognitive functions (Scott, 2001). In other words,
institutions not only provide a predictable social environment, but also harbor values
and shared meanings of a given society. Once norms and organizations are
institutionalized, they can be a source of dominant values in a society as an essential
aspect related to the enforcement of institutions, and the roles and identities that
institutions bring about and impose on individuals (Scott, 2007, March and Olsen,
1989). Hence, institutions and institutional reforms affect and are affected not only
by their regulatory environment, but also by social and cultural values and
individual mental frameworks. These layers and dimensions and their dynamics
together determine how those formal aspects of institutions play out in practice
(Scott, 2001, Orrnert, 2006, Dia, 1996). Thus, changing rules triggers changes in
the values and culture of the recipient society (Skoog, 2007). But so far it is not
clear how specifically this happens and donor policies tend to avoid addressing this
question altogether. Only most recently did some donors start to emphasize the need
to pay attention to normative aspects of institutional reforms (OECD, 2005a).

Myth 4: One-Time Changes in Formal Elements of Institutions Will Result in
Appropriate Behavior Change
Another assumption informing donor policies in public sector reforms over
the last five decades is that institutions that have incrementally evolved over long
periods of time in one context can be artificially and quickly recreated in another
208

soil. Generally, public sector reforms have been carried out primarily through
promoting one-shot changes in formal legal norms and organizational structures by
replicating equivalent models that worked in developed countries. This assumption
is informed by the thin concept of institutions and institutional change discussed
above; the relative malleability of formal laws to external pressures adds to this.
The tension between donors‘ thin notion of institutions and the nature of
actual institutions is evident in all waves of public sector reforms. Donor
interventions often have been misguided as they assumed an institutional vacuum
where actually unwritten (informal) prescriptions have greater influence on behavior
than formal government laws. In the first wave of reforms, institutions were equated
with formal organizations and administrative reform was largely confined to
building or developing specific units of public sector organizations in developing
countries. The reformers expected that such islands of modern organizations would
then affect change in the entire public administration system of that specific
country. This did not happen; instead, the newly introduced features of those
organizations were overshadowed by cultural norms and practices governing the rest
of the public sector; sometimes those organizations were used to further elites‘
political agendas (Riggs, 1964, Heady, 2001).
The second wave of public sector reforms shifted to a higher plane – from
the organizational to the sectoral level. Moreover, the reformers decided to reshape
public sector institutions indirectly – through changes in the private sector – by
freeing markets. But again, these reforms were based on the misguided assumption
209

that institutional change would be quick and follow the rapid changes in formal
economic policies, laws, and organizations, and discounted the influence of political
and societal institutions, as well as the need for enforcement mechanisms. The
outcomes of the reforms demonstrated that the reform policies were based on
guesses and a-priori assumptions rather than robust theoretical analysis based on
empirical evidence.
The current third wave of public sector reforms, concerned with reshaping
the whole governance system in recipient countries, most clearly exposes the
limitations of the existing conceptual frameworks. The governance system
encompasses webs of dynamic and layered administrative, political, economic,
social, and other institutions ranging from local to national levels, mutually shaping
each other. This nested and multi-dimensional nature of institutions and the
uniqueness of contexts can explain why different outcomes result from similar
public sector reforms. The same rules or organizations introduced in different
countries generate unique outcomes because they affect and are affected by the pre-
existing rules and norms in the system.
This myth leads to unrealistic policy prescriptions when it is coupled with
the lack of sufficient expertise in the governance of developing countries and the
limited timeframes of donors and politicians at the receiving end (Welch and Wong,
1998, North, 1993). Hayek traced this myth to the common illusion inherent in the
design of the thinking mind:
210

…the basic assumption underlying the belief that man has achieved mastery
of his surroundings mainly through his capacity for logical reasoning from
explicit premises is factually false, and any attempt to confine his actions to
what could thus be justified would deprive him of many of the most
effective means to success that have been available to him…. Many of the
institutions of society which are indispensable conditions for the successful
pursuit of our conscious aims are in fact the result of our customs, habits or
practices which have been neither invented nor are observed with any such
purpose in view (1981, p. 11).

Desirable institutional change will not quickly result from one-time legal
changes. Institutions often take decades to take root as they involve changes not
only in formal laws and organizations, but also in the associated social norms and
mental models of individuals. Even if somehow the right institutions have been
established as a result of donor interventions, this would not be a sufficient
condition for development because institutions are also dynamic phenomena. They
require constant and incremental adjustments to a given context to remain relevant.
This means that the planning, design, implementation, and evaluation of
institutional reforms have to be done within a realistic timeframe, and do not build
false expectations of quick changes.
It is no wonder then that developing countries have been unable to recreate
Western public sector institutions by importing their models and reforms over the
last five decades. The reviewed reform experiences indeed suggest that such
reforms mostly failed to deliver expected outcomes. Changing laws and
organizational structures, which has been a common approach to carrying out
institutional reforms, does not translate into expected behavioral change directly
211

when laws are imposed externally (Berkowitz et al., 2003, Riggs, 1964, Bohnet et
al., 2001). This finding is especially relevant to reforms in developing countries
where informal enforcement of institutions tends to be more prevalent than in
Western societies (Ellickson, 1991, North, 1993, Ostrom et al., 2002, Kubicek
2000).
Furthermore, this myth overshadows more important questions reformers
need to be asking: What makes some institutions work better in some countries and
fail in others? How do formal and informal components of institutions interact? To
date, only a few scholars have looked at the changing nature, process and outcomes
of dynamic interactions between formal and informal elements of institutions (as
discussed in the next chapter). In particular, while reforms affect and are affected
by both formal and informal elements of institutions, these ―feedback loops,‖
especially those concerning non-formal aspects, received little attention among
scholars (Ellickson, 1991, p. 282, see also Kubicek, 2000), and even less among
policy makers.

Implications from Adhering to These Myths
Donors‘ continued practices in view of this knowledge deficiency and their
continued adherence to the myths discussed above may result in a number of
undesirable consequences. The section below elaborates on each of them.

212

Blindly Designed and Conducted Reforms Have Little Chance of Delivering
Expected Outcomes
If practitioners do not understand how to build effective public sector
institutions, fixing other problems at the implementation and evaluation stages that
get the most attention are not likely to improve the outcomes. Yet, analyses of
reforms focused more on implementation problems, at the expense of the design
issues. Focusing on the former would be akin to fixing the road that leads nowhere.
That is why knowledge deficiency is the most pressing problem that needs to be
addressed to improve the effectiveness of public sector reforms and other
institutional reforms.
As mentioned above, artificial institutional change is extremely difficult to
design and carry out as it involves a large number of variables which are hard to
account for and arrive at expected outcomes (March and Olsen, 1989). public sector
reforms became more challenging over time because this time reformers intend to
change not only organizations but the whole governance system. Practitioners try to
undertake such a complicated task without a clear understanding of what makes
institutions and reform processes effective because they lack clear and practical
guidance drawn from robust theory and empirical research. Instead, the tendency
has been just the opposite. While the scope, the extent, and the ambitions of
institutional reform expanded, the knowledge on institutional change did not catch
up with the needs of practitioners. In contrast to the first wave of reforms promoted
by a handful of donors concerned with isolated organizational development, the
213

current wave of reforms vastly expanded in complexity and reach. This trend makes
this knowledge problem even more acute. The failure of reforms does not only lead
to missed opportunity costs, but can also instill and deepen cynicism among the
public.

Donors Will Remain Vulnerable to Fads and Ideologies
The myths make reforms vulnerable to ―best practices,‖ fads, and a-priori
belief systems inherited from the past or held by influential stakeholders. All three
waves of reforms have been founded on such ideas; the research findings used by
donors to back their reform agendas have been stretched to fit their a-priori ideas.
This tendency has resurfaced with new rigor as reflected in the prescriptions for
building a ―good governance‖ regime modeled after OECD countries. The
widespread influence of the New Public Management trend is another example.
Some of such hastily formulated, ideologically rather than empirically-based
reforms, are said to have contributed to persistence and worsening of the
institutional problems in countries undergoing institutional reforms (Holmes, 2007).

The Myths Fuel the Aid System’s Existing Flaws and Impede Donors’ Effort to
Change Their Own Practices
The myths also fuel other existing problems in the aid system and process
which have been widely discussed in the existing literature. They also prevent
donors from applying their newly proclaimed policy agenda and approaches in
214

practice. For example, when pressures for supporting institutional development
increase with the growing homogeneity among donors, IDA tends to revert to and
perpetuate its old approach, characterized by supply-driven reforms with overly
ambitious objectives that extensively use ―gap-filling‖ expatriate technical
cooperation as a solution for systemic institutional problems (Bossuyt, 2001).
Furthermore, the donors‘ old approaches became even more pronounced
when institutional reforms became a priority in major IDA‘s reform policies
(Grindle, 2004, Evans, 2004). This system‘s flaws, such as the desire to move
money (―supply driven‖ reforms) and poor design and evaluation practices, are
reinforced by the donors‘ relationships with experts – contractors who have a vested
interest in securing more jobs for themselves, which also creates a principal-agent
problem (Ostrom et al, 2002). Given that accountability at all stages of international
development practice is problematic, an increased emphasis on institutional reform
and pressures to produce results can further facilitate opportunistic behavior.

What Impact Failed Donor-Promoted Public Sector Reforms Can Have on
Recipient Countries?
In this situation the pressing question to ask is not whether the reform took
place or not, but what the consequences are, and how they affect the recipient
society. If institutions are essential for development and if institutional changes are
encouraged by donors and carried out by unaccountable elites in nontransparent
environments, what impact will such reforms have on the recipient society?
215

Donors‘ reviews of their own public sector reforms only indirectly recognize that
the reforms have had some negative effects, and avoid explicitly mentioning the
negative side effects of the reforms. If institutions shape behavior, and if effective
institutions are essential for good governance, then the negative effects of the
distorted institutions might be as significant.
Few donors ask themselves what impact the misguided or misused donor
interventions have on the recipient societies. Policy documents are silent on the
question of what happens when reforms are captured by vested interests and used to
pursue their private agendas. Yet the donors narrowly interpret the existing
research and draw unsystematic inferences to justify their policies. There is a
significant logical flaw underlying institutional reforms: on the one hand, reforms
are expected to be designed and carried out by developing countries which should
take the drivers‘ seat. On the other hand, the leading donors hold that institutions
are created by the powerful elites to pursue their interests (North, 1990, World
Bank, 1997a). By this logic, given that leadership in most developing countries
remains unaccountable and non-transparent, institutional reforms would be used by
the existing groups with access to power to amplify their authority. Hence the
reforms have a potential to aggravate the existing situation. Indeed, the limited
donor evaluations reviewed in the previous chapters show that institutional reforms
conducted in the poorest countries, which are typically those with the weakest
capacity, have been much less effective than in more advanced ones.
216

Some scholars caution that institutional change is highly indeterminate –
once it is initiated it is difficult to predict what exactly it will generate. That is why
planned efforts to transform institutions are described using a metaphor of a garbage
can, as ―highly contextualized combinations of people, choice opportunities,
problems, and solutions‖ which no one controls (March and Olsen, 1989, p. 80).
The side-effects of foreign aid in general have been extensively discussed in
the literature between two opposing camps. On one extreme are those who argue
that foreign aid has been essential for development in many poor countries. All
development agencies and some researchers led by Jeffrey Sachs belong to this
camp. On the other extreme are those who argue that foreign aid negatively affects
the quality of governance, and even more so when pre-existing institutions are
already weak. According to this group of researchers, foreign aid harms beneficiary
societies in many ways, including by weakening accountability, increasing
corruption, or at the very least by alleviating local pressures for reforms (Cooley,
1999; Easterly, 2002b; Knack, 2000; Shirley, 2006). William Easterly has been the
most outspoken advocate of this view.
39

39
Easterly summarized the argument of this former camp as follows:
A group of well-meaning national and international bureaucracies dispensed foreign aid
under conditions in which bureaucracy does not work well. The hostile environment under
which such aid agencies functioned induced them to organize a cartel that increased
inefficiency and reduced effective supply of development services, frustrating the good
intentions and dedication of development professionals. The cartel of good intentions allows
rich country politicians to feel that they are doing all in their power to help the world's poor,
supports rich nations' foreign policy goals, preserves a panoply of large national and
international institutions, and provides resources to poor country politicians with which to
buy political support; in short, foreign aid works for everyone except for those whom it was
intended to help (2002b. p. 1)

217

This debate is partly misguided because it is based on the assumption that
aid is homogenous, whereas aid comes in various forms and can have disparate
effects on different aspects of governance in different countries and produce varying
outcomes. Differentiating those effects could yield more practical insights as to
what works and does not work and why.
To date only one study (to the author‘s knowledge) analyzed how different
types of aid affect different components of governance using cross sectional
longitudinal data (Ear, 2007). It compared how each of the two forms of aid –
technical cooperation (TC) and grants – affect governance indicators. Ear borrowed
from Burnside and Dollar‘s (1997) governance indicators, which include ―voice and
accountability,‖ ―government effectiveness,‖ ―rule of law,‖ ―political stability,‖
―regulatory quality,‖ and ―control of corruption.‖ Using a cross sectional model this
study found that all of these six governance indicators, with the exception of ―voice
and accountability,‖ negatively correlate with aid dependency. Using a pooled time
series cross sectional model, which provides more datapoints and is therefore a
more robust data analysis method, the study found that aid was negatively correlated
with ―rule of law.‖ When aid was disaggregated into the technical cooperation (TC)
and grant components, the findings suggested that TC had tendency to hurt all
indicators except for political stability. One recurrent finding is that aid, and
especially technical cooperation, hurts ―rule of law.‖ The author cautions that his
findings are tentative, and makes a case for more fine-grained approach to
218

understand specifically how aid affects governance quality in order to find ways of
improving the effects of aid.
Ear‘s (2007) findings not only confirm practitioners‘ observation that this
form of aid tends to have a higher failure rate (Israel, 1987), but goes further in
suggesting that technical cooperation (TC) may hurt or negatively influence most
(but not all) indicators of governance quality. Which countries are likely to be hurt
most by TC and why? The UNDP‘s 2006 study of capacity development through
technical assistance concluded that ―institutional weaknesses hinder capacity
development, the effectiveness of TC and the possibility of TC reform.‖ The study
recommended that ―strengthening institutional frameworks and making them more
conducive to developing and sustaining capacity should be a priority of
governments and donors alike. This includes both working to improve the quality of
governance generally, and establishing incentives for performance and for
individual and organizational capacity development‖ (UNDP, 2006, p. 34). In other
words, this is a catch 22 situation – the capacity development efforts fail because
there is poor capacity and therefore capacity needs to be improved. Thus, donors
are yet to find a workable approach capable of helping countries with the poorest
capacity, which are most in need of improvements to their public sector institutions.
Since technical cooperation has been the main form of aid employed by
donors to promote public sector reforms, in what ways can such a form of aid affect
governance quality in the poorest recipient countries? The next chapter explores
219

this question in greater depth, drawing from donors‘ experiences and institutional
analysis literature.

Why Has this Deficiency in Practical Knowledge
Not Yet Been Addressed by Practitioners?
The previous sections identified several patterns in the approach to reforms,
and myths informing donors‘ reform policies. Two interesting questions arise.
First, what accounts for this homogeneity across donors? Second, if this deficiency
in practical knowledge is one of the key factors contributing to the poor outcomes of
the public sector reforms which may even generate negative side effects in the
poorest countries, why has it not been addressed yet? Several reinforcing factors
could explain why different donors have shared similar myths and patterns. Those
factors can also explain why the knowledge problem discussed above has been
downplayed. For one, there seems to be a normative isomorphism in place where
dominant donors spread certain assumptions (DiMaggio and Powell, 1983).
Certain sets of shared norms and assumptions travel across the donor community
and shape their policies. Second, donors have roughly the same institutional
design, characterized by relative autonomy from and limited accountability to their
funders and recipients. The staff of donor agencies also grows dependent on these
reform processes and myths as their careers and future are based on sustaining those
myths. Challenging those myths in such a setting by insiders would not be
220

welcomed. The complex nature of the problem at hand, as well as the researchers‘
lag behind practitioners‘ demand, also play a role.

Practitioners Are Vested in Their Own Survival
One of the key assumptions of the international development field, as
mentioned above, is that donors know how to fix the problems of
underdevelopment. Recognizing this myth by donors would question the relevance
of IDA even further that has been the case so far. As the field has expanded, the
whole system became increasingly dependent on this assumption: expertise,
organizations, projects, and programs stand for jobs, income, and promotions for
development agencies and their experts. This assumption, however, has become
difficult to sustain over many years of failed experiments. Still, donors have been
very slow in recognizing that they lack knowledge. Instead of addressing the
knowledge deficiency and correcting their approach, they have continually
reinvented their theories, as the overview of the three waves of reforms in previous
chapters indicate. Only most recently have they started acknowledging that they do
not know what makes institutions effective and how to build them. But even then
their practice still continues on the old path.

Limited Accountability
One of the reasons why donors have not seriously considered addressing the
knowledge deficiency for a long time is the limited accountability in international
221

development field. The accountability problem is found at all stages, as well as
within both the supply and receiving sides of development assistance. The layered
nature of the foreign aid system hinders accountability and pressures on donors: The
chain of aid delivery includes the links between donor governments and IDA, IDA
and their contractors, the contractors and the recipient governments, and between
the recipient governments and the public. With every successive link,
accountability and pressures become weaker; meanwhile, the public is even more
removed from the source of funding and ideas. The IDA‘s decision-making
authority is mismatched with their accountability and responsibility to the original
taxpayers (Chandler, 2005). Donors are primarily preoccupied with moving money,
and in the case of bilateral donors, also by political and strategic objectives, as well
as a desire to continue projects for the sake of continued income for experts and/or
the organizations for which they work. There is also less concern with evaluating
their interventions and integrating their lessons back into the process and the content
of reforms. This combination can lead to wasteful, and sometimes disastrous,
outcomes in developing countries where projects are implemented even if they are
not likely to benefit the public. For example, as mentioned above, organizations and
officials in IDA and developing countries prefer short-term and visible projects that
yield immediate demonstrable outputs (Girishankar, 2001, DFID, 2003, Ostrom et
al., 2002). However, they do not have strong incentives to invest time and resources
to improve the context, process, and outcomes of institutional reforms. Thus,
institutional reforms are reduced to their most visible and short term elements such
222

as new legislation and organizations. In addition, powerful actors at the recipient
end favor traditional IDA practices and are not interested in challenging them.
Several other problems aggravate the situation. For one, as mentioned in the
previous chapters, public sector reforms are hard to evaluate. Project and program
timeframes are too short; reforms involve multiple factors and stakeholders making
it hard to evaluate and hold specific persons or organizations responsible. Thus,
when evaluations do take place they tend to focus on outputs (such as legal changes)
rather than outcomes (actual impact of those changes) (Ostrom et al., 2002). This
means that the parties involved in reforms are able to continue their practices
without concerning themselves with the actual outcomes of reforms. At the
recipient side, in many developing countries, government officials are not always
effectively held responsible for their decisions and actions, and can use IDA and
their projects selectively to advance their own and/or organizational interests.
Moreover, by their very nature, bureaucracies of all organizations involved are built
for securing stability but not change. All these problems on the supply and demand
sides of development assistance reinforce each other, and serve as an additional
obstacle toward addressing the knowledge deficiency.

Poor Understanding of Recipients’ Institutions and Institutional Processes
The research constraints also disfavor institutional development. From an
academic perspective, although extensive research on political institutions exists,
little is known about administrative institutions of developing countries (Nunberg,
223

1999, p. ix). Scarcity of knowledge of administrative systems seems to be reflective
of the poor interest in and underdevelopment of comparative public administration
in the United States that dominates Western scholarship (Jreisat, 2005). A lack of
precedents for institutional transition from socialism (Goyal, 1994, p.166) was
another obstacle that prevented more initiatives on substantive reforms in the public
sector.
The positivistic paradigm dominant in policy-oriented research and
disciplinary fragmentation are also among the key problems that account for this
gap. Institutional change is one of those fuzzy topics with little empirical research
and which is difficult to subject to quantitative analysis. Further, a highly
fragmented nature of disciplines and paradigms make integration of knowledge
more challenging.
Therefore, despite the burgeoning of the research on institutional change,
academics have not been able to provide donors with adequate guidelines for
institutional reform to donors. Meanwhile most IDA‘s understanding of institutions
remains limited to general and abstract terms, with little regard for distinctions
between different governance systems (Bandstein, 2005), and issues in actual
practice of these governments.

But today when societies and organizations face an
increased necessity for institutional reforms with the rapidly changing social and
physical environment, such theoretical integration is necessary.

224

Selective Use of Research
The leading financial development agencies such as the World Bank and
IMF have been heavily influenced by research in economics in developing and
designing their approach to institutional reforms even though ―economists have
neither absolute nor comparative advantage in thinking how to build the rule of law
in a society, enhance its voice and accountability, or control corruption at large‖
(Rodrik, 2008, pp.19-20). While the currently influential New Institutional
Economics movement has addressed major limitations of neoclassical economics,
there is room to fill in explaining institutional changes discussed in previous
chapters.
These IDA, including the World Bank which claims expertise in public
sector reforms, favor economic theories partly due to the prevalence of economics
and finance professionals in them. Owing to their similar formal training and
socialization under the influence of a dominant scientific paradigm (i.e. positivism),
these professionals tend to favor technical economic and financial analysis and
avoidance of politics (Miller-Adams, 1997). For this same reason, economists‘
formal models have had greater appeal to IDA compared to the ―essayist‖
institutional research from other disciplines (World Bank, 2002a). Some donors
such as the World Bank only recently started paying attention to recruiting
specialists from other disciplines with relevant expertise in institutional change and
development. Meanwhile, an extensive body of research from other disciplines,
such as public administration, political science, sociology, and law which study
225

transformations in administrative, political, societal, and legal institutions, is not
being put to use.
In addition, the use of this economic version of institutional theory has been
confined to the prescription of policies, but not as much to analysis of the process
and outcomes of donors‘ own policies. Ideally, policies have to be modified by
findings from the analysis and evaluation of the implementation; but few have
analyzed the outcomes of the reforms from an institutional perspective.
Furthermore, donors selectively use and interpret the existing research to support
their renewed focus on institutions even though some of the scholars whom donors
heavily draw from point out that no clear answers are available yet for reforming
governance institutions (North, 1993, 2005, Rodrik, 2008, Asemoglu, 2008).
Ignoring this knowledge deficiency and upholding the myths that fill this
gap may lead to several undesirable consequences. For one, blindly designed and
conducted reforms have little chance of delivering expected outcomes, which was
confirmed by the numerous assessments of the reforms reviewed in the previous
three chapters. Second, a lack of knowledge makes IDA vulnerable to fads and
ideologies, and fuels existing flaws in the system. Tinkering with reforms may alter
existing values in unexpected ways because institutions have a normative
dimension.
Considering that researchers and practitioners still lack a clear understanding
of institutional phenomena, and given the potential negative side effects mentioned
above, it is surprising and worrying that institutional reforms are viewed as a
226

panacea capable of addressing complex national and global challenges ranging from
ensuring participatory governance and economic development to fighting global
poverty (World Bank, 1997a, 2002a). Institutional reform is a powerful instrument
that can be used or misused equally with harsh implications for a wide range of
societies. Indeed, institutional reforms led to improvements in places where there
already was a functional public administration in place, but the reforms undertaken
in corrupt systems reinforced those features. Unfortunately, poor countries with the
weakest public administration face the greatest pressures for institutional reforms
from IDA as part of the conditions for aid relief or additional loans.
In spite of these drawbacks in the content, process, and context of institution
building reforms, as well as their potential and actual negative effects, more
ambitious institutional reforms are designed and funds continue to be earmarked.
This problem is even more daunting for planned institutional reforms in complex
environments where not one, but all governance institutional changes are envisioned
(Caiden, 2006).
Considering the past failures and how little is really learned about planned
institutional change, most influential IDA seem to be overly optimistic about the
prospects of successful institutional change. The ―institutions matter‖ policy of the
IDA may be premature given the lack of a systematic knowledge base to inform
these crucial interventions. The meaning of institutional change in international
development practice has expanded from organizational change to transformation of
whole governance systems. If organizational change was difficult – as has been
227

demonstrated in previous waves of reforms – a transformation of the whole
governance system with large numbers of interconnected organizations from public,
private and nonprofit sectors is even more difficult to comprehend and implement.
The primary obstacles underlying this lack of clarity are related to the lack of clear
definition of what institutions are and limited practical knowledge of how to
deliberately design and change institutions to generate good quality institutions.
These challenges, combined with the existing structural and incentive problems both
on the donor and recipient sides, may render reforms to have limited positive impact
on developing countries. Institutional reforms informed by more accurate
understanding of the subject matter may reduce their potential negative side effects
on the intended beneficiaries.

Conclusion
This chapter analyzed the three waves of public sector reforms promoted by leading
donors in developing countries over the last five decades. The chapter intended to
answer the first set of research questions: What body of theoretical and practical
knowledge and ideas informed donor-promoted public sector reforms in developing
countries for the last five decades, and how have they affected the outcomes of the
reforms? What can researchers and practitioners of institutional change learn from
these reforms?
The overarching finding from the analysis of the three waves of public sector
reforms is that although the previous waves of reforms generated invaluable lessons,
228

not all of them have been applied in the subsequent ones. Donors have been more
successful in identifying and addressing lessons on ―what‖ the interventions should
accomplish rather than ―how.‖ The content of reforms has shifted for the last five
decades, from focusing on government in the 1960s, to markets in the 1980s, to
encompassing governments, markets, and civil society in the current wave of
reforms. Thus, all three are enveloped in the ambitious governance agenda.
Consequently, the reforms have expanded in scope over time, from a focus on
organizational change to the transformation of institutions relating to the entire
governance system. They have gradually embraced a more systems-based approach
to development that recognizes the reciprocal influences between effectiveness of
government and demand for it from the private sector and civil society. As a result,
the donors‘ current institutional development agenda looks less like a coherent
reform agenda, and more like a patchwork of competing ideas and terms based on
limited research which draws from empirically flawed a-priori ideas about human
behavior.
At the same time, reformers retained their primary emphasis on changing
institutional hardware – i.e. formal structures, laws, procedures – while neglecting
the institutional software - culture, norms and mental models – underlying and
animating the hardware shaping its performance.
Furthermore, donors have not succeeded in addressing the limitations in
their methods of promoting reforms. The approach to reforms has been partially
revised, but mostly in policy; it has yet to translate into practice in the poorest
229

countries. Translating this ambitious reform agenda into practice has been
challenging; donors still rely on their discredited but accustomed methods. If
anything, in the third wave of reforms, the redefinition or thinning of institutions as
―rules of the game,‖ coupled with the existing limitations in the aid system and a
lack of comprehensive knowledge of institutional change contributed to the
hollowing of institutional reforms. The latter became more about changing laws
and organizations and modeling them after those in developed countries.
Meanwhile strengthening the capacity of government organizations to formulate,
design, and carry out effective government policies and programs became secondary
to rule change.
Instituting new laws and/or changing existing ones alone, not surprisingly,
has not had an expected positive impact in developing countries because laws and
government are often de-coupled from actual rules of the game informing behavior
and often suffer from poor legitimacy and lack of resources and capacity to enforce
those laws. As a result, overall there has been little or no progress in the countries
with poorest governance quality, as summarized in the OECD Development
Assistance Committee‘s preliminary reviews (OECD, 2006a) and the findings of the
World Bank and IMF‘s Development Committee (World Bank and IMF, 2003).
The main but overlooked problem underlying challenges of promoting
successful public sector reforms, on top of the inherent complexity of such
institutional reforms and structural limitations in the aid system, is that donors still
do not know how to help recipient countries with weak capacity to build effective
230

public sector institutions. In view of this knowledge deficiency, the existing
practices are informed by reinforcing layers of unjustified explicit or implicit
assumptions on the nature of institutions and institutional change accumulated over
the five decades of reforms.
This chapter identified four such myths. First, donors mistakenly assume that
they know how to fix developing countries‘ ineffective institutions. Another
misconception that has been discredited but persists is that Western models of
formal institutions are universally applicable and are effective, and that local
informal institutions undermine those. Third, policy makers also hold that
institutions are homogenous and fragmented pieces of government-backed rules
and/or organizations, ignoring the layered and multidimensional nature of
institutions. Institutions are thus assumed to be all about external regulation, which
leaves out the normative and cognitive mechanisms of enforcement. The fourth
assumption is that institutions that have evolved over long periods of time can be
easily recreated through one-shot deliberate human design. Donors assume that
changing formal elements of institutions will automatically translate into
appropriate change in practice, forgetting the need to account for the other non-
formal prescriptions that influence human behavior, as well as the dynamic nature
of institutions.
This knowledge deficiency and the misguided assumptions that fill this gap
combined to undermine the reforms‘ chances of succeeding in promoting positive
changes in administrative institutions in developing countries. They also fuel the
231

limitations in the aid system, reform process, and contextual factors. Some of these
myths have been acknowledged by donors and researchers; but they continue to
inform their practices – no viable alternative has been offered yet. This chapter took
the first step to correct those myths by explicating and subjecting them to critical
analysis. (Part III of this dissertation proposes a different way of thinking about
institutional reforms.)
If governance institutions have a strong impact on societies, as donors claim,
and when donor-promoted reforms fail to deliver expected outcomes, what impact
do those reforms have on recipient societies? How do donors‘ efforts and reforms
play out in practice and influence the reform strategies in the recipient countries?
What are the actual outcomes of such reforms? Unfortunately, as mentioned above,
the actual effects of the reforms as well as their side effects remain outside the
attention of both practitioners and scholars (OECD, 2005a). The next chapter
attempts to illustrate how donors‘ efforts are playing out in practice using the
example of Kyrgyzstan‘s public sector reforms.
232

PART II

Case Study of Kyrgyzstan’s Public Sector Reforms For The
Last 20 Years

Part II of this study is comprised of chapters six, seven, and eight. This part
answers the second research question – how donor-promoted reforms played out on
the ground in a specific country context. Kyrgyzstan‘s experience presents a good
window for exploring and improving understanding of the design and
implementation of institutional reforms. The Kyrgyz government‘s eagerness to
ride donors‘ second and third waves of reforms makes this an interesting case for
this inquiry.
It is not possible or desirable to isolate an administrative system from its
broader political environment given the highly politicized nature of public
administration. That is why administrative reforms in Kyrgyzstan will be described
and analyzed in the context of the broader governance system and reforms
undertaken in this country.
Chapter six reviews Kyrgyzstan‘s governance institutions, specifically
focusing on its history, major changes, and the current state of affairs. Chapter
seven then provides an overview of the administrative reforms, with specific focus
on reforms of civil service and the machinery of government, as well as local
233

governance reforms. Chapter eight then examines both the direct and indirect
effects of donor-promoted institutional reforms in Kyrgyzstan in the last twenty
years. As mentioned before, no part of this thesis seeks to put blame on one or the
other party for any of the observed outcomes, given that reform outcomes result
from a complex interplay of various factors. The goal of this part of the study is to
trace how donor policies played out on the ground and why, and identify the room
for improvement from donors‘ perspective.
234

Chapter 6

Kyrgyzstan’s Past and Present Governance Institutions

This chapter reviews Kyrgyzstan‘s governance institutions, specifically
focusing on its history, major changes, and the current state of affairs. The first part
of this chapter focuses on the governance institutions prior to the independence.
The second part of this chapter maps out the current governance institutions.

Governance Institutions in Kyrgyzstan Prior to the Independence
Historically, the Kyrgyz people experienced different sets of governance
regimes with their distinct institutions, which have been built one on top of another.
This section traces those institutions up to the independence in 1991.
The antecendants of the Kyrgyz people are believed to have moved from the
northeastern part of modern-day Mongolia to settle in the present territory of
Kyrgyzstan in the 15
th
to 16
th
centuries. The Kyrgyz people led a nomadic lifestyle
living and changing settlements in groups of clans and tribes. This lifestyle was not
conducive to creating a nation attached to a distinct territory, as well as to bringing
Kyrgyz people under direct colonial/external control.
Each tribe had a governance structure consisting of the executive (bi and
bek) and collective council (kurultai, the meeting of the elderly). There was some
accountability structure to the population and the bi was expected to respond to the
235

needs of the public. Collective identity was strong; individualism was shunned, as
reflected in a Kyrgyz saying ―bolungondu bory jeit‖ (those who branch out [from
the public] he will be eaten by a wolf).
The idea of a Kyrgyz public was loosely conceptualized. It primarily
referred not to the entire Kyrgyz people, but first of all to the tribe to which one
belonged. The tribes where connected through the idea of having the same roots,
and their leaders kept contact through meeting in grand councils and celebrations
(toi), as well as through rivalries and alliances amongst themselves. While several
independent Kyrgyz states emerged throughout its history, which date back to as far
as 200 B.C., as historians claim, these states did not last long enough to form,
cultivate, and maintain a strong sense of national identity and institutions to secure a
unified cohesive governance of the Kyrgyz tribes.
The first modern administrative system was introduced in Kyrgyzstan‘s
current territory by the former Russian Empire in the mid 19
th
century. The system
was essentially a colonial one. Colonizers exercised indirect control over the
Kyrgyz people by co-opting local chiefs and using military power. In fact, the
current Kyrgyz capital Bishkek (then Pishpek) was a military garrison used by the
Russian Imperial Army to defeat the Kokand Khanate which ruled the Fergana
valley at that time. The Kokand Khanate exercised indirect rule over the Southern
Kyrgyz clans, whose leaders were influential in the Khanate and retained relative
independence from it. The geographic divide among Northern and Southern tribes
was deepened by the tension between the clans: The Southern clan notables wanted
236

to increase their standing in the Kokand Khanate and materialize their ambitions of
winning the throne through uniting with the Northern clans. The latter resisted
being brought under the Kokand Khanate, and sought help from the Russian
Empire, with whom some of the Northern notables had established friendly ties
back in the 18
th
century.
In the late 19
th
century, the Russian colonial authority started sending
Russian peasants to settle in the Kyrgyz territories. This ―implantation of sedentary
Russian peasants on nomad lands, backed by military power of the colonial state,
destroyed a socio-economic system and impoverished the people‖ (Dukenbaev and
Hansen, 2003, p. 17). Such settlements and land acquisitions, combined with the
colonizers‘ effort to draft local men into the Russian army, created tensions and
revolts, which were brutally suppressed and forced some to flee to China.
The Kyrgyz people gradually settled in villages, mostly according to their
local solidarity networks (such as clan and tribal groups), in the 1920s after it came
under Soviet rule.
As a nation-state with formal government institutions and delineated
territory, this new entity came into being as the Kara-Kyrgyz autonomous enclave in
1924, which was transformed into the Kara-Kyrgyz Autonomous Region in 1926.
In 1936, this territory became one of the Socialist Republics of the Soviet Union,
which represented a federation of socialist republics. The Kyrgyz Republic
remained in the Soviet Union for about seventy years until 1991, when it became an
independent state.
237

Economically, Kyrgyzstan, as with the other Central Asian socialist
republics having a large youth population, natural resources, and arable land, was
predominantly the supplier of raw materials such as mineral resources, tobacco,
meat, grains, etc., to plants in more advanced industrial republics of the Soviet
Union. The majority of the native population resided in rural areas, whereas
Russians resided in cities and held most of the jobs in the strategic social, economic,
cultural and political spheres. In 1970, for example, ethnic Kyrgyz constituted 44%
of the total population of the republic, but only 17% of the urban population and
12% of the capital‘s population. At the same time, 66% of the capital‘s residents
were Russian, while they comprised only 30% of the republic‘s total population.
These statistics also indicate a clear division of labor. While the native population
occupied unskilled or semi-skilled jobs in rural areas, the industrial and white-collar
jobs were reserved for the cities and non-titular nations (Hetmanek, 1975, Huskey,
1997).
The Kyrgyz Socialist Republic had roughly two main layers of state
administration. The lowest layer of state administration in rural areas was organized
around agricultural communities such as kolkhoz and sovhoz, i.e. collective and state
farms, set up in villages and/or groups of villages (the residents of which, as
mentioned above, in turn corresponded with the pre-existing clan and tribal groups.)
Village councils had nominal power, whereas the collective and state farm
enterprises had real authority, as they played multiple functions. In addition to
238

agricultural production, they were also in charge of public infrastructure and
services, such as housing and local education and health care facilities.
The Soviet regime also created a national administrative layer of
bureaucratic institutions mainly to administer the rural communities. The industrial
government enterprises and educational institutions set up in the cities were mostly
directly controlled by union-wide (vs. republican) ministries based in Moscow.
40

The central administrative layer oversaw local communities through its elaborate
rayon (districts combining several villages) and oblast (province, combining levels
of rayons) territorial-administrative structures. While people associated with and
accepted the jurisdiction of the locally-created formal structures on the basis of the
pre-existing informal institutions, the national administrative system set up to be
accountable to Moscow remained detached from the local population (Cooley, 1999,
Luong, 2002, Roy, 2002).
Describing public administration in the Soviet republics is a challenging task
because the latter has several distinct features that defy the commonly understood
key characteristics of public administration and civil service. For one, principles of
service and accountability to the public were alien to the Soviet governance regime.
Instead, public administration was created to serve the state and the Communist
Party, to bring and keep the local people under the state‘s control, and implement
the policy decisions made in Moscow. The administrative structure was mainly

40
For example, at the end of the 1980s 40% of the economy in Kyrgyz Republic was controlled by
enterprises directly run by Moscow (Huskey, 1997).

239

used to extract resources for the greater union‘s planned economy, whereas the local
rural communities primarily provided social benefits.
Furthermore, the distinction between elected and appointed political officials
and civil servants was virtually non-existent. There was no independent system for
recruiting civil servants. The higher echelons of civil servants, along with political
appointees and elected officials, were indoctrinated through nomenclatura.
Training of cadre servants included not only introduction to formal rules and
systems, but also through immersion in communist ideology. Exams and tests
included questions of Marxist and Leninist ideology. (Even examinations of nursing
staff included such elements.) The nomenclatura constituted the pool of the
Communist Party‘s cadres selected and trained by it to work in government and
carry out the Party‘s directives. Instead of a neutral civil service, there was an
appointment system of all higher-level state officials whose loyalty to the party was
the key.
Officials and state servants at the republican level did not make policies.
Policy decisions during the Soviet regime were primarily made in Moscow by the
central apparatus of the Communist party and the Supreme Soviet, and reflected the
five-year plans, while both politicians and bureaucrats in the peripheries
implemented those policies. Thus, the centralized authoritarian state‘s emphasis on
control, along with complete subordination to the Communist party, shaped the
ethos of the sate servants. The government was in charge of the planned economy,
and bureaucrats had extensive managerial discretions. Those positions often came
240

with perks (cars, housing, access to special schools, etc.) and status that elevated
them from the rest of the public.
While this governance structure closely resembled that in the other fifteen
republics of the Soviet Union, the actual governance in the Kyrgyz Socialist
Republic integrated elements of both Soviet and its pre-Soviet governance regimes.
Two distinct but parallel institutional systems operated in the Kyrgyz Socialist
Republic. One, the formal institutional system, was based on the ideas of nation and
ethnicity, which were defined, imposed, and enforced by Moscow. The other, more
implicit and often formally ignored institutional system, was based on the loyalty to
the preexisting ―solidarity group‖ (Roy, 2000, p.15). The formal institutions did not
penetrate too deeply through informal institutional systems to govern relationships.
This situation resembled those in other republics in Soviet Central Asia.
Instead, Moscow indirectly governed Kyrgyzstan, as it did the other Central
Asian republics, by formally establishing and observing official attributes of an
administrative state. It recruited young cadres from among the indigenous people,
trained them in Party lines through nomenclatura, as mentioned above, and then
normally appointed them back to head local institutions.
41
At the same time, the
center kept the ―solidarity‖ networks – grouped habitats of families with kinship
links such as clans, tribes, and village communities (Roy, 2001). The Soviet
regime thus built local administration based on traditional networks and identities,

41
Moscow directly controlled such essential for itself economic functional areas such as industry and
security, but local/indigenous cadres were not normally appointed in these spheres and other regions.

241

and exercised indirect control through formal political and economic institutions as
well as pre-existing informal institutions. The latter underwent a quiet
transformation in interaction with, and to adapt to, the formal political institutions,
but did not totally disappear. The Soviet regime used local leaders to govern the
peripheries (Roy, 2002), and those leaders became accountable to Moscow rather
than to the public.
One of the purposes of Gorbachev‘s perestroika in the second half of the
1980s was to address this problem of institutionalized ineffective administration by
bringing Central Asian societies under the rule of formal institutions (Gorbachev
1988, p.1, cited formerly in Gleason and Perlman, 2005, see also Ellickson, 1995).
The collapse of the Soviet Union abruptly ended his institutional reforms.

Current Governance Institutions
The governance system in Kyrgyzstan may appear very distinct from other countries
of the world beyond the former Soviet camp due to the historical developments
described above. But, the key features of the current governance institutions in
Kyrgyzstan resemble the first four out of five key features observed in other
developing countries with previous colonial experiences. Ferrel Heady summarized
those features as imitation of the previous colonial system‘s administrative
institutions, limited human resources capacity, corruption, and formalism, i.e.
242

discrepancy between laws and practice (2001, pp. 299-302).
42
This section
elaborates on these features as applied to Kyrgyzstan.

Imitative Governance System that Preserved the Features of the Previous
Regime
Kyrgyzstan‘s governance system, not just its administrative system, closely
resembles that of the former Kyrgyz Socialist Republic. This pattern is observed in
other post colonial countries as well: ―a country that was formerly a colony almost
certainly will resemble the parent administratively, even though independence was
forcibly won and political apron strings have been cut‖ (Heady, 2001, p. 299).
In Kyrgyzstan, a new governance system, tailored to the needs of the newly
independent democratic state, never emerged, primarily because different forms of
statehood for the last two centuries were always imposed from outside, rather than
through internal struggles and self-determination. As a result the previous
governance system was adapted to the new economic and political conditions.
Thus, while in form, Kyrgyzstan‘s governance system has been undergoing drastic
changes through imitation and borrowing from other democratic countries, in
practice it demonstrates a fair degree of continuity from the previous regime. This
observation falls within the path dependency phenomenon. As summarized by Nabli

42
Although Heady refers to the features of ―public administration systems,‖ those features are
descriptive of overall governance system in Kyrgyzstan, because the latter emerged on the basis of
the administrative system set up by Moscow. Moreover, ―operational autonomy‖ of the bureaucracy
is the fifth feature that Heady indentified, but it does not apply to Kyrgyzstan.

243

and Nugent (1989), ―institutions may not always evolve ‗efficiently‘; indeed
institutional rigidities, inertia and so on may set in, thereby preventing, even for
long periods of time, institutional adaptations to the various institutional changes
and causing institutions to be inefficient.‖
According to the constitution the state governance structure is based on the
principle of division of powers and checks and balances between three branches of
powers. But the work of the legislature and the government are largely
subordinated to the president‘s office.
43
The latter is the most powerful and
influential policy-making body which, determines most government policies and
imposes on the other organs. Some see parallels between Kyrgyzstan‘s current
governance system and a semi-feudal regime (ICG, 2005), while others see a
resemblance between the president‘s office and the ―Communist Party‘s Central
Committee‖ (Omuraliev, 2005, p.1).
The independence of the parliament has been eroded over time. Whereas in
the early 1990s, a more independent-minded parliament (which some consider as
the only legitimate parliament the country ever had) provided checks and balances
to former President Akaev‘s office, since the second half of 1990s fewer and fewer
public representatives have challenged the executive‘s initiatives, and in fact, rarely
gain a quorum to overturn them. Apart from the weak standing in the political
arena, the legislature is also disadvantaged in terms of financial resources, which are

43
As will be discussed in greater detail below, the president‘s office (administratsiya) was recently
expanded and renamed as President‘s Institution – this was part of the current president Bakiev‘s
administrative reforms.

244

controlled by the president‘s office. It also lacks qualified and trained staff for
exercising its duties as a policy-making body.
The judicial branch, consisting of local courts and three high courts –
Constitutional Court, Supreme Court, and Court of Higher Arbitration – is known as
one of the most corrupt institutions and is widely distrusted by the public. The
judicial system also fails to provide effective checks and balances on the other
branches, siding with the executive. It often upholds the executive‘s choices
because the executive appoints the judges with the nominal approval of the
legislature.
The vertical division of government authority projects a similar power
imbalance and displays functional duplications observed at the national level. In
terms of territorial organization, Kyrgyzstan is a unitary centralized political system
with authority resting on the national government. The sub-national administration
has three tiers: the first includes seven oblasts and the largest cities of Bishkek and
Osh. The second tier includes 45 rayons and ten cities, which are in turn
subordinated to their respective oblasts. The third tier includes ten cities as well as
about 467 rural communities (villages or groups of villages) also subordinated to
their respective rayons.
Local territorial organs consist of two sets of governing bodies. The local
self-government bodies are elected by residents of a given territory. According to
Bahtiyar Fattahov, the stats secretary of the National Agency for Local Self
Governance, the size of the local municipal staff as of 2007 was 8,000 employees.
245

In comparison there are 14,000 state servants at the national level. A parallel local
state administrative structure exists in each tier of the local governance system
representing the central government. The president appoints and dismisses the heads
of local state administrations, i.e. governors (heads of oblast) and akims (heads of
rayons). Governors and akims act as the executive‘s representatives and uphold the
latter‘s policies at the respective local government. They also manage the nationally
allocated budget, that flows from the center to oblast levels and then to rayons and
finally from there to rayon subordinated cities and villages. The president‘s
appointees to local administrations backed by the centrally-allocated funds have
greater authority compared to often poorly-funded locally elected representatives of
self-governance organs. Some argue that oblast level territorial units are redundant
for a small country like Kyrgyzstan.
But, even this unbalanced-power formal structure described above does not
fully account for the actual governance institutions and processes. As has been
common practice during the former Soviet regime, it was not through the formal
institutions alone that the executive concentrated power. The executives have used
not only the formal authority, which is already unparalleled to any other branch or
official, but also the extensive informal networks to sustain power (Baimyrzaeva,
2005).
The term ―state administration‖ is more reflective of the governance
structure in Kyrgyzstan than ―public administration.‖ Administrative neutrality
from political interventions and public service are not characteristic of Kyrgyzstan‘s
246

bureaucracy. In fact, government documents themselves use ―state administration‖
(mamlekettik bashkaruu in Kyrgyz national language and gosudarstvennoe
upravlenie in Russian official language.) The term ―public administration‖
(obshestvennoe upravlenie) is rarely used and refers to social or communal self-
governance.
Bureaucrats‘ and political officials‘ accountability to the public is almost
nonexistent. This partly stems from the Soviet legacy, which was made worse with
the developments in the newly independent state. During the previous regime,
bureaucrats and officials looked up to the Communist party and other policy-makers
in Moscow, and the party had extensive controls over them through official
channels and a network of informants. However, following the dissolution of the
Soviet Union, this external control was lifted. The public was not used to
demanding governmental accountability.
While government officials found new foreign masters in donors, who
replaced Moscow in terms of policy advice and some funds, they do not feel
accountable to donors as they did to Moscow. The formal channels intended to
place the government‘s political-bureaucratic institutions under public control –
such as civil society institutions and elections – not only did not take root, but they
also deteriorated since the initial successful experiences. Only in rare cases, the
pretence of external accountability over accountability to the public presists.
The bureaucrats‘ loyalty to political masters, control orientation, and
secrecy, inherited from the previous regime, makes it harder to make the
247

administration transparent and accountable to public. The key values informing this
bureaucratic culture was not service to public and professionalism, but loyalty to the
party and political appointees. Under the authoritarian Soviet regime the
administrative system of Kyrgyz Republic served the Communist Party and
Moscow‗s agendas. Such an administrative culture of the Soviet bureaucracy that
valued loyalty to the political elites still persists.
The main change today is perhaps that the loyalty to the Communist Party
shifted to loyalty to the official who helped the state servants to secure their
employment. Furthermore, while detached from the public and politically
dependent, the local civil servants had extensive administrative discretions over a
range of social and economic matters in the planned economy. This mindset still
prevails. Given that their new masters – the political leadership – emerged from the
ranks of the Soviet bureaucracy (nomenclatura), it is hard to talk about
accountability of the political offices to the public as well. Secretiveness is
widespread not only among the higher-level bureaucracy, but also at the level of the
clerical support staff (this made it difficult not only to conduct interviews for this
study, but also to find appropriate phone numbers and make appointments). These
characteristics, coupled with lack of external pressures and mechanisms of
accountability to and feedback from public, are not easy to revert. Not having an
experience of being operationally autonomous from political elites during the
former regime, current state servants do not feel a need for it, or know how to live
with it, and therefore there has been no internal push for reforms.
248

As former Minister of Foreign Affairs, Muratbek Imanaliev (2007) observed:
At present, bureaucracy in the states of Central Asia could be viewed as a
reformed Soviet nomenclature class. A distinguishing feature of the modern
bureaucracy in the Central Asian states is that it has merged with business
and criminal groups. Everything that is happening in the states of the region,
including the issues of state formation, should not be viewed as a movement
towards development and the approach to international standards (for
instance, European). To a greater extent this is a regeneration of the Soviet
on the inertial basis, i.e. the so-called post-Communism in the post-Soviet
area. Post-Communism forms its own set of values - a cross-breed of
Sovietness, Islamism and, as D. Furman qualified it, imitational democracy.
In sum, independent public administration in Kyrgyzstan does not exist. The
main difference from the previous regime is that the administrative machine is now
used by the president. One of the manifestations of this practice can be seen in the
commonly used term ―administrative resource‖ (―administrativni resurs”), which
refers to the widespread mobilization of the government machinery including all its
financial resources and even state servants (including educators and health
professionals), by the officials, primarily by the president, to advance their own
agendas in elections, referenda, and other cases they see fit. Here is how Muratbek
Imanaliev portrayed today‘s governance system:
The state management has virtually not changed: the same staff of the Central
Committee with functional and sectoral departments (Administration of the
President), the same Cabinet staff, helpless ministers, the judiciary as a branch
of the executive, first secretaries of provincial and regional committees
(provincial and regional governors) who are accountable to, and depend on, the
President (Secretary General or First Secretary). A set of functions, the character
of activities, the style of leadership, a vertical line of mutual responsibility
remains the same – Soviet. Elections are held according to the Stalinist scheme –
―elections are won by those who count, and not by those who get more votes‖
(2007).

249

Limited Human Resources Capacity
Second, the Kyrgyz bureaucracy was and remains deficient in skilled manpower.
This legacy too can be partly traced to the previous regime, which the new political
leadership in the independent Kyrgyzstan and donors failed to properly address. As
mentioned earlier, the central administrative system set up by Moscow was basically
an extractive one to fulfill the directives of Moscow, whereas the local agricultural-
administrative units have disintegrated. Bureaucrats and political officials of the
Soviet regime were trained to implement policies, but not develop them. Following
independence, the old bureaucracy remained to support the new political officials,
and both groups happened to comprise of largely the same members of the
nomenclatura . Given local civil servants‘ and politicians‘ limited expertise in a
market economy and democratic governance, and their lack of policy analysis and
evaluation capacity, decision-making has heavily relied on a subjective basis and a
top-down fashion (one example of the latter is the officials‘ recent failed attempt to
write a national ideology). Moreover, such a decision-making process is not only of
poor quality and lacks a public buy-in, but it is also more vulnerable to misuse of
government authority for private ends. This gap was partly filled by foreign
technical assistants who supplied policy advice on key issues, even though they did
not always have adequate knowledge of the local context.
The cadre system underwent drastic changes with the collapse of the Soviet
regime and weakening of the Communist Party. While the nomenclatura also
disintegrated, the products of this cadre system continued to (and still do) work in
250

the new government, albeit not always in the same capacities. During the previous
regime, as mentioned above, the Communist Party carefully trained, selected, and
appointed cadres, whom it monitored and controlled through official channels as
well as through informants. In the new government‘s unstable political and
economic situation of the early 1990s, the political leaders preferred to select their
subordinates from people who they could trust. In the absence of the party‘s
watchful eye, it was also easier to succumb to the pressures to hire friends and
relatives.
As a result, the new appointments were often based on friendship and
kinship ties rather than according to the principle of meritocracy. The popular term
kryshevanie
44
(from the Russian word ―krysha” meaning ―roof‖) refers to this
practice. It means higher-level officials securing government positions for their
friends and relatives through pressures or other types of influence. This appointment
practice trickled down to the lowest levels of bureaucracy. This pattern has been
further solidified over time, and has negatively affected the quality of the
governments‘ decision-making and implementation capacity, as well as morale and
discipline in government organizations.
In the newly independent Kyrgyz Republic that was making many crucial
and urgent policies, there was a dire need for specialists with policy-making skills.
A few specialists who had superior technical skills, expertise, and knowledge were

44
―Kryshevanie” is also used in a business context; it refers to the practice of providing protection,
such as from excessive tax and other regulatory bodies‘ excessive interference, to businesses by
higher-level government officials.

251

not always consulted; some of them left the country; others moved to work in the
private sector or in international organizations. With the lack of locally-trained
policy specialists, decisions were often made with the help of foreign specialists
supplied by donors. Those specialists were often unaware of local realities, which
have sometimes contributed to the adoption of less than ideal policies.

Corruption
Another related defining feature of the post-colonial administrative systems is the
channeling of much of the bureaucratic activity ―towards the realization of other
goals than the achievement of program objectives,‖ (Heady, 2001, p. 301), which is
essentially a sign of systemic or institutionalized corruption. If corruption was not
bad enough during the days of the Soviet Union, after independence it became even
more prevalent. Corruption increased following independence when the oversight
from Moscow and the Communist Party was lifted and political appointees and state
servants had no one to answer to. The attitudes of the general public, which was not
accustomed to demand answers and accountability, enabled greater misuses of
power. Kyrgyzstan is now ranked as one of the most corrupt countries in the former
Soviet Union.
There are at least two sets of mutually reinforcing key factors that enable
corruption in the country. One is the weak monitoring/accountability. The other is
the peculiar financial regulatory structure of the government. The weak monitoring
system of political and state employees goes back to the indirect governance
252

system
45
established during the Soviet era as well as the extensive network of
informants used by the system, which, in combination, contributed to erosion of
local institutions of accountability. Since independence, a lack of transparency and
accountability in the decision-making and implementation process, coupled with
traditional norms of preferential treatment of members of one‘s clan, family, and
friends, contributed to the reality that misuses of government authority became
commonplace. A lack of clear job descriptions and extensive powers of
bureaucrats, added to the flourishing of corruption. Furthermore, with
independence and severe economic crisis situations, bureaucrats‘ privileges and
salaries drastically decreased. These conditions further fueled extraction of bribes
by government officials to make up for the lost privileges and to earn a living.
Relatedly, management of government‘s finances is another major source of
corruption. Kyrgyzstan has a de-facto two-government structure. One is in charge
of the expenditure, and the other is in charge of the revenue streams. The prime
minister is responsible for the expenditure side. The profitable aspects of the
economy are managed by specially created agencies, such as those responsible for
attracting investments and managing governmental or semi-governmental profitable
enterprises. These agencies have been established and/or moved outside the

45
The situation is descriptive of the following:
The worst of all worlds may be one where external authorities impose rules but are able to
achieve only weak monitoring and sanctioning. In a world of strong external monitoring
and sanctioning, cooperation is enforced without any need for internal norms to develop. In
a world of no rules or monitoring, norms can evolve to support cooperation. In an in-
between case, a low level of external monitoring discourages the formation of social norms,
while also making it attractive for some players to deceive and defect, given the low risk of
being caught (Ostrom, 2005, p. 130).

253

oversight of the legislature and prime minister, and made accountable to the
president. This mechanism was introduced by former president Akaev. This
structure was not explicit in the legislation, but has been extensively used by the
former president‘s family and close circle of friends. Not surprisingly, the largest
scandals about mismanagement of government‘s resources have been connected
precisely to these agencies. The heads of some of these agencies do not consider
themselves to be part of the government. Bakiev, the current president, not only
benefited from this system, but actually legalized it as part of his recent stream of
administrative reforms (see more on this below).

Formalism and greater reliance on informally enforced institutions
46

The logical consequence of the above is formalism, defined by Fred Riggs as ―the
widespread discrepancy between form and reality‖ (c.f. in Heady, 2001, p. 302).
While a certain degree of discrepancy between law and practice exists in all
countries (inter alia, Helmke and Levitski, 2004), Kyrgyzstan‘s situation is more
similar to other developing countries, where regulations are often formally adopted
but informally avoided (Caiden and Sundaram, 2004). If formal and informal
unwritten norms clash or needs of the informal group clash with the needs of the
government/state, primacy is given to informal institutions (Cooley, 1999, Collins,
1999).

46
As will be discussed in greater detail in chapter nine, informally enforced institutions do not exist
in vacuum, but they closely shape and are shaped by formally enacted institutions such as
government laws and organizations, and are essential for the enforcement of the latter.

254

Reliance on informally developed and enforced norms and organizations is
often referred to as tribalism (from the word tribe) or kyrgyzchilik, meaning that
these are tribal norms and/or norms that are pertinent to Kyrgyz. But informally-
enforced laws are not just collection of norms that governed tribes. Such norms are
also used by members of other nationalities as well, not only by Kyrgyz people.
Examples include informally-enforced norms such as kryshevanie (one meaning of
which is getting jobs in government for friends and relatives by influential officials),
as mentioned above, or using the government machinery (administrativnu resurs) to
seek private goals such as winning elections.
In the literature, and even among local experts, such informally enforced
norms and organizations are often referred to as signs of backwardness, residuals of
pre-modern institutions, and as a course of corruption undermining the working of
modern democratic institutions (Collins, 1999, Cooley, 1999). But this view is
somewhat simplistic, as it looks at informally enforced institutions in isolation from
the context, and ignores the conditions under which they emerge, transform, and
operate.
Informal institutions have been used as instruments of corruption, just like
any other instrument, including formal institutions such as laws and government
organizations that have been widely used in corrupt dealings in all types of
countries. Informal institutions, at the same time, have been instrumental in
providing basic socio-economic support to the poor and weak, extended relatives
and co-villagers, at times of severe economic crises in the last 20 years, during
255

which the government has been unable to provide adequate pensions and salaries.
Without informal institutions many elderly and sick would be homeless and be in
even worse shape. This is not an attempt to justify corrupt practices, but to gain a
more realistic understanding of what governance institutions are and how they
operate.
Most of today‘s informally-enforced institutions are in fact the coping
mechanisms that have emerged and/or adapted in response to the way formal
institutions have been introduced and used. One of the factors underlying this
formalism is that public does not identify with the state for a number of reasons.
People‘s identity is primarily tied to family groups rather than to the nation. As
mentioned above, the Kyrgyz people did not have cohesive statehood to generate
and maintain a strong idea of one national identity. If in the more stable and
established states individuals‘ identity and loyalty are tied to one‘s nationality, in
Kyrgyzstan (as in many postcolonial countries with weak national history and
identity), one‘s loyalty and identity are defined by smaller familial groups such as
village and/or tribal/clan networks. In government organizations the situation is
worse: Individuals do not show loyalty to nation/public at large, but primarily to the
individuals who hired/supported them, and who are often from their friendship
and/or family networks.
The state, as we know it today, was imposed by external forces, rather than
emerging from within. Thus, the mindset of the people did not transform along the
way mirroring and supporting the emergence of formal institutions. The state
256

institutions are not perceived as a higher-level legitimate institution to serve the
needs of the public.
Informally-enforced norms and organizations existing in Kyrgyzstan are
actually the product of the amalgamation of different layers of institutions that the
Kyrgyz people experienced over time. At least four major sources shaping the
informally-enforced institutions could be identified. The original layer of current
informally-enforced institutions stems from the ancient norms that were formed and
existed for the longest periods of its history when the Kyrgyz people led a nomadic
lifestyle. The norms governing nomadic communities naturally harbored
collectivistic attitudes, strong group identity, and obligations to the family and
close-knit group and solidarity networks people could count on.
The second major influence came from the colonial state administration that
the Russian Empire set up to govern the Kyrgyz people and the colonial territory.
This was the first time the Kyrgyz were introduced to formal administrative
institutions. The expansionist, extractive, and coercive colonial governance regime
backed by the military, shaped the people‘s distrust toward formal administrative
institutions. People learned to avoid and exercise caution in dealing with those
institutions.
The third major influence that shaped and reshaped informally-enforced
institutions was Soviet Union‘s administrative system. This time the reach of the
government expanded. More formal institutions were introduced to regulate
relationships at lower levels, below the central administration, such as those
257

regulating hiring processes at government organizations, as well as delivery of
social services. At the same time, as mentioned before, the Soviets did not attempt
to completely replace informal norms and organizations, but created parallel
structures such as kolkhoz and sovhoz which co-existed and even built on the pre-
existing informal organizations. Thus, co-existence of formally and informally-
enforced institutions blurred the lines between them, and both types of institutions
were used to exercise governance in Soviet Kyrgyzstan. Because of the secretive
nature of the Soviet bureaucracy and the way formal institutions have been used for
control purposes, informal norms and solidarity networks have been considered
more reliable.
The final major source of influence came with independence from the
former Soviet Union in early 1990s. The change in the form – from Soviet to
democratic regime – did not significantly alter the way informally-enforced norms
and informal organizations operated. In fact, the new political leadership also
extensively used informal norms and networks, some of which were actually based
on university connections, to form the government and get things done, along with
the use of formally-enforced norms and government organizations.
As time passed, no effective mechanisms emerged to keep political and state
servants accountable to public or to anyone else. With the lack of external
monitoring and accountability mechanisms, formal government institutions have
been increasingly used for private purposes, leading to declining trust in formal
government institutions. International Republic Institute‘s (IRA) 2006 nationwide
258

survey found that among the most favorably ranked institutions that enjoyed the
confidence of the respondents were media (90% favorable); army (80%); and
education system (73%). The least favorable institutions included judicial system
(43%); religious institutions (49%) and law enforcement bodies (53%). 60% of the
respondents perceived corruption in the country to be ―high‖; 33% as ―average‖ and
only 4% as ―low.‖ The top three most corrupt institutions named were customs
(88% respondents said very or rather corrupt); judiciary (87%) and law enforcement
(87%).
As the trust in reliability and legitimacy of the formal state institutions
further eroded, informal norms and informal networks became even more relevant.
The widespread public perception is that there is no rule of law for all, but rule of
law works for select individuals who have influence. Thus, greater reliance on
informal institutions was a natural response.
Most ironically, these attitudes underlying greater reliance on informal
institutions – fueled by the poor legitimacy of the state associated with establishing
and exercising external control, lack of shared identity with greater public, primacy
of allegiance to family, smaller solidarity and/or regional informal networks, and
misuses of the government by political officials and state servants – appear to be
internalized by the state servants themselves more than anyone else. For them,
often interests of the family and other informal organizations trump the interests of
the public. They tend to approach formal institutions and their authority as a source
of rent to serve their own and their families and friends‘ needs, as evident in a well
259

known cynical observation by a politician who remarked that in Kyrgyzstan if you
are not stealing from the government you must be an idiot or just too lazy. There is a
certain stigma attached to working in government, again as evident in a popular
remark which says ―if you can‘t make it elsewhere you go to work for government.‖
This lack of legitimacy and lack of trust in formal institutions, and lack of
accountability mechanisms, creates a vicious circle. The state is used as rent by
those who are entrusted to serve the public; the public distrusts the government and
avoid paying taxes other fees, which generates even less resources, and lower
salaries further contribute to corruption (Rothstein, 2003).

Civil Society Organizations
Kyrgyzstan‘s non-profit sector, including independent media and political
parties, are considered to be the most vibrant in comparison to other states in
Central Asia. By 2001, 3,019 public associations in Kyrgyzstan were registered
with government organs. This list included 1,608 social protection unions, 195
religious organizations, 289 professional unions, 121 political unions, 335 scientific
and cultural unions, 71 youth and students‘ associations, 94 women associations and
388 printed media (Adamson 2002, c.f. in Kobonbaev 2004). While not all of them
have been active, these numbers and the activities of the non-profit sector is an
indicator that the political climate in Kyrgyzstan still remains more liberal compared
to its neighbors.
260

Yet, as former statesman Ishenbai Abdrazakov observed (2010), despite the
quantitative growth, civil society organizations have still not reached the level
where they can have the impact and power to reshape the deep-rooted problems of
governance of the country. These alternative social forces have not become
significant players in governance in part due to the government‘s constraints on civil
society‘s political and civil rights, as well as due to the limited sources of funding
(McMann, 2004, Weinthal, 2004). The non-profit sector‘s sustainability problems
could be partly explained by the monopoly of the public property by political-
economic elites (Luong 2004: 274-275). Private sector philanthropy has not yet
developed to the extent to provide local funding for these organizations. This limits
the development of civil society groups largely to donor assistance.
In addition, and perhaps more importantly, a sense of artificiality of
externally initiated and supported non-profit organizations also seems to pose a
challenge for the latter to successfully integrate into the broader society, given the
history of voluntary organizations in the former Soviet Union. In the latter, most
voluntary organizations and clubs were extensively used by the state and the
Communist Party. ―Volunteering‖ often meant being forced to carry out certain
tasks outside work days and hours. Hence, breaking down the public cynicism and
involving it in non-profit organizations to pursue common interests has been
challenging.

261

Conclusion
This brief overview of Kyrgyzstan‘s current governance system indicates
significant accountability and legitimacy problems partly inherited from the
previous regime. Politically, the state has evolved into one with a significant power
imbalance where the executive has the highest concentration of authority, including
control over the bureaucracy and sole policy making authority, but lacks
accountability and checks from other branches. Economically, the public
experienced growing inequality, persistent poverty, as well as widespread misuse of
government authority and economic resources by elites and their allies for private
ends. These outcomes, instead of the promised prosperity and democracy,
accumulated public frustration, leading to the March 2005 public demonstrations
that ousted the former president of the country after fifteen years of rule.
The next two chapters will provide an overview and analysis of public sector
reforms against this background.
262

Chapter 7

The Mindless Camel: Kyrgyzstan’s Public Sector Reforms from 1991-2010

The Kyrgyz have a saying: zakon builalangan too – kaida bursang kete
beret, which means that the law is a mindless camel which can go anywhere
following its master‘s will.
47
This saying reflects the popular public attitudes
towards the government‘s formal institutions, perceived as a handy instrument that
can be easily manipulated by political elites for various ends. This metaphor is apt
for describing how the laws, including the constitution, have been used to serve the
agendas of the people who knew how to operate the camel. The same metaphor can
be used to describe how public sector reforms in Kyrgyzstan have been used to
pursue private interests.
The previous chapter mapped the past and present governance institutions in
Kyrgyzstan. This chapter first provides an overview of the public sector reforms,
specifically covering macroeconomic, political, and administrative reforms

47
This saying echoes Weber‘s metaphor of a machine that he used to describe bureaucracy. He too
warned that the administrative machine is malleable for ―anybody who knows how to gain control
over it.‖ Once bureaucracy is in place, it becomes self-reinforcing and increasingly resistant to
change and replacement (1922:988). Weber further cautioned that by ―concentrating the power in
the hands of relatively few at the apex of bureaucratic organizations, legal rational authority would
deprive the masses of any effective say in their personal destiny, restrict choice to predetermined
outcomes and transform workers into anonymous practitioners‖ (cf. in Caiden, 2004). This caution
seems to have been overlooked by those who were preoccupied with building efficient modern
bureaucracy. The current state of Kyrgyzstan‘s government institutions and the problems of
administrative reform provide vivid example for the dark side of bureaucracy Weber cautioned
about.

263

undertaken in the country for the last 20 years. Administrative reforms specifically
focus on reforms of civil service and the machinery of government, as well as local
governance reforms.
In line with the broader donor policies, since independence in 1991,
Kyrgyzstan‘s new government experimented with two waves of governance
reforms, intended to transform public sector institutions. These reforms were
mainly driven and supported by donors and were subject to the latter‘s changing
logic and priorities in the second and third waves of reforms (which were described
in depth in chapters three and four). In the first few years of independence, donors‘
reform policies were based on the assumption that the free market would generate
impetus for effective government institutions and democracy. Hence, much of the
effort was concentrated on macroeconomic reforms, as well as political
transformation into establishing democratic polity. By the second half of the 1990s,
when donors‘ policies changed the emphasis of public sector reforms, Kyrgyzstan
also adopted a more inclusive and systemic governance approach that stressed the
importance of effective public administration institutions. The sections below first
describe macroeconomic reforms, followed by political, and then administrative
reforms. This overview touches on the most salient aspects of the reforms.

Macroeconomic Reforms
Following the collapse of the Soviet Union, Kyrgyzstan found itself cut out
from Moscow‘s subsidies that constituted 10% of its GDP at that time (World Bank,
264

2003c). Kyrgyzstan‘s economy also went into severe crisis as it was interwoven
into the economic infrastructure and markets of the Soviet Union, which also
disintegrated. Partly because of this excessive external economic dependency, the
new government was forced to seek out funds from donors in exchange for a
commitment to a series of institutional reforms.
The most urgent issue on the agenda of the government and donors was
economic recovery and stabilization. International development agencies have been
helping the government through most of these reforms since then. The International
Monetary Fund (IMF) was among the first to help Kyrgyzstan. In 1993, the IMF
offered Kyrgyzstan an initial loan on the condition that the new government
accepted and implemented macroeconomic liberalization reforms. The IMF‘s so-
called ―big-bang‖ macroeconomic reform strategy consisted of the following
components to be carried out simultaneously: (1) liberalization of prices and
elimination of trade barriers; (2) macroeconomic stabilization - the process through
which inflation is brought under control and lowered over time; (3) restructuring
and privatization – the processes of creating a viable financial sector and reforming
the enterprises in these economies to render them capable of producing goods for
free markets and of transferring their ownership into private hands; and (4) legal and
institutional reforms needed to redefine the role of the state in the economy,
establish the rule of law, and introduce competition policies (IMF, 2000).
If in the first half of the 1990s, economic growth was negative and GDP per
capita was falling by 50% of the 1991 GDP, in the second half, this trend was
265

reversed. By 1996, hyperinflation ended; GDP increased by 2.1%, industrial
production by 7.5% and agricultural production by 8.1%. Privatization also was
carried out rapidly. By 1996, 97% of trade, 80% of industry, and about 50% of
other sectors of the economy were privatized. The banking system, securities
markets, and registration of property were established, as well as price
liberalization; only a few significant social services and products have been left
under government control (Musakojoev, 1997). In 1998, Kyrgyzstan was the first
among the former socialist republics to join the World Trade Organization (WTO).
As discussed in chapter three, the institutional reform component was given
scant attention because during the second wave of reforms leading donors assumed
that functional institutions would fill the ―institutional vacuum‖ once the
macroeconomic policies and reforms were implemented. In Kyrgyzstan as well
initially IMF and other donors paid minimal attention to reforming government
institutions not directly related to macro-economic functions of the government. At
the same time the institutional capacity of the new government was in poor shape to
support the reforms; they had no adequate institutional frameworks and regulations
in place which are essential for dealing with a radically new economic regime.
In addition, privatization was implemented in the Soviet planning style
where the numbers of privatized enterprises mattered more than the fair process and
the qualitative outcomes (Kobonbaev, 2004, Mikhalev and Heinrich, 1999). Such a
situation allowed a few vested interests – the new entrepreneurs who emerged from
former government elites and their allies – to take advantage of the situation where
266

oversight and accountability was minimal, and tailor the new government
regulations for their own benefit. In general, the privatization of public entities
obtained another name – prihvatization - which stands for stealing.
As the IMF belatedly acknowledged, in situations of partial and incomplete
reforms ―unchecked by either the political system or by competitive markets‖
―vested interests‖ influenced and modified government policies to generate rents for
themselves from persistent market distortions (2000). Similar to other countries of
the former Soviet Union, during privatization in Kyrgyzstan, large amounts of
government assets were appropriated by small groups of people, depriving the poor
of their share and income opportunities (ibid). Government enterprises were
auctioned at very low values because the process was not transparent, which
allowed those working in the government and their relatives and friends to take
advantage of their position. These processes closely tied a newly emerging business
sector and government elites together (IMF, 2000). Consequently, business elites
often seek political office to secure immunity from persecution among other
reasons. This type of privatization is still under way as the government is selling the
remaining strategic public assets. The main difference is that currently the push for
privatization of the remaining assets is originating less from donors, but more from
the local economic establishment which is much stronger now than in the early
1990s and has a strong grip on the Kyrgyz White House.
Poorly informed and hastily designed macroeconomic policies, especially
privatization, with weak or nonexistent transparency, accountability, and oversight
267

over government‘s actions, facilitated emergence of the covert corrupt networks
which has strengthened over time. Here is how Valeri Dill (2007), one of the
members of parliament, explains how the mafia took root in Kyrgyzstan (translation
from Russian is not literal).
During the early 1990s when privatization started most officials took advantage
of this opportunity in dividing public property. In Kyrgyzstan thus emerged
mafia – ―as a criminal group, which intends to accumulate capital and rob the
country.‖ Soon, the key profitable spheres in the economy, such as energy
sector, mining industry, alcohol industry, as well as customs and tax inspections
came under the control of the president‘s family and the people close to it. This
mafia group rearranged the system of collection of income. In every ministry,
in every large enterprise at the top were people who controlled financial
streams… (ibid)

Dill further explains how this situation precipitated the tulip revolution in 2005:
This criminal structure suppressed smaller businesses and prevented the
emergence of middle class. The change in leadership was a good opportunity
for overthrow of this covert structure, but the new family just simply inherited
this structure (or vice versa) and undercurrents remained the same. (ibid)

He predicted that without radical changes in the way government operates, and if
this situation continues, in few years Kyrgyzstan will turn into a failed state. He
was pessimistic about the possibility to change the situation, because the corrupt
network was pervasive:
This covert network not only corrupted the current first family, but also most
public representatives who do not even know their own duties. They came
to power to serve their own need and the needs of the people who helped
them come to the power, and are reluctant to pass laws limiting the interests
of the mafia. The government is de-capacitated. Its hands are tied because
the real decisions are made ―beyond the walls of the White House.‖ (ibid)

268

The narrative summarized above is line with how many individuals and
businesses in the country as well as articles in local and international media view
this situation.
In sum, in macroeconomic reforms, enthusiasm in early 1990s was replaced
over time with increasing concerns about the health of the economy. Despite the
initial successes, which included stabilization of inflation rates, liberalization of
prices and exchange rates, and the introduction of a national currency, within a few
years these reforms created a backlash in the form of increased inequality, poverty,
and corruption. Instead of a flourishing and competitive private sector, there are
widespread allegations that the country‘s economy is controlled by a small network
of people shaping the government decisions for their own benefit. Kyrgyzstan now
has widespread poverty (40% of the population lives below the poverty line) and a
huge disparity in income. In the last few years, Kyrgyzstan‘s economy is
characterized by extensive labor emigration due to high unemployment. While
official statistics indicate 18% unemployment, the real situation is even worse, as
evident in large number of labor migrants – as many as 800,000 (out of 5.2 million
total population) according to some estimates, most of whom are working in
Russian cities. Thus, the legacies of the Soviet regime combined with hastily
designed and implemented economic reforms prevented the emergence of an
effective private sector capable of promoting development and democracy in
Kyrgyzstan as donors had hoped.

269

Political Reforms
Political reforms in Kyrgyzstan, similar to the macro-economic ones, started
up with a strong impetus led by the nation‘s first president Akaev who was once
proclaimed as the most liberal reformer in the region. The country‘s new
constitution in 1993 established a parliamentary democracy with extensive rights of
citizens and formulated a division of power between the three branches. Political
parties, independent media, and non-profit organizations mushroomed in the
formerly totalitarian Communist country. The government‘s political and macro-
economic reforms were initially praised as being successful, which turned
Kyrgyzstan into the darling of the Western governments that saw in it an ―island of
democracy‖ in the region (Olcott, 1996).
This euphoria did not last long. By the end of the 1990s, the positive image
of an ―island of democracy‖ started fading as the government‘s corruption scores
and external debt topped the charts (Gray et al., 2004, UNDP, 2005, ICG, 2005).
Internally, opposition parties and media reported the tightening grip of the
government on their activities. A series of constitutional amendments and other
ways of tinkering with political institutions became the norm, resulting in a highly
imbalanced allocation of authority with serious consequences for the legitimacy of
the state and effectiveness of government institutions.
The country‘s constitution has been amended six times since 1993. The first
constitutional change initiated by the President Akaev took away some powers of
the legislative branch and amplified those of the president, setting a trend for future
270

constitutional amendments. On top of the legislature‘s already weak capacity and
artificial standing in society, inherited from the former Soviet regime where
representatives‘ role was nominal, the first president‘s aggressive tactics heavily
hindered its authority. The original 1993 constitution granted the parliament the
right to determine domestic policy and foreign policy, but after the constitutional
changes, the president took charge of both policies: the constitutional referendum in
1996 replaced the formerly strong unicameral parliament with a two-chamber
house. The 1998 referendum introduced further changes in the constitution. It
increased the number of legislators in the lower house and reduced the number of
legislators in the upper house. It introduced a rule that 25% of the legislators would
be elected by party lists, and also rolled back immunity of the legislators. These
constitutional changes also introduced progressive measures, such as right to private
property and prohibition of adoption of laws limiting freedom of speech.
Closer to the expiration of his term in the office, in February 2003 Akaev
succeeded in changing the constitution one more time, justifying it by the need to
address the political crisis following the fatal shootings by government forces of
five people among the peaceful demonstrators in Aksy (a southern province). The
changes strengthened the then existing regime, by granting immunity from
prosecution to the president and his family members upon his retirement (which was
later repealed after the March 2005 revolution); replaced the bi-cameral parliament
with a unicameral body, and abolished elections to the parliament on the basis of
party membership, replacing it with a single majoritarian system. Analysts
271

suggested that these changes were made to secure the former president‘s continuing
influence on political decisions in the country, by staffing the new parliament with
the people loyal to him. Indeed, the March 2005 revolution was a reaction to the
president‘s excessive manipulation of the elections to the new parliament in
February 2005 (ICG, 2005, Dykenbaev and Hansen 2004).
President Bakiev, who came to power following the March 2005 revolution
on the promise of redistributing the executive‘s authority to other branches of
government, did not keep his promise. Just the opposite happened. Not only did he
delay the reforms, but he resisted the redistribution of power. At last, at the
referendum in October 2007, which was marred by massive violations, he
introduced new changes to the constitution which strengthened his powers and
reintroduced elections to the parliament on the basis of party lists. Bakiev then
quickly dissolved the parliament and initiated new parliamentary elections in
December 2007. These elections also were criticized as being heavily manipulated
by the president and his supporters. In these elections, the president‘s Ak Jol party
gained 71 out of 90 seats, whereas the largest opposition party Ata Meken did not
get any despite its significant support base. The July 2009 re-election of Bakiev
with 76% of the votes similarly was criticized by the Organization for Security and
Cooperation in Europe (OSCE) and other observers as being manipulated by the
president to secure his office.
The last set of changes for the constitution is underway. On December 14,
2009, Bakiev submitted a set of new proposals for constitutional changes to the
272

parliament; the latter quickly discussed it on December 17 and sent it to the
Constitutional Court for analysis. The Constitutional Court is supposed to get back
to the parliament with its comments on the proposed changes within three months.
This is the first time that the public has been left in the dark about the content of
proposed constitutional changes. The media has stipulated that this set of changes is
related to the major changes in the government structure that the president already
enacted under the umbrella of state governance reforms announced in September
2009. These changes, summarized below (in the section on Bakiev‘s administrative
reforms), have been criticized by the opposition and media as unconstitutional. One
of the leaders of the opposition, the head of the Ata Meken party Omurbek
Tekebaev, appealed to the Constitutional Court arguing that the president has acted
beyond his authority by creating five new institutions and eliminating offices of
security and state secretaries. Analysts and opposition members argue that through
this set of constitutional changes, Bakiev is trying to bring his reforms in line with
the constitution after the fact (Kasybekov, 2009).
Thus, through a number of changes in the constitution and informal
practices, the political system turned into a dysfunctional one with excessive
concentration of power in the presidency. The latter has little accountability and
checks, but extensive authority. The longest article in the current constitution
(article 46) from October 23, 2007, is the one that specifies the authority of the
president. According to this version of the constitution, the government – consisting
of the prime minister and his office, the cabinet of ministers, and all the ministries
273

and state agencies which are not directly subordinated to the president – is ―the
highest executive body of state power in Kyrgyz Republic‖ (article 68, paragraph 2).
But the government‘s actual policy-making function has become and remains
nominal. Although the government is responsible and accountable to both the
parliament and to the president (article 71), the parliament has little control over the
government. The latter merely implements the policies and decisions coming from
the president‘s office. The president also appoints all of the judges, the heads of
local government administrations of all three tiers, prime minister, ministers, the
prosecutor, the head of the national bank, and all government agencies under the
president‘s control. The president has the right to dissolve the legislature and
cabinet of ministers, determines the domestic and foreign policy, and has full
authority over military and security forces. The decrees of the president have the
same power as legislative laws
Similar to the macroeconomic reforms, the early steps in transformation of
political institutions were promising, distinguishing Kyrgyzstan from its less
democratic neighbors. In time, Kyrgyzstan joined the club of authoritarian
countries, where freedom of speech and political opposition are increasingly
suppressed.
274

Administrative Reforms
48

Administrative reforms undertaken in Kyrgyzstan for the last twenty years
can be categorized into three distinct timeframes. As mentioned above, in the early
years of independence, which overlapped with the second wave of reforms that
advocated smaller government, little attention was paid to reforming the
administrative system beyond privatization and downsizing of government
organizations. Most efforts were concentrated on macroeconomic and political
restructuring. Among the few government agencies that received the most attention
and funding were the Central Bank and Ministry of Finance, as evident in allocation
to these entities of 20.3% and 13.2% of total foreign assistance the government
received between 1992 and 2000 (UNDP 2002b). While there were donor efforts
intended to help the government in improving the quality of the administrative
system overall, such as by the UNDP, which invested $8 million on such programs
and projects between 1993 and 1997 (Wandel, 2007), reforms of public
administration at this time were overshadowed by greater concern with
macroeconomic and political transformation and stability.
From 1996/1997 through 2005, which corresponds to the donors‘ third wave
of reforms, significant efforts were undertaken to reform the administrative system

48
The commonly used name of the reform in national Kyrgyz language is mamalekettik bashkaruu
reformasy; in official Russian language it is reformi gosudarstvennogo upravleniya. Bashkaruu in
Kyrgyz and upravlenie in Russian both mean governance and management at the same time. The
author took a liberty to translate this as ―state governance reform‖ (vs. state management reform)
given the scope of the reforms. ―State governance reform‖ and ―administrative reform‖ are used
interchangeably throughout the text.

275

with donors‘ encouragement, but with uneven outcomes. This phase, described in
greater detail below, will be referred to as Akaev‘s reforms. Between 2005 and
2010, Bakiev came to power following the revolution that overthrew former
president Akaev on the promise of improving the effectiveness of government
though governance reforms. In the early years of his presidency Bakiev delayed
administrative reforms. In late 2009 and early 2010, Bakiev compensated for his
initial slow pace by instituting radical measures, which raise serious caution about
their benefit to the public. This phase will be referred to as Bakiev‘s administrative
reforms. This section reviews these two phases of reforms.

Akaev’s Administrative Reforms: 1996/1997-2005
In the third wave of reforms since the middle of the 1990s, the donors started
pushing stronger for reform of the state administration. The first of such initiatives
was a conference in 1997 called Public Sector Management for Transition and
Development in Kyrgyzstan. The conference was sponsored by UNDP/UNOPS
(United Nations Office for Project Services) Project Management Development in
Kyrgyzstan. It brought together local and foreign experts on governance reform,
high level officials, as well as representatives from other countries who shared their
experiences. The summary of the panel on Administrative Reform and
Reorganization at this conference captures how administrative reform was
understood:
276

The aim of administrative reform is to change the structure and functions of
the civil service in order to make it an efficient mechanism for the promotion
of democratic principles and the basic tenets of the state based on rule of law
and the principles of market oriented economy (UNDP, 1997b, p. 73).

The next impetus for administrative reforms came from the World Bank‘s
National Poverty Reduction Strategy (NPRS) and Comprehensive Development
Framework (CDF) initiatives. Consistent with donors‘ renewed concern with the
effectiveness of government institutions, emphasis on national ownership of the
development process, and the global concern with poverty reflected in the
Millennium Development Goals, Kyrgyzstan‘s authorities prepared the country‘s
NPRS under the auspices of the World Bank. The NPRS in turn became the basis
for the country‘s development blueprints, also promoted by the World Bank – the
Country Assistance Strategy (CAS) for 2003-2006 and Comprehensive
Development Framework (CDF)
49
for 2000-2010 – that were intended to inform
donor assistance to the country. The development policy laid out in the document
targets poverty as the priority, according to which the government intended to
strengthen its institutions that would create a favorable business environment and
generate income to reach that target.
The three priorities of the CDF/NPRS were the formation of an effective
state, building a fair society, and promoting sustainable economic growth.
Specifically, the formation of an effective state, according to the NPRS, entails a

49
CDF is the World Bank‘s framework — a ―holistic long-term strategy‖ based on the principles of
cooperation and transparency — that puts ―countries in the driver‘s seat‖ in owning and directing
development, to strengthen governments‘ effectiveness in poverty reduction and to secure better
coordination between stakeholders in the development process.

277

smaller and more professional, inclusive, decentralized state apparatus that is
responsive to the private sector and civil society. In addition, reforms were
introduced to eliminate overlapping functions, improve coordination among
different state agencies, and address local capacity and resource constraints through
the decentralization process. Other essential objectives stated in this framework are
curbing corruption, building democratic institutions, and improving the
effectiveness and integrity of the state through greater transparency and
professionalism in public administration, public expenditure management, and the
legal system. To meet these objectives the government concentrated its effort on
reforming the civil service system, changing the government machinery via
functional reviews and inducement of information and communication technologies,
and decentralization reforms.
The renewed emphasis on administrative reforms came from the World
Bank‘s Governance Structural Adjustment Credit (GSAC) ($7.78 million),
accompanied by the Governance Technical Assistance Credit (GSTA) ($20 million),
designed to assist in implementation of the GSAC from 2003 through 2008. These
projects were based on the country‘s development blueprints. The GSAC was
created to help the government improve the public sector‘s transparency and
responsiveness and to increase efficiency, effectiveness, and accountability of the
public sector. These objectives were pursued through the reforms directed at
improving public expenditure management, internal control environment;
transparency and accountability in public procurement, health and education, public
278

service delivery; effectiveness of the civil service; and streamlining of the structure
of government agencies. The government started receiving funds to implement
these two major projects from the World Bank beginning in June 2003.
These reforms mainly concentrated on reforming the civil service,
machinery of government and local governance institutions, each of which will be
reviewed below. Subsequently, a summary of the outcomes of all these reforms will
be provided.
Civil service
50
reforms
While the first civil service reforms in Kyrgyzstan were initiated with the adoption
of the 1993 constitution that established the principle of a de-politicized civil service
for the first time, the major changes in the civil service system were initiated in the
second half of the 1990s. These measures include the decrees of the president on the
Reorganization of the Central Public Administration and on Measures on Further
Improvement of State Administration Structures of the Kyrgyz Republic passed in
1996. As a result of these policies, twenty one ministries with the total 17,500 civil
servants that existed as of 1996 were reduced to fourteen (Murzaev, 2003).
However, as Dykenbaev and Hansen (2003) observed, approximately the same
number of new government bodies were created.
In 1996, the president also enacted a decree to establish the Agency for State
Service Reform and an accompanying document (polijenie) on State Service. The

50
In Kyrgyz and Russian languages, the official documents refer to state service rather than civil
service. ―Civil service‖ in literal translation means ―civilian (non-military‖) service. In this and
other chapters civil service and state service will be used interchangeably.

279

document did not separate political from administrative positions. In 1997, the
president‘s decree established an Academy of Management under the president of
Kyrgyz Republic (http://www.amp.aknet.kg) on the basis of the former Bishkek
International School of Management and Business. Since 2004, by presidential
decree, the Center for Training, Retraining, and Improving Qualification of Cadres
was established under the roof of the Academy. The center provides training
annually for more than 3,000 civil servants and employees of local/municipal self-
governance bodies. The Academy has received technical assistance from various
donors, including from UNDP and TACIS (Technical Assistance for the
Commonwealth of Independent States), as part of their programs on improving the
quality of governance. Initially the Academy did some work in placement of its
early alumni, but this practice shortly discontinued.
In 1997, the National Public Administration and Civil Service Commission
(since 2000, the National Council) was established under the President of the
Kyrgyz Republic to prepare proposals for public administration and civil service
reform. The Commission‘s most important document was the 1998 Strategy of
Administration Reform. The Strategy identified a need for passing legislation
outlining the targets of administration reform, slimming down administrative
machinery, optimizing ministries‘ and departments‘ organizational structures and
size, delegating authority to local administrations, improving management of public
enterprises, and creating a system of training for civil servants.
280

The next cornerstone in civil service reform was the adoption of the 1999 Law
on the State Service based on the president‘s earlier decree and the Strategy of
Administrative Reform. It took six years for this law to be adopted by the
parliament with technical support from the European Union‘s TACIS program. The
law reaffirmed principles of competence and professional ethics as the basis for
professional public service, provided classification of public posts, and defined the
formal ranks, basic rights, duties, and social guarantees of civil servants. The law
also outlined legal guarantees for protection of civil servants. At the same time,
similar to the president‘s earlier decree, the law does not clearly distinguish political
and non-political offices and state bodies, elected and appointed public servants, and
civil and military services. In addition, the principles of de-politicization, neutrality,
stability, and continuity introduced by this law are undermined by the concentration
of major decision-making powers in the hands of the president that leads to high
staff turnover (Dykenbaev and Tanyrykov, 2001).
The GSAC and GSTA facilitated adoption of the Strategy of the Reform of State
Service, passage of the new Law on State Service in 2004, and creation of the
Agency on State Service. In implementation of this strategy, the Council on State
Service was created, which was in charge of determining the strategy of
development of the state service and coordinated cooperation of government bodies.
The Agency on State Service was designated as a working body of the Council to
implement the Law and develop relevant bylaws. The Agency was also made
responsible for improving civil servants‘ qualification by providing training,
281

evaluations, and tests, and collecting and analyzing income declarations from state
servants.
The 2004 Law on State Service, in contrast to the previous legislation,
established a clearer division between the civil service and political offices. The
law also made competitive hiring to civil service compulsory. The law also
introduced the institute of highest administrative positions in government organs –
stats secretaries – to secure better implementation of the law State Service and
target high staff turnover in civil service. The frequent replacements of civil
servants have been a common practice. Almost every new political appointments
triggered replacement of civil servants in a given agency or unit. Such highly
politicized recruitment and career system seriously hindered continuity in the civil
service. The stats secretaries are appointed to respective government agencies by
the prime minister upon recommendation from the Council on State Service.
Reform of the government machinery
Reforming the machinery of government is concerned with improving the rules,
institutions, and structure of the administration necessary to carry out government
policy, e-governance and e-government initiatives (UNDP, 2005).
Functional reviews
Functional reviews of the government agencies and ministries have been one
of the main tools of improving the effectiveness of public administration. The
purpose of functional reviews is to identify which functions an organization should
carry out, and which ones should be decentralized, devolved, or privatized. The
282

reviews aim to identify and eliminate duplicated and redundant functions to secure a
more efficient use of resources of the organization. These reviews were considered
essential and timely given the transition of the administrative system from planned
to market economy.
Several donors have been involved in promoting functional reviews both by
conducting pilot projects as well as by training the staff of the ministries to conduct
such reviews on their own and learn the basics of financial and human resource
management. In line with the obligations the government took under the World
Bank‘s GSAC and GSTA credits, mentioned above, UNDP worked on a joint
project with DFID (UK‘s Department for International Development) to improve
the state governance system, focusing on functional analysis of several government
organs both at central and local state administration levels. The European
Commission‘s TACIS program also conducted functional reviews in some
ministries.
A critical report titled Functional Analysis of Organs of Executive Branch in
Kyrgyzstan identifying the key problems and proposing suggestion for reforms of
the state governance was prepared in 2001. The UNDP‘s Strengthening State
Governance System and Reform of State Administration project sponsored this
report prepared by a Working Group of the National Council of Reform of State
Governance and State Service. This report highlighted the key problems in several
government ministries, which underwent functional reviews. These problems
included the following. First, the qualifications of the state servants and the
283

structural organizations of the ministries did not adequately support the stated
functions of the ministry. Many ministries had up to three overlapping departments
dealing with the same financial and budgetary functions, whereas others had only
one department dealing with three different functions with very limited resources.
Allocation of human and other resources was uneven. Second, clear subordination
principles within the ministries did not exist. Third, labor division across
―horizontal‖ departments was unclear. Fourth, coordination among ministries was
inadequate; the president‘s and prime ministers‘ offices (both of which have
departments corresponding to the main functions of main ministries) did not provide
such coordination. Fifth, the ministries lack clerical/administrative support (which
had been laid off due to staff cuts to save funds) which was detrimental to the work
of the organization because highly-educated specialists are overburdened with low-
skilled jobs. The report also proposed a set of recommendations, including the need
to create separate human resources, financial, and legal departments with clear
division of labor and specification of functions in each ministry and main agencies;
delegate some of the functions of the prime minister‘s and president‘s offices to line
ministries; legislate clear subordination principles across all ministries; conduct an
inventory of intra-ministerial rules to secure clear division of labor; create new
coordinating structures for general functions; and stop cutting administrative/clerical
staff to save funds, which actually reduced the productivity and increased waste in
ministries. Interestingly, according to the Open Kyrgyzstan media (www.open.kg)
this project was closed down by the president‘s office; the entire report and its
284

recommendations were ignored; and the leader of the project Mira Jangaracheva,
former minister of education, was sidelined.
E-governance reforms
Among the first and the most important policy documents guiding this
component of the reform was the Paper on Informatization (Konseptsiya
Informatizatsii) adopted by the Government in 1994. This document laid out the
basis for development of ICT. The next document, the Konseptsiya on Legal
Informatization approved by the president‘s Decree in 1997, intended to provide
openness and access to legal information. The Ministry of Justice was to register
normative-legal documents and implement this Konseptsiya. The 1998
Konseptsiya of Informatization Development, approved by the president‘s Decree in
1998 gave a new impetus to e-governance reforms in Kyrgyzstan. Specifically, it
stipulated the development of legislative bases in ICT, establishment of corporate
networks in the ministries and agencies, implementation of the State Computer
Network project, formation of national information resources, and access to ICT by
organizations and citizens.
Currently more than ten laws related to ICT exist. Among them, the key
policy document on electronic government is the National Strategy Development of
ICT in the Kyrgyz Republic. It was developed with input from various government
agencies as well as private and non-profit sectors and foreign experts. This
strategy‘s main goal is to form an information society and e-government in
Kyrgyzstan. In terms of funding, e-governance reforms have been supported by
285

UNDP, World Bank, Asian Development Bank (ADB) and other donors through
grants, credits, and technical assistance, including training, and equipment for
developing and establishing information systems and networks.
The UNDP helped the government to set up the largest unified network –
Information System of Public Administration (ISPA), which connects 44 ministries
and other central government bodies and their local subdivisions. Beyond the
unified network, almost all ministries and government agencies have their own local
networks. As of 2001, the public administration system had 5000 personal
computers, and 20% of those (i.e. 1000 computers) were connected to the ISPA
network (Myrzaev, 2003). The ADB provided credit for establishing an
Information System in the Ministry of Education and Culture that connects the
Ministry with its subdivisions in the oblasts and rayon. The World Bank, in
cooperation with the state Property and Investment Fund via State Agency on
Registration the Property Rights, financed the Computer Land Cadastre and
Cadastre on Property and their Owners (ibid).
Currently, the governmental Internet-portal (http://www.gov.kg) is
functioning on the basis of State Computer Network. This Internet-portal links
several public institutions, providing users with information on their activities, staff,
and contacts. In the future the portal is expected to offer simple services such as
consulting and licensing, and develop more interactive features (Murzaev, 2003).
No formal and comprehensive evaluation of e-governance reform in Kyrgyzstan
exists to this date. Integration of information and communication technologies
286

(ICT) in public administration in Kyrgyz Republic is highly decentralized. Although
the Department of Informatization within the Ministry of Transport and
Communications is in charge of implementing the government policy in this field, it
does not have its own budget. Hence the department does not carry out training,
monitoring, and evaluation of ICT use in public administration on regular bases, but
only weakly influences the process of policy implementation within other ministries
and agencies.
Decentralization reforms
Following independence, the collective and state farms (kolhoz and sovhoz), which
served as agricultural-economic production units and provided local infrastructure
and basic services, disintegrated. Akaev‘s 1996 decree established ―local self-
government‖ executive bodies (ayl okmotu) for villages corresponding to the
territories of the old kolhoz and sovhoz. Transfer of the latter‘s administrative
responsibilities to the newly formed local executive bodies was continued through a
series of other laws including the 2001 Law On Local Self-Government and Local
State Administration and 2002 Law On Communal (Municipal) Property. In 2002 a
National Strategy for Further Decentralization was adopted with UNDP‘s
assistance. The Strategy intended to reform the inter-governmental finance system
and the units of sub-national government. This intention was materialized through
adoption of the Law on the Financial and Economic Basis of Local Self-
Governments in 2003, which further delineated fiscal authorities and responsibilities
of state and local self-governments, and established limited financial autonomy for
287

local self-governments, including collection of local taxes and noninterference by
rayon administrations in local self governments‘ fiscal management.
As mentioned above, in contrast to the local state administration
representing the central government, local self-government bodies include heads of
the executive body (ail okmotu) and the local councils (kenesh) that are elected
directly by public residing in that territory. Local self-government bodies own the
local property and use income derived from it for delivery of local public services.
In addition to the three tiers of sub-national governance bodies (oblast, rayon, and
village), the 2002 Law on Local Self-Government and Local State Administration
added a provision on community based organizations (or citizens‘ voluntary
associations), which can register at the Ministry of Justice as nonprofit
organizations, and operate at grassroots level under local self government bodies.
Local self-government bodies can collaborate with and delegate to these
organizations certain responsibilities in service delivery and management of its
resources (including property) on contractual basis.
There is a high level of overlap in the functions, responsibilities, and
authority among organizations of these four tiers of sub-national governance bodies,
as well as among local state administration and local self-governance bodies. Even
officials themselves are often confused about who carries out what functions.

288

The last year of Akaev’s reforms
In 2004, one year prior to his ousting, Akaev passed a Strategy of Reforming the
Kyrgyz Republic‘s State Governance System. The official rationale stated in the
Strategy was the need to streamline the reforms and secure better coordination
among the agencies implementing reforms. The Central Expert group, created
under the National Council on Good Governance (the National Council was
established on July 25, 2003), was in charge of overseeing implementation of the
Strategy. The Expert Group was to take over the responsibilities of previous bodies
overseeing the reform of state governance. The National Council was transformed
into the Consultative Council by the president‘s October 25, 2004 decree. The
Consultative Council included high-level government officials as well as members
of international donor agencies.
The president‘s decree and the Strategy was an attempt to regain the support
of the donors which were becoming disillusioned by the undemocratic tendencies in
the country, such as the 2002 killings of several demonstrators by the government
forces, and the 2003 referendum initiated by the president which strengthened the
president‘s authority. But this Strategy did not have a long life.

The outcomes of Akaev’s administrative reforms
How did these administrative reforms play out in practice? There was a fair
amount of counting of the outputs of the reforms – such as the numbers of laws
passed, the number of ministries that underwent functional reviews, and the number
289

of computers allocated to government ministries – by the government and donors.
But the analyses of outcomes are not as common. No formal evaluation was
undertaken to this date to evaluate the effectiveness of these reforms.
51

Government has been selective in implementation of its declared reforms.
Most progress was accomplished in producing various types of legislation and
strategies, and establishing different organs to oversee their implementation. But,
implementation of those documents and strategies was minimal or superficial.
Moreover, the reforms affected lower levels of government, and ignored the highest
levels where problems had their origins, such as duplication among the functions of
the president‘s and prime minister‘s offices and the ministries. The exceptions
pertain to technical aspects of the reform that had strong donor support, such as e-
governance reforms. Overall, it appears that reform documents have been produced
mainly to feed and satisfy donors and continue securing funds from them.
Specifically, in terms of civil service reforms, the World Bank‘s 2002
―Governance and Service Delivery in the Kyrgyz Republic,‖ based on the 2001
nationwide survey
52
concluded that very little improvements, such as some degree
of competitive hiring and knowledge of the law, have been achieved through these

51
The author‘s attempts to approach the responsible government officials, mainly at the State
Agency on State Service, were not successful. The officials either avoided communication or even
when they met, did not provide requested information, primarily because they did not have such
information. This section draws from different sources and independent observations and
assessments of stakeholders who were either interviewed by author or shared their views elsewhere.
Some experts who agreed for the interview asked to remain anonymous, which is why their
statements mentioned in the text are not backed by names and positions.

52
The evaluation was based on surveys of 1,000 citizens, 400 enterprise managers, and 350 public
officials, conducted by the Kyrgyz survey research firm M-Vector in 2001.

290

reforms. The report noted that many challenges remained. Specifically, it stated
that competitive hiring for civil service was still an exception rather than a rule; civil
servants‘ salaries were very low; and the system still lacked transparency with
regard to conflict of interest. Overall, civil service reforms failed to generate
expected and significant positive changes in the administrative system. The list of
the major unresolved problems remained the same: low administrative
expertise/capacity; excessive politicization of the administrative system; unlawful
and inadequate interference of executive authorities in economy; poor policy
implementation; and the lack of transparency (Kyrgyz Government, 2003).
The functional reviews that have been praised as being landmark reforms
have had their critics. Local experts gave a poor grade to this set of reforms as
having a limited impact because the process did not have ownership from the
political leadership, lacked coordination within government, as well as between
government and donors. In addition, while letting the ministries conduct their own
functional reviews was a good idea for improving internal organizational capacity,
there was a lack of effective monitoring and evaluation systems and
recommendations for elimination of unnecessary functions were not implemented.
As another expert summarized:
Horizontal functional analysis was carried out rather shallowly leading to
irrational distribution of functions between ministries and sub departments
and unfair distribution of human resources between state bodies and within
them. Analysis of functions of local state administrations and local self-
government bodies was conducted only in pilot regions and its results did
not receive adequate evaluation. Financial mechanisms allowing for
291

implementation of functions delegated to self-government bodies were not
thought through and developed (Omuraliev, n.d.)

Decentralization reforms gave some authority to local self-governance
bodies. However, key obstacles include the attempts to retain significant political
control and duplication of the local self-governance institutions by local state
administration representing the central government.
53
In addition, while the heads
of local self-governance bodies are elected, they still have little authority because
local governments largely depend on the budget allocations from the center since
local resources are often miniscule. The heads of the local state administrations
hold the real power in local politics as they manage a significant part of the locally
spent budget. In sum, these reforms have not touched the urgent problems in local
governance concerning (1) increasing authority of local self-governance bodies over
collection and allocation of local revenues, (2) reducing triple vertical layering of
the local governments at oblast, rayon and local levels, (3) and unclear division of
authority between local and national level bodies of the ministries and agencies
(Tarabinski, 2002).
In brief, despite some positive changes, these administrative reforms
initiated to date have been unsystematic and mostly cosmetic. They focused more

53
On the one hand central political leadership gave authority to local self governing bodies, and on
the other it is taking it away, as demonstrated by the following example. In 2006 a new rule was
introduced with local governance reforms, according to which the president appoints the heads of the
local administrative bodies with the approval of the local representative bodies of respective sub-
provinces (rayon kenesh). But this rule is purely symbolic. When rayon kenesh in Naryn did not
want to approve the president‘s nominee Adalis Kulanbaev for the position of the head of the local
administration, and suggested their alternative candidate, the governor of the province intervened
―reminding‖ them they only had a right to approve (Akipress April 25, 2006).

292

on legal, technical, and organizational changes, due in part to poor capacity and
weak oversight and discipline in government organizations. A more important
reason why implementation and effectiveness of reforms was hindered is that
political leadership did not want to change its power base by granting neutrality to
bureaucracy and establishing merit-based civil service that would limit politicians‘
control over the system. Removing the local state administration bodies off the
back of local self-governments also would limit the central government‘s control.
Introducing greater accountability and transparency would reveal the sins of the
politicians who are used to playing by their own rules in the dark.
As summarized by the UNDP, ―despite many changes in the structure of the
Government and public administration organs, both at the central and regional
levels, they remain largely non-functional and ineffective‖ (2004, p.20). The
administrative system fused with the political system had very few formal
institutional changes, but the practice has not departed far from what it was during
the former Soviet regime.
These analyses shed light into the so-called ―tulip revolution‖ which erupted
in March 2005, as a result of which Akaev fled to Russia. The revolution was not
sudden, but accumulated over time since the second half of the 1990s as the
government became more corrupt. The 2002 survey of the population by the Center
of Study of Public Opinion (Ilibezova, 2002) found that 74% of the respondents
thought that corruption became worse compared to what it was during the days of
the Soviet Union. Two-thirds of the respondents did not trust the law enforcement
293

bodies; 78% felt that they were unprotected in the face of rude and unpunished
behavior of the law enforcement bodies. Meanwhile, 37% of the population and
50% of the respondents from law enforcement bodies believed the imperfections in
legislation created conditions for corruption. Moreover, 70% of all respondents
agreed that without bribing it was impossible to solve any problem. According to
another survey
54
conducted by the International Republican Institute (IRI) in April
2005 following the March revolution, the top three biggest failures of the former
president Akaev were government corruption (according to 27% of respondents);
his relatives‘ influence in politics (27%); and selling state property for personal gain
(21%).
This revolution was primarily a public response to the continued misuses of
power, usurpation of government authority and public resources by a narrow circle
of people surrounding the president and his family, poor economic conditions, and
dissatisfaction with the way government worked. Monopolization of government
enterprises, shutting down of the competition using government authority, and poor
management of government resources, contributed to increasing inequality and
impoverishment of the public. This, coupled with the breakdown of the economic
and welfare net, and increased corruption, made the abuses of state authority more
severe for the public than they were while Moscow provided a safety net. The

54
1.500 participants of the survey selected from around the nation were interviewed face-to-face.
The survey was funded by USAID; carried out on behalf of IRI by SIAR-Bishkek. Baltic Surveys /
The Gallup Organization (Dr. R.Alisauskiene) was responsible for the design, coordination, and
analysis of the survey.

294

manipulation of the parliamentary elections in 2004 by Akaev‘s network to further
increase its power became the straw that broke the camel‘s back.
How could this happen in the ―island of democracy‖? The new governance
system which emerged in the aftermath of the disintegration of the former Soviet
Union, did not have effective accountability mechanisms for the political leadership
and bureaucracy, but granted them extensive powers to manage government
authority, large flows of foreign aid, as well as institutional reforms. These
opportunities enabled political leadership, bureaucrats, and their friends and family
to openly modify government institutions and systematically and continuously use
public resources and reforms to pursue private interests. They also attempted to
block critical voices.
The administrative reforms did not help in reversing the situation, as they
avoided the key problems of the system, such as lack of accountability of both
bureaucracy and political officials, and extensive concentration of the government
authority by the president. These features of the governance system undermined
independence and effectiveness of other branches of power as well as local
governance bodies.
In sum, it was not only the political tip of the iceberg that needed to be
reversed, but the entire governance system, especially public administration, that
was used to serve a narrow group of people. How did the new leadership that
arrived on the wave of the revolution cope with this challenge of transforming the
administrative system? The next section focuses on this question.
295

Bakiev’s Administrative Reforms from 2005-2010
The new president Kurmanbek Bakiev came to power on the promise to
make government effective and work for the public by changing the constitution to
restore the balance of power, fight corruption, improve the economic situation, and
reform the cadre system by introducing a merit-based system. In other words, he
promised to redress all the key problems that led to the revolution.
How did Bakiev do in terms of delivering his promises? For the most part of
this period, administrative reform was given only lip service. In the first four years
of his presidency, between 2005 and 2009, Bakiev consistently mentioned the need
for state governance reform and criticized the previous president for failing in this
area. Yet he did not propose any cohesive and specific measures for state
governance reforms. He also liquidated the Consultative Council and its working
groups which were in charge of overseeing the implementation of the State
Governance Reform Strategy. The latter, the same as the national Comprehensive
Development Framework until 2010, and other related initiatives of former
president were forgotten. The political appointees, experts, and civil servants
working on administrative reforms prior to the revolution have been replaced by
new people loyal to the president but not always qualified and experienced on the
reform policy. In November 2005, the new government also conducted large-scale
reorganization resulting in abolishment of 228 administrative entities,
reorganization of another 714, and layoff of 5,539 staff, all of which, is proclaimed
to have resulted in 279 million soms ($6.25 million) savings (Bekbolotov, 2006)
296

Meanwhile, donors continued their assistance, although they have become
increasingly skeptical. UNDP for example, continued promoting greater use of
information-communication technologies in government through trainings and other
initiatives. Most recently, in October 2007 UNDP, along with the ministry of
transportation and communications announced a competition among government
agencies for the best website. Out of 14 participants, the Ministry of Justice website
(www.minjust.gov.kg ) was found to be the winner, as it provides free public access
to all legislative documents. The Ministry of Finance website (www.minfin.kg )
was recognized as the second best. In sum, the ―accomplishments‖ still refer to the
technical changes.
In 2007, Bakiev introduced a new National Development Strategy for 2007-
2010 (NDS-1), which was superseded in 2009 by revised National Development
Strategy for 2009-2010 (NDS-2). The Ministry of Economic Development and
Trade coordinated the drafting of NDS-2 by involving experts from other ministries
and independent experts. The NDS-2‘s key strategic goals are (1) increasing the
quality of economic development; (2) improving the quality of state governance; (3)
improving the quality of life; and (4) increasing the quality of environment. The
main changes to the later version of the document were clarification of the links
between inputs and the indicators of monitoring of outcomes; wholesale analysis
and assessment of challenges and risks; and added measures for improving
effectiveness of state governance, including that of judiciary and law enforcement
bodies.
297

Among the key achievements of administrative reforms listed in the NDS-2
are functional analysis of 40 government organs, 108 of their sub-divisions, and 713
territorial organs, improving the quality of their deliverables.
55
At the same time,
the NDS-2 notes that recommendations of functional analyses have not been put in
practice and many of the duplications remain.
In terms of budgetary and local governance reforms, in 2007 the government
eliminated rayon and oblast levels from the budget system, leaving central
government and local ayl okmotu. But the rayon level was reintroduced to the
budgeting process in 2008; it was justified by the fact that (1) there was no clear
delineation of the authority and functions between local self government bodies and
local state government, and (2) local self-governments did not have mechanisms of
social economic forecasting (NDS-2, p. 97). Interestingly, the document does not
explain why reintroducing the rayon level was the best solution to these obstacles.
The 2008 Law on Local Self Governance and Local State Administration still does
not address this problem of duplication of functions and authority.
Another output that the NDS-2 presented among the achievements of the
administrative reforms is that the Agency on State Service collected declarations
from 98.4% of state employees in political and special state positions. These

55
This report does not differ much from the 2006 data collected from the interview with Nikolai
Davidov, the head of the prime-minister‘s office on state service. According to this respondent, as of
September 2006, functional reviews were conducted in 41 ministries and state organs by specially
trained working groups from the staff of those organizations. Through functional reviews 638 (1/3 of
total) functions were abolished, including 80 functions delegated to private sector and local
governments. The respondent said as a result of these measures organizational structure of the
government bodies improved.

298

declarations are mere formality because there are no penalties for not filing them;
even those which are filed do not always adequately reflect the real income of the
officials and state servants.
The document also states that a new reserve of cadres was formed; it
includes 67 graduates of universities and 89 current civil servants. The Agency also
opened a testing center for state servants. The establishment of the center was
possible through the World Bank‘s support of $65,000. The center would facilitate,
among others, open and competitive selection to state service, as well as periodical
exams of state servants for evaluation and promotion purposes. NDS-2 mentions
the limitations of the existing Law on State Service, such as its failure to cover
political positions, as well as its lack of indicators by which to measure its
effectiveness. Thus, the document states a new Law on State and Civil Service in
Kyrgyz Republic would be legislated to remedy these limitations.
Bakiev’s initiatives since 2009
In his speech on July 27, 2009, following the recent presidential election
(which was heavily criticized as being rigged and undemocratic by independent
observers), the president Bakiev announced his plan for state governance reforms.
This plan itself includes a number of radical measures to streamline public
administration and machinery of the government. In September 2009, the president
announced the beginning of the first phase of the state governance reforms (reformi
299

upravleiya).
56
The key proposed change was the division of government organs into
two distinct systems: the one that promotes economic development and another that
would secure smooth/effective functioning of the government. This legalized the
previously mentioned de-factor two-part government structure introduced by the
previous president.
To promote economic development a special fund would be created. It
would be in charge of attracting investments and promote innovations to ensure the
country is effectively integrated into global economy. To ensure a favorable
investment climate for businesses, the government would strengthen protection of
private property and limit bureaucrats‘ intervention in business through developing
streamlined legislation. A Consultative Council would be also formed to discuss
operational questions and deal with approbation of laws related to business interests.
To ensure effective functioning of the government, which will be the
responsibility of pravitelstvo (i.e. prime minister‘s office and ministries) the
duplication among the branches of power would be removed; strict regulation of
government organs would be ensured; personal accountability of all officials and
bureaucrats would be increased; and the size of the bureaucratic apparatus
optimized.
To prevent the bureaucracy from derailing these reforms (―we know how
fast and easily bureaucracy can derail any type of reforms‖) public oversight on

56
In his reform program the president did not mention what would be the second phase of reforms.
Analysts suggest the second phase of the reforms include the latest constitutional changes intended to
legalize the changes he initiated in the first phase of reforms (please see more on these constitutional
changes in the section on political reforms in earlier part of this chapter).
300

officials‘ activities at all levels would be ensured, although the president did not say
how. The reforms would also follow the vision that would emerge from dialog with
society, which would secure reasonable relations between the interests of society,
government and business. The president noted that mechanisms for regulating such
processes are being developed, including the ―Agreement on interaction of
government with nongovernmental organizations.‖ Other similar mechanisms for
promoting dialog of the government with youth and business sectors are on the way.
All such ―disparate fragments would be combined into a cohesive system.‖
How did this reform agenda play out in practice? The president was
surprisingly quick to enact some of these reforms. But these changes, as explained
below, counter the principles of public oversight, dialog, effectiveness, efficiency,
and elimination of duplications in state governance he proclaimed in his speeches.
His website has even a longer list of the principles which supposedly inform the
new set of governance reforms. This list, in addition to the above listed principles,
also includes standardization of the governance process (limit subjective
influences); ―minimization of political risks,‖ and ―balance of interests of different
social groups and structures,‖ among others.
To act on his agenda of creating new structures vested with promoting
economic development in the country, the president created a new Central Agency
on Development, Investments, and Innovations (Centralnoe Agentsvo po Razvitiuy,
Investisiyam, i Innovatsiyam), CADII. The president‘s son, Maxim Bakiev,
301

appointed to lead this agency, is best known for allegations of his involvement in
large scale covert economic activities in Kyrgyzstan and beyond.
This Agency, despite the claims of reducing duplication of functions in
government and size of government bodies, actually duplicates the function of
existing government agencies and ministries. Moreover, despite his declared
commitment to increase public oversight and accountability of officials, CADII has
a dubious corporate structure and accountability mechanisms. It is placed outside
the government‘s and legislature‘s oversight. The government funds CADII
receives will be managed by a private consulting company MGN consulting whose
head was recently issued an arrest warrant for massive fraud in Italy.
57

On February 20, 2010, the president created Kyrgyzstan‘s Institute of
Development in charge of overseeing and consolidating intellectual resources for
research and project development, intended to promote economic advancement of
the country. The institute will be overseen by the Central Agency on Development,
Investments, and Innovations.
Another recent step in reforming state administration, which does not fit in
either part of his agenda (i.e. promoting economic development and smooth

57
On March 7, 2010 Italian court issues a warrant for the arrest of Eugene Gourevitch. He is a close
business associate of the president‘s son and head MGN Group. The latter was selected as CADII‘s
financial consultant. The 1,600-page arrest warrant of the Rome Judge Aldo Morgigni claims that
―Gourevitch used his international contacts and financial expertise to help the Italian criminals
launder their illicit profits‖ (Willan, 2010). MGN groups was also involved as a consultant in
privatization of two major government enterprises KyrgyzTelecom and Severoelectro which have
been accused of being fraudulent. Gourevitch himself was a board member of a number of key
enterprises in Kyrgyzstan, including Asia Universal Bank and International Airport Manas.

302

functioning of the government) was the creation of a new special armed division
―Arstan‖ (―lion‖ in Kyrgyz) which will be in charge of providing security to top
officials. This division was created on the basis of ―Pantera‖ (―panther‖) – a special
division of the National Service of Government Protection (former National Guard).
The division, the same as the National Service of Government Protection, came
under exclusive control of the president. Bakiev‘s youngest brother has been
appointed to head this division. Local media and observers explain these moves as
the president‘s attempt to prevent the capture of government through demonstrations
in the future, as was done in 2005 revolution.
The president‘s reforms also finally touched on the long standing problem of
duplication of functions at the highest level of government, but not in the direction it
was expected based on his earlier promises. As mentioned above, the president‘s
office (administratsiya) dominated and duplicated the prime minister‘s and line
ministries functions, and determined policies that other government agencies and
legislature were expected to endorse and/or implement. This undermined
independence of other government organizations, creating confusion and
inefficiencies, and eroding the principle of checks and balances. Unfortunately, the
new changes did not resolve the problem. They merely reframed the president‘s
office‘s name and role. Now, instead of the president‘s administratiya, there will be
the Institute of the President. This Institute will encompass the president‘s
apparatus, secretariat, as well as president‘s state councils on defense, security, and
law and order.
303

The last of the president‘s initiatives is to convene the nation-wide (kurultai)
meeting of 750 of the ―most deserving representatives of the public‖ to discuss the
key issues of the society and generate recommendations to the government on
March 23, 2010. The president already ―booked‖ 150 seats. The remaining 600
would be nominated by the public from around the nation through public meetings
in villages and cities. Critics claim this is a staged performance to imitate
democracy, while the real decisions are made elsewhere; the local public meetings
are not open to everyone and most people are unaware of these meetings at all,
mostly selected people are invited and nominated. As a result the participants of the
kurultai would be the usual suspects – the same group of people (teachers, retired
officials, and elderly, so called ―dejurnie aksakali‖) the government uses all the time
to secure support (including in elections) and validate its decisions. Meanwhile the
opposition parties are preparing their own kurultai which is scheduled for March 24,
2010 (Mikhailov, 2010).
The president‘s early steps in implementation of these reforms are being met
with significant criticism and caution among media and opposition parties. As
mentioned above, the opposition parties and media have criticized the president for
violating the constitution, in response to which the president seems to have initiated
a new set of constitutional changes after the fact. These reforms are seen by many
as the attempts by the president, his family, and people close to them to formalize
and further consolidate political and economic power in the country.

304

Outcomes of Bakiev’s administrative reforms
What outcomes of Bakiev‘s reforms have been accomplished? In the early years of
Bakiev‘s presidency, administrative reforms were downgraded in importance.
Rather, ―public administration reform that threatened the power patronage and rents
of senior officials was systematically opposed and manipulated‖ (World Bank,
2007c, p.23). With regards to civil service reforms, the World Bank Group‘s Joint
Strategy of Assistance to Kyrgyzstan (2007c) provides a good summary of the
outcomes:
Despite the enactment of a new civil service law and laws requiring asset
and income declarations of high state officials, and the provision of greater
independence to the Chamber of Accounts, the overall pace of civil service
reform has been slow. The Civil Service Law, approved in June 2004, was
amended by the Jogorku Kenesh to increase the powers of ministers in
appointments and reduce the role of the Civil Service Agency (CSA), thus
raising questions about the Government‘s commitment to civil service
reform. The reform was further undermined by the appointment in October
2004 of a close relative of the President as State Secretary of the CSA. In the
months following the March revolution, there was considerable pressure to
make high level appointments without due regard for the newly established
competitive procedures overseen by the CSA, and there was very little
official recognition of the role of the CSA to manage the appointments
process. These issues led to postponement of the disbursement of the second
tranche of the GSAC, which was supporting these reforms, and the project
having an unsatisfactory rating. The Government has since begun to address
the deficiencies in implementation of the reforms, although commitment to
them is still uneven across government structures (pp.17-18).

If anything, the earlier small accomplishments seem to have been reversed, and the
rationale for administrative reforms has been used to further advance political and
economic ambitions of a narrow group of individuals. Extensive patronage
networks, low salaries (civil servants‘ salaries are 3-4 times lower than in private
305

sector), replacement of experienced civil servants by people loyal to the president
following the March 2005 revolution, inconsistent and frequent changes in
legislation, political instability, and endemic corruption which increased since the
revolution, are among the obstacles in the way of establishing a professional merit-
based civil service (ibid).
Kyrgyzstan‘s worsened corruption scores lend support to these observations.
In the World Bank‘s Worldwide Governance Indicators for 2008, Kyrgyzstan is
among the three worst performers on the corruption control variable when compared
with other former Soviet republics (even when the best performers – the Baltic
countries – are excluded) (World Bank, 2009). Transparency International‘s
Corruption Perception Index (CPI) shows that Kyrgyzstan ranked 118 in 2003, and
by 2009 its rank dropped to 162. The International Republican Institute‘s (IRA)
surveys conducted from 2005 through 2009 also lend support to the observation that
the quality of governance worsened over this time. The IRA survey for 2009 found
that the three most important issues Kyrgyzstan was facing are unemployment (54%
of all respondents mentioned this issue); economic development (29%); and
corruption (20%). The same survey found that the biggest three mistakes of
Bakiev‘s governance are power cuts, corruption, and increased crime rates. The
2009 IRA survey comparing how public perceptions of corruption changed between
2006 through 2009 also supports this observation. The survey found that if in 2006
61% of the respondents considered corruption in the country to be high, and 30% as
306

average, in 2009 68% of thought corruption was high and 26% thought it was
average.
This chapter provided an overview of the public sector reforms undertaken
in Kyrgyzstan for the last 20 years, with specific attention to macroeconomic,
political and administrative reforms, and their outcomes. The next chapter analyses
these reforms from the donors‘ perspective.
307

Chapter 8

Analysis of the Donors’ Influence on
Kyrgyzstan’s Public Sector Reforms and Their Outcomes

As demonstrated in the previous chapter, public sector reforms undertaken in
Kyrgyzstan over the past 20 years for the most part did not generate significant
improvements in governance. The two key problems presented through the
governance system in Kyrgyzstan are (1) a lack of political accountability of the
administrative and political system; and (2) a lack of professional ethos to support
proposed formal legal and structural changes. Neither of these challenges are
addressed or accounted for by donors, and even less so by the government. If
anything, the reforms seem to have been taken advantage of and even directly used
to pursue self serving goals of political entrepreneurs. This can be attributed to a
number of factors both at the recipient and donor levels. Section one provides a
brief account of public sector reforms and their outcomes. The second section
discusses donors‘ influence on the process and outcomes of the reforms. The third
section identifies unintended consequences of the reforms. The final section draws
implications for donors and researchers.
It bears repetition that no part of this thesis seeks to place blame on one or
another party for any of the observed outcomes, given that reform outcomes result
from a complex interplay of various factors. The chapter‘s goal is to trace how
donor policies played out on the ground and why, and identify the room for
improvement from the donors‘ perspective.
308

What Happened on the Ground
Kyrgyzstan‘s early steps in institutional reforms, especially in economic and
political institutions, started on a very promising note. However, following initial
successes with political and macroeconomic reforms, the quality of governance
started going downhill and donors called upon the government to reform the
administrative institutions. The government‘s reform efforts were mainly limited to
formal legislative, organizational, and technical changes that were intended to
please donors and secure continued funding. Some bright spots were found mainly
in technical aspects of reforms, such as those associated with e-governance reforms.
Many of the legislative documents enacted in the process of reforms were
not implemented. Lack of adequate implementation capacity and funding, and more
importantly, formalistic attitudes towards law, including by political officials and
state servants themselves, meant that many of legislative outputs of the reforms
remained only on paper. The following passage provides an illustration of how
these outcomes are not peculiar to Kyrgyzstan only, but are instead prevalent in
other developing countries as well:
The gap between expectations and actualities can be partially masked by
enacting laws that cannot be enforced, adopting personnel regulations that
are quietly bypassed, announcing a program for delegation of administrative
discretion while keeping tight control of decision-making at the center
(Heady, 2001, p. 302).

The political aspects of public sector reforms, such as measures for
increasing accountability, replacing patronage-based appointment practices with
309

meritocratic ones, and removing the duplication of functions at all levels, have been
given lip service but not changed in practice. The government and political elites
have no stake in reforms that will undermine their resource base. Merit based
appointments into government positions offer one of the sources of power and perks
politicians use for personal enrichment and to help out their friends and family.
These are privileges they do not want to lose. Duplication of authority at the highest
level is the de-facto practice that the president has established and which his
representatives at lower levels of territorial administration mimic.
Since early 2000, donors have been warning that there is more rhetoric than
action in the government‘s reform; and that the government‘s ambitious reform
programs and strategies need to be simplified, and focused on the implementation of
the priorities. But the practice did not change. The Minister of Economic
Development and Trade Akylbek Japarov was quoted saying that in Kyrgyzstan for
17 years of independence (1991-2007), 270 various strategies and concept papers
have been adopted, and about 120 of them were annulled prompting him to suggest
that a ―moratorium to adoption of various strategies‖ should be introduced (Lymar,
2008). Interestingly, it was Japarov‘s ministry which served as a focal point for the
new National Development Strategy for 2009-2011.
Meanwhile, widespread public cynicism, disillusionment with the
government, and worsened corruption scores provide indicators of this downward
slope. It is difficult to tell whether corruption was the consequence or the cause of
the reforms. It could be argued that the tide of corruption was too high and swept
310

away the small wins in administrative reforms. At the same time, the overview of
public sector reforms in chapter seven also suggests that administrative and public
sector reforms in general have been used to advance political and economic interests
of a few at the top. Both presidents were unwilling to relinquish control over other
branches and levels of government. Just the opposite happened: both presidents
concentrated authority in their hands under the name of public sector reforms. Such
was also the case at both at the horizontal level – as the presidents usurped the
functions of both legislature and government by creating parallel structures outside
the control of the legislature and government – as well as at vertical level, where
three tiers of central government‘s representatives accountable to president mirror
the local self-governance bodies. The duplication of functions leads not only to
inefficiencies, but also breeds poor accountability and corruption. On top of this
skewed formal power structure, and cumbersome and duplicative organizational
arrangements, both executives extensively relied on informal structures ranging
from the councils of elderly and covert economic groups to extend their authority.
But such reforms did not account for this and thus did not target these informal
dimensions of governance.

How Donors Approached the Reforms
Donors made significant efforts to reform/build effective public sector
institutions in Kyrgyzstan over the past 20 years. They managed to keep the
government focused on reforms, and invested large amounts of funding to provide
311

technical assistance in the form of policy advice, trainings, and equipment, to
facilitate effective functioning of administrative institutions. Their
accomplishments have been most notable in technical aspects, such as e-governance
reforms.
At the same time their intentions and efforts have been undermined not only
by the lack of political will on the ground summarized above, but also by several
drawbacks in their approach to reforms which affected how the reforms played out.
The following section first lists some of the most salient of such drawbacks, and
then explains why they exist.

Administrative Reform in Early Years of Independence Was Neglected
One of the biggest oversights by donors occurred in the early 1990s when
donors largely ignored administrative reform. Only since the late 1990s have
external donors realized that the government machinery has not actually become
more democratic. Donors have not learned the important lesson from the half-
century of experience in international development which demonstrated that the
main distinction between the more effective democratic states and the rest is that the
former are able to bring their administrative machines under effective control of
responsible and representative polity, whereas in the latter the administrative
machines often serve the ruling elites (Riggs, 1996).
This oversight has been detrimental to improving the quality of Kyrgyzstan‘s
governance as the subsequent developments illustrated. By the time they received
312

attention, administrative institutions had already been molded to serve the
unaccountable political leaders of the emergent semi-authoritarian regime. As
mentioned above, this also allowed economic entrepreneurs to further co-opt the
bureaucracy and allowed political leaders to establish a stronger grip over the
―administrative resurs.‖

Administrative Reform has Been Treated as a Technical Intervention
Even when administrative reforms finally caught donors‘ attention in late
1990s, they were promoted in isolation from democratic/political reforms. Donors
treated administrative reform as a technical matter which could be improved by
infusing technologies and training. As mentioned in chapter five, this assumption
has been ingrained in donor‘s approach to reforms since 1950s. Donors, and even
more so political leaders in Kyrgyzstan, did not explicitly prioritize public service
over efficiency; the latter is not the defining feature of government bureaucracy, but
service to the public is. Partly, greater concern with efficiency was the residual of
the second wave of reforms. This technical orientation seems to have enabled the
politicians in charge to keep control over the administrative system and effectively
resist substantive reforms.
An ironic example is mentioned in the 2004 Strategy of Reforming the
Kyrgyz Republic‘s State Governance System which lists several accomplishments
in streamlining the operational processes of government. One of the measures
undertaken to consolidate financial and technical support functions of the key
313

political offices, including that of the President‘s office, Prime Minister‘s office,
Parliament, Electoral Commission, Audit Chamber, and Constitutional and Supreme
Courts have been placed under the logistics department in president‘s office.
Donors‘ democratization reforms are focused on political institutions such as
legislature and elections, and are reduced from administrative reforms. Meanwhile,
administrative system must be made accountable to the public. This is essential,
given that political institutions are expected to keep bureaucracy accountable and
ensure it is serving public needs – even if the more advanced democracies are
unable to exercise this function, let alone in Kyrgyzstan, where politicians are
themselves corrupt and use bureaucracy for private ends. Making bureaucracy more
accountable to the public through opening it to public monitoring could also help to
ensure that democratization reforms of political institutions are sustained. As one
scholar noted:
Originally, administrative reform had referred to radical administrative
changes taking place in the public sectors of states and dependencies that
accompanied radical political changes, constitutional overhauls, and
ideological shifts. My belief was that all these dramatic developments would
not really amount to much on the ground unless and until there were
sweeping transformations in their administrative states, i.e. in the way public
organizations operated, particularly how they interacted with the people
they supposedly served. At the time, just a few years ago, most political
democracies had not gone very far in democratizing their public
bureaucracies and most economic or people‘s democracies still relied
heavily on authoritarian single party regimes (Caiden, 2006, 17-18, emphasis
added)

Civil service reforms overemphasize reliance on the mechanisms of internal
organizational accountability. Given that an institutionalized corruption is the
314

commonplace in the Kyrgyz bureaucracy, which means that internal organizational
culture of bureaucracy has internalized corrupt and unethical behavior, such
excessive reliance on internal administrative accountability might actually
exacerbate the problems of the civil service system.
At the same time this focus on internal organizational control fails to employ
external mechanisms of accountability, i.e. openness of the process of reform and of
the service provision itself to citizens,‘ as well as non-profit and private
organizations‘ scrutiny. But, such obstacles as the World Bank‘s ―good practices‖
58

that protect a government‘s gatekeeper functions with regard to information
dissemination, policy making, and implementation, may successfully eliminate
constructive use of external mechanisms of accountability and civil society‘s
participation in governance process.
59

Legal Change is Emphasized While Formalistic Nature of Institutions is
Overlooked
Donors concentrated most reform efforts on enacting legal changes. Thus is
a sub-optimal strategy in the environment where laws are systematically ignored,
including by the state servants, except for when the laws are not used in pursuit of

58
The WB‘s operational manual, in its ―good practices‖ section states that the ―main purpose of the
Bank is to support governments' development programs. In supporting such programs, the Bank
should not carry out activities with NGOs without government knowledge and consent‖ (WB,
2000e).

59
See the February 2004 Minutes of ―Round Table with NGOs,‖ the attachment 4 of the World
Bank‘s Country Assistance Strategy for 2003-2006 (2003c).

315

private interests. As is evident in the previous chapter, the prevailing understanding
was that administrative reform is about inducing improvements in formal structures
and functions. Donors initially applauded changes in laws and elections, assuming
that they would translate into the changes in practice, but this did not occur. The
actual day-to-day working of the government was given little attention.
Thus, formalism, described in chapter six, not only was ignored, but was
further reinforced by donors who attempted to recreate the administrative system in
Kyrgyzstan similar to that in developed countries. The response to these pressures
in Kyrgyzstan was the same as in other countries – change laws but adhere to
practices which are governed by unwritten laws. Narynbek Kasymov, the deputy
director of the Agency on State Service, summarized outcomes of the first fifteen
years of civil service reforms as follows:
According to legislation, we are adopting international experience;
everything is ideal on paper, but when it comes to reality kyrgyzchylyk is
taking over. Nothing was done in fifteen years, whereas now we are trying to
improve something in a year and a half… (2006, p.23)
60

Many laws and strategies followed in response to donors incentives from the
government. But neither of them seriously concerned themselves with
implementation, partly because both donors and the government did not have
monitoring capacity and incentives to do that. The government was also crippled
with weak capacity and failed to enforce discipline within state service which was

60
Although Kasymov was talking in the aftermath of the revolution and ousting of Akaev, who was
blamed by Bakiev for a lack of progress, Kasymov knows a thing or two about the way reforms have
been promoted as he was in charge of personnel administration in the former president‘s office.

316

largely formed by patronage principle, rather than based on merit and hierarchical
accountability.

Normative Aspects of Institutions Were Overlooked
Normative dimensions of institutions – i.e. shared values and assumptions,
that determine the way government laws play out in practice and how effective
government institutions will be – has been largely absent from the donors‘ radar.
As the review in chapters six and seven indicate, one of the key factors undermining
effectiveness of public sector institutions and reforms is the popular attitudes
towards government and state service. The government and state service are
perceived as a means for advancing political officials‘ and state servants‘ personal
interests as well as interests and needs of their relatives and friends, whereas the
idea of public service is absent. Those values have been detrimental to reforming
public sector institutions. Without changing those values and attitudes, changes in
laws will not translate into practice.
In contrast, the Communist Party took this aspect of institutional change
seriously, as exemplified by efficiently designed and executed indoctrination
processes. The mental models of the large number of the former members of
nomenclatura who still occupy important positions in government are hard to
reverse. These mental models, in turn, affect the way laws are translated into action
and create additional obstacles to reforms.
317

But this is not the entire story. Local experts indicate that the current
bureaucratic ethos in Kyrgyzstan has evolved and that it now represents an amalgam
of traditional and soviet bureaucratic culture, which is infused with the elements of
wild-west capitalism (Imanaliev, 2007). One of the former members of parliament
Baibolov, in his interview to a local newspaper, summarized this situation as
follows:
It is impossible for someone with integrity to make a career [in government]
in our society. Moving up along the hierarchy places heavy moral burden.
One often has to compromise one‘s conscience and principles. Such
qualities as professionalism, education, honor, conscience, are long
devaluated and have been out of demand. This is why I am very
disappointed in government (2007).

In sum, one of the key obstacles to reforming the existing administrative system is
the values and moral standards of the state servants. But no concerted effort has
been undertaken to build a cohesive public service ethos along with the reforms.

Explaining Donor’s Approach: Donors’ Knowledge Deficiency
How does one explain these drawbacks in donors‘ approach to reforms? As
discussed in detail in chapter five of this study, the common institutional constraints
in donor-recipient relationships and in donor industry, such as limited resources,
perverse incentives, and donors‘ non-interference/neutrality principle are aggravated
by the knowledge deficiency. This knowledge deficiency consists of lack of clear
understanding of recipients‘ institutions and how institutions change.
318

The overview of reforms illustrates that Kyrgyzstan‘s reform experience is
not an exception. Here too donors‘ inadequate understanding of the institutions on
the ground, and their inadequate assumptions as to how institutions change informed
their optimistic expectations and their inadequate approach to promoting reforms in
Kyrgyzstan. The lack of clear understanding of the existing institutional
environment in Kyrgyzstan was belatedly acknowledged by World Bank as follows:
the ―IDA has been slow to acknowledge how much is still unknown about the
workings of Kyrgyzstan‘s economy and society, and about why expected and actual
outcomes have been so different‖ (2001). Donors also mistakenly assumed that the
administrative system in place was a rational and technocratic one, capable of
implementing the directives and commitment of the political leadership. But it was
belatedly realized that actual picture was different:
During the course of the past decade, however, it became clear that the
―client‖ was not a homogeneous set of technocratic reformers but rather an
amalgamation of clients, implementing agencies, and stakeholders, including
the parliament, the old nomenclature, clan groups, the new mafias, new civil
society organizations, and others with often conflicting agendas. In this
context of shifting and competing powers, the influence of the reformers was
sometimes offset by other groups. In consequence, client country
performance became less satisfactory as many of the reform-oriented laws,
policies and programs were poorly implemented while corruption and other
governance problems came to be binding constraints on the country‘s
development (World Bank, 2001)

Negative Side Effects of the Reforms
Limitations in the approach to reforms do not only undermine effectiveness of
reforms. Reforms may be a powerful means of promoting development. But, as
319

with any powerful instrument, they should be used with caution. When reforms are
informed by unjustified assumptions and inadequate representations of the actual
conditions on the ground, they may generate negative side effects which are hard to
reverse in long run. This case study offers several examples of such side effects.

Institutional Reforms Promoted In Lack Of Political/Bureaucratic
Accountability And Transparency Helped To Open Doors For Corruption
The most vivid example of how reforms can open doors for corruption is the
hastily designed and pushed privatization reforms in early 1990s. In an
environment where accountability and transparency were lacking, many the public
assets were prihvatized, i.e. acquired for pennies by officials. There are allegations
that accumulation of wealth in this way also enabled emergence of the network of
oligarchs who co-opted the political leadership, which in turn has co-opted
bureaucracy, both of which were then used in the pursuit of private gains. In
addition, observers note that institutional reforms became a source of political
currency. Politicians have used administrative reforms – which involves creation
and reorganization of laws and organizational structures and hiring and firing
opportunities that come with it – to actually accumulate power, favor supporters,
and punish those who they want to eliminate.
Moreover, some argue that direct foreign aid and technical assistance
projects provided to the government have helped those in the government to
320

continue old practices, actually strengthening their positions (Cooley, 1999, Gleason
and Perlman, 2005).

Reforms Contributed To Inflation of Laws
As mentioned above, institutional reforms have often been confined to
changing laws and organizational structures. Too many new and revised laws lead
in turn to the inflation of laws (i.e. passing laws that remain on paper only), given
government‘s weak enforcement and funding capacity, poor legitimacy,
inconsistencies among laws, poor competency for formulating effective policies,
poor communication and coordination among government agencies. The resulting
cacophony of laws and organizations also make the government less transparent,
less streamlined, and hinder effectiveness of the system. For example, here is an
example of how the organizational changes in environmental enforcement
authorities in Kyrgyzstan resulted in sub-optimal structure:
The organizational structure of environmental enforcement authorities in the
Kyrgyz Republic was quite instable last few years. Before 2001, the main
environmental enforcement agency in Kyrgyzstan was the Main Division of
Environmental Inspection (MDEI) of the Ministry of Environment
Protection (MEP). Following the merger of the MEP with the Ministry for
Emergency Situations in March 2001, the MDEI was transformed into the
Department for State Environmental Control (DSEC). In 2003, the DSEC
was merged with the former Department for Ecology and Environmental
Monitoring, to form the DENRU in the Department for Ecology and Nature
Resource Use before 2001, the Regional Departments for Environmental
Protection (RDEPs) were directly subordinated to the national inspectorate.
Under this model, staff from the national level supervised the activities
carried out at the sub-national level. In 2003, the national-level inspection
authority lost the direct jurisdiction over RDEPs and this
321

situation did not change when the State Agency for Forestry and
Environmental Protection was created in 2005 (OECD, 2005c).

Furthermore, the legal inflation may also curb economic development. For
example, Kubanychbek Omuraliev (n.d), a local analyst, described the
administrative barriers to business development as follows:
State structures establish their own norms and monitor implementation of
these norms. That leads to conflict of interests - civil servants will always
develop laws providing for preservation of their control functions, thus
justifying their existence. Therefore, a variety of tax departmental legal
norms designed in the interest of state structures were passed and are still
passed as state structures simultaneously serve as their authors of these
projects, controlling agencies and institutions providing paid services.
Registry of permission documents provided by the state management bodies
lists over 136 permissions. De-facto amount of various tax departmental
permission documents, sub licenses, information sheets and other similar
documents is significantly larger, and a major part of them does not
correspond to current legislature. Instructions created by many different
ministries and departments require improvement (emphasis added).

These examples suggest that focusing on legal changes in the context of
nontransparent and authoritarian governance regime can amplify the dysfunctions in
the system rather than to remedy them.

Institutional Reforms Facilitated Alteration of Existing Institutions In
Unexpected Ways
Institutional reforms based on an inadequate understanding of what
institutions are on the ground and how they change may fail to establish effective
institutions. In addition, such reforms may even destroy existing institutions
322

(Fukuyama, 2004, Evans, 2004). Donors‘ discussions of institutional mechanisms
and reforms neglect values and the role of institutions in creating and sustaining
identities. Furthermore, since this aspect of institutions is missing from policy
documents, the problem of identification, design, implementation, and evaluation of
reforms overlooks how normative and cultural-cognitive aspects of institutions
affect and are affected by reforms. No evaluations of institutional reforms have
addressed how reforms have interacted with local pre-existing rules, values, norms,
and identities; instead, norms and value systems are treated as something exogenous
to institutions. Moreover, if institutions can secure order and stability, then
misplaced and distorted institutions may give way to greater instability and disorder
(International Crisis Group, 2003). Kyrgyzstan experienced such political
instability during the 2005 revolution. Local experts warn that without radical
changes instability may return (Dill, 2006).
In sum, lack of attention to deficiency of practical knowledge and a tendency
to uphold unjustified assumptions on how reform should be promoted, combined
with local unfavorable conditions (such as lack of government accountability and
shared norms according to which government is viewed as private rent) may lead to
several undesirable consequences. For one, blindly designed and conducted reforms
have little chance of delivering expected outcomes. Furthermore, institutional
reforms promoted with the knowledge deficiency are likely to add to the negative
side effects of the reforms. Institutional reforms informed by the prevalent myths
on the nature of institutions and institutional change can be used by unaccountable
323

elites to serve their own interests thereby fueling institutionalized corruption,
contribute to inflation of laws, and facilitate alternation of existing institutions in
unexpected ways.
Considering the path-dependent and locking effects of institutions,
61
the
negative side-effects of institutional reforms mentioned above are likely to become
even more pervasive. ―Even worse than the initial problems of having the wrong
institutions imposed almost everywhere is the ―lock in‖ that can occur when
powerful individuals gain advantage from such institutions leading to major
problems of path dependence (Arthur, 1989, as cited in Evans, 2004). The
powerless and helpless are the ones who pay the big costs‖ (ibid, 31-32).
Undesirable side effects of institutional reforms are likely to play out with
greater intensity in corrupt, non-transparent and unstable environments, where a
government lacks capacity – the conditions that need effective institutions most.
These problems in institutional reforms are not unique to Kyrgyzstan.

Conclusion
The present chapter contributes to the limited research on public administration in
Kyrgyzstan and in institutional change that have taken place there. As such, the

61
According to Pierson, the increasing returns is the key to the path dependence because ―the
probability of further steps along the same path increases with the each move down that path. This is
because the relative benefits of the current activity compared with other possible options increase
over time. To put it in a different way, the costs of exit – of switching to some previously plausible
alternative – raise. Increasing returns processes can also be described as self-reinforcing or positive
feedback processes‖ (2000).

324

findings herein also hold value for policy makers concerned with effective
administrative and other institutional and governance reforms.
Kyrgyzstan‘s case is not unique. The same defining features of public sector
institutions found in most other developing countries are present in Kyrgyzstan.
Similarly, many of the same approaches that donors used elsewhere also apply to
Kyrgyzstan. Hence, studying broader patterns and drawing lessons from such a
practice may have made the donors‘ interventions even more effective and
potentially beneficial than they have been. By the same logic, the lessons from
Kyrgyzstan can be applied to other countries as well.
This analysis sheds light into one of the questions posed in chapter five:
Since technical cooperation has been the main form of aid employed by donors to
promote public sector reforms, in what ways may such aid affect the quality of
governance in the poorest recipient countries? The answer is cautionary.
This analysis shows that donors have little chance of changing public sector
institutions through the conventional approach, summarized in chapter five of this
study. Why? Because this approach is inappropriate for dealing with local political
environments, and it is based on an unjustified understanding of what institutions
are and how they change. Moreover, the interplay of this approach with the local
unfavorable conditions can contribute to negative side effects such as those
observed in Kyrgyzstan.
The donors are acknowledging the limits of their knowledge

and are
attempting to correct some of their myths.

But their solutions are the same. Even
325

though these same solutions are of little value, donors continue to repeat or recycle
the same solutions. For example, WB (2007c) identified corruption was one of the
key obstacles to good governance. The proposed solutions are not new.
62

Unfortunately, while donors understand the limits of reforms and their drawbacks,
their proposed solutions to address the continued problems in a governance system
are not as promising.
The next section therefore attempts to address the knowledge deficiency
through a synthesis of empirical research, drawing from multiple disciplines in order
to propose a new set of solutions.

62
This strategy offer the following solutions to fight corruption in Kyrgyzstan:
To fight and reduce corruption, the Government needs to begin to confront these entrenched
interests, eliminate the ambiguities and arbitrary powers delegated to officials. It also needs
to effectively separate economic and political interests of the many senior officials in some
of the key sectors of the economy, including particularly power generation, banking, gold
mining, and transport and communications. In this respect transparency in these sectors will
be fundamental, but will have little impact unless there is strong political will to oppose
vested interests and ensure that individual ministers, members of Parliament and other high-
ranking officials are no longer able to oppose changes that threaten their own business
interests.
One of the key tasks going forward is ensuring transparency and accountability of the civil
service. The Government has begun to implement the legal framework for competitive and
merit-based appointments to the civil service. An important aspect will be to ensure that due
process is followed in all appointments and dismissals. Another important step in promoting
accountability will be the publishing of income and assets
declarations by high level state officials in the mass media. (2007c, pp. 23-24)
326

PART III

Theoretical Tools and Propositions for Institutional Reform

The previous parts of this study reviewed and analyzed how leading donors
approached public sector reforms globally for the last five decades (Part I) and how
such reforms played out in a specific country context (Part II). The broad
observation that emerged from the two previous parts of the study is that donors‘
conventional approach to reforming public sector institutions in developing
countries through technical assistance, which involves expert advice, trainings, and
technologies, have not always been able to help the recipients accomplish
substantive improvements. Why?
The most salient problems reformers of public sector institutions have faced,
as has been illustrated in the example of Kyrgyzstan‘s case study, are of political
and normative nature. Recipient countries‘ political leadership often lacks
accountability to public, and their power is rarely checked by democratic
mechanisms. Therefore they prevent public sector reforms which may reduce their
power. In addition, in Kyrgyzstan, as in many developing countries changing laws
does not translate into changes into practice because governments often have poor
legitimacy, public service as a value is non-existent, and serving self-interests and
327

the needs of the friends and family through using office is a commonly accepted
norm.
Not surprisingly, donors‘ reliance on changing laws and formal
organizational structures and short-term trainings have not been able to address such
obstacles as these and change actual practice. Yet, while donors realize the limits of
the conventional approach, their strategies remain the same.
The analyses in part I and part II also suggested that one of the underlying
reasons why the conventional approach does not work in addressing the most
difficult problems is the deficiency of practical knowledge on institutional reforms
and institutions on the ground. More specifically, currently institutions are often
understood as formal laws and/or organizations, whereas the work of most
institutions involves normative and cognitive dimensions of behavior. Therefore
donors‘ partial understanding of institutions contributed to limitations in the
approaches to reforms which are not always the most effective. If anything, those
approaches seem to be enabling local unaccountable political officials and
bureaucrats to use institutional reforms as an opportunity to advance personal
interests.
This last part of the study – chapters nine and ten – therefore attempt to
address this deficiency. They propose a more comprehensive framework that
integrates advances in research in institutions from different disciplines. They also
draw practical inferences from the analytical tools and propositions. These tools
and propositions could then help remedy some of the drawbacks of the current
328

approach. These chapters answer to the third research question: ―What can
researchers and practitioners learn about institutional reform from interdisciplinary
scholarship on institutional change?‖

329

Chapter 9

Review of the Relevant Literature on Institutions and Institutional Change

As demonstrated in the preceding chapters, while the complexity of donor-
promoted institutional reforms, as well as the emphasis on and expectations from
them, have increased, and the research of institutional changes expanded in different
disciplines, few synthesized this research into more comprehensive body of
knowledge. In addition, a gap remains between research and practice of donors‘
institutional reforms, with the exception of one strand of institutional studies
research in economics. Comparative public administration, whose focus has been
these kinds of institutional phenomena, made limited use of institutional theory.
Research in other disciplines tended to focus on other levels and types of
institutional change processes, which made it harder for practitioners promoting
public sector institutional reforms to relate and apply such knowledge in practice.
The consensus among institutional analysis scholars in various schools and
disciplines is that overall institutional change is poorly understood and theorized, let
alone subject to effective deliberate planning (Siffin, 1972, p. 47, as cited in Eaton
1972, Zucker, 1984, March and Olsen, 1989, Scott, 2001, North, 1990, 1993, 2005,
Campbell, 2004, Ostrom, 2005).
Why has institutional change scholarship, especially focused on macro-level
deliberate institutional changes, advanced slowly? This chapter discusses two key
obstacles to better understanding institutional change. The first section focuses on
330

the ambiguity of the conceptual frameworks on institutions. The second section
focuses on different strands of research on institutional change. Although North
declared that ―the study of institutions has been bedeviled by ambiguity about the
meaning of the term‖ (2005, p. 62), and many scholars, including North himself,
attempted to resolve this problem and significantly advanced understanding of
institutions, the existing conceptual frameworks still have important gaps. Those
limitations hinder synthesis of the scholarship and understanding of institutional
change processes.
No effort is made here to summarize all institutional change theories – this
was done by others (inter alia, Scott 2007, Campbell, 2004). Rather, this section
focuses on the critical analysis of broad scholarship across disciplines in light of its
relevance to the public sector reforms. This review also does not intend to question
the value of the works reviewed. Rather, it intends to identify their strengths and
gaps, given that different disciplines focus on different manifestations of
institutions. The next chapter builds on their strengths and attempts to address their
limitations by synthesizing the body of knowledge from difference disciplines. This
could help to generate more practical knowledge and to facilitate better
understanding of deliberate institutional change processes overall, and public sector
reforms in particular.

331

Overview of the Existing Conceptual Frameworks
Interest in institutional analysis, which goes back to works of early
institutionalists such as Commons, Parsons, and Weber, among others, has been
revived for the last few decades with a new rigor. Scholars across the social
sciences, especially in economics, sociology, and political science, generated
different versions of conceptual frameworks to understand institutions, their effects,
and institutional processes in different settings. This section reviews general types
and specific examples of commonly used conceptual frameworks, and identifies
their limitations and the implications of the latter for the advancement of knowledge
on institutional change. These conceptual obstacles are discussed in the example of
several NIE studies that have been influential in shaping donors‘ development
policies.
At least three types of definitions of institutions have been used in practice
and academia. While institutions are generally understood as the phenomena that
structure social interactions, each type of definition emphasizes different elements
of institutions. One definition emphasizes rules/norms, another primarily
emphasizes organizations‘ role in structuring human behavior. The most commonly
used definition encompasses both rules/norms and entities/organizations. All three
have been in use since early 20
th
century with varying emphasis over time.

332

Institutions as Rules/Norms
The rule-centered definition, albeit more focused on informally enforced ones, was
advanced by some early institutionalists in sociology, and has been revived since the
early 1990s. Parsons referred to institutions as a system of norms ―that regulate the
relations of individuals to each other‖ (Parsons 1934/1990, p.327, as sited in Scott,
2007, p. 14). A similar definition focused on rules reappeared in North‘s (1990)
work. There he defined institutions as formal and informal ―rules of the game in a
society, or more formally, are the humanly devised constraints that structure human
interaction‖ (p.3). Organizations refer to a group of individuals bound by a
common purpose. In this work North used a metaphor of a game to distinguish
institutions from organizations, by referring to the distinction between rules and
players. This definition of institutions has been widely used in academia, especially
among economists united under the New Institutional Economics (NIE) movement
and political scientists in the rational choice tradition,
63
as well as among some
donors (Rodrik, 1999, Nugent, 2004, World Bank, 1997a, Jutting et al., 2007, DFID,
2003).

63
The New Institutional Economics (NIE) has been an umbrella movement in social sciences; it
combines theory of institutions with neoclassical theory grounded on assumptions of scarcity and
competition. This is why NIE is sometimes uses interchangeably with ―rational choice
institutionalism.‖

333

Institutions as Organizations
The organization-centered definition emphasizes the functional fields and
human collectivities within which rules structure human interaction and which
enforce those rules. This version was advanced in sociology, as exemplified in the
works of Spencer and Sumner (as cited in Scott, 2007). For example, the Sumner
included in institutions a ―concept‖ (an idea, notion, doctrine, interest) which
defines the purposes or functions of structure which provides instrumentalities
through which the concept is translated into action. The ―structure‖ here embodies
the idea of institution (Scott, 2007, p.9). This definition mostly refers to
organizational fields, systems, or subsystems, and is now more commonly used in
sociology.
In institutional analysis of organizations literature Selznick‘s influence has
been significant that Scott (2007) refers to a group of scholars as belonging to the
―Selznick school‖ (p.23). Selznick distinguished between organization as a
mechanistic instrument and organization as an adaptive organic system: the former
becomes institutionalized when its goals or procedures become ―infused‖ with
values of the members of the organization, thereby acquiring a ―distinctive identity‖
(ibid, p.22).
In contrast to NIE/rational choice schools which see organizations merely as
instruments designed to pursue a common purpose, sociological institutionalism and
institutional analysis of organizations hold that organizations are organic systems
that structure behavior through normative processes. Even if initially created as
334

mechanistic instruments for certain ends, over time through adaptation under the
influence of characteristics of its members and its environment, organizations
become institutions to the extent that they are serve as a source of norms and rules
that structure behavior (Scott, 2007).

Institutions as Rules/Norms and Organizations
Early institutionalists introduced the broad definition of institutions. It
encompasses both rules/norms and organizations through which those rules are
enforced. Among economists, for example, Commons saw institutions as solutions
– mechanisms and rules of conduct – generated to reconcile past conflicts.
Specifically, institutions for Commons consisted of ―a set of rights and duties, an
authority for enforcing them, and some degree of adherence to collective norms in
prudent and collective manner‖ (Van de Ven 1993, p.142, as cited in Scott, 2007,
p.3). In sociology, Hughes also identified that the essential elements of institutions
as including ―(1) a set of mores or formal rules, or both, which can be fulfilled only
by (2) people acting collectively, in established complementary capacities or offices.
The first element represents consistency; the second concert or organization‖
(Hughes, 1939, p. 297, as cited in Scott, 2007, p.10). Woodrow Wilson – a father of
American public administration – also leaned towards a similar definition
emphasizing both legal frameworks and political-administrative arrangements.
North‘s modified definition (1994) – formal and informal rules of the game and their
enforcement characteristics – also falls in this category. But partly because
335

―enforcement characteristics‖ in this definition is vague and poorly understood, and
partly because his earlier definition that focuses on formal and informal rules and
does not mention ―enforcement characteristics‖ became more popular, this modified
version has been overshadowed by his earlier definition. Oliver Williamson‘s
(2000) definition similarly encompasses organizational entities, regulatory
frameworks, and procedural devices, but it too has been overshadowed by North‘s
original definition. Nabli and Nugent‘s definition of institutions in their influential
work (1989a) also falls in this category, although Nugent (2004) too in his later
works used a rule-based definition.
To sum up, early institutionalists‘ more encompassing definition of
institutions that included both rules/norms and organizations had been split into two
directions in new institutionalism schools. While both understand institutions to be
social phenomena that structure human interaction, the new institutionalism in
economics and political science tends to focus more on rules and norms which are
used by actors (individuals and organizations) to pursue their objectives, whereas
sociological institutionalism focuses more on organizations seen as the contexts that
structure behavior of actors. A more encompassing definition that includes both
rules/norms and organizations is commonly used among practitioners who often go
back and forth between the two.

336

Practitioners’ Definitions of Institutions
Practitioners of comparative public administration and development tended
to refer to institutions as organizations (e. g. political parties or specific agencies) or
their systems that include organizational entities as well as the principles of their
organization (e.g. bureaucracy). This does not mean that they were not aware of the
rule-based definitions that prevailed in academia. In the 1960s, for example,
development administration scholars and practitioners studying institutional reforms
borrowed the sociologist Talcott Parsons‘ (1949) definition of institutions as
―normative patterns which define… proper, legitimate or expected modes of action
or social relationships‖ and modified it into ―change-inducing and change-
protecting formal organization‖ (Landau, 1972, p. 93, as cited in Eaton, 1972).
Similarly, the World Bank that emerged as a leading IDA in the second wave of
reforms held that ―improving individual agencies is still the bread and butter of
institutional development activities‖ (1991, p. vii). The World Bank expert on
public sector reforms similarly equated institutions with organizations, and referred
to institution building as ―the process of improving an institution‘s ability to make
effective use of the human and financial resources available‖ (Israel, 1987, p.11).
Thus, practitioners in the past tended to use institutions to refer to government
organizations and/or their systems.
Since the early 1990s, the influence of North‘s definition on practitioners
changed this picture. Now practitioners sometimes use rule-centered, sometimes
organization-centered, and sometimes a combination of both definitions even within
337

the same document. More recently, donors have been moving towards a broader
definition of institutions that encompasses both rules and organizations. For
example, the World Bank‘s Strategy for Reforming Public Institutions and
Strengthening Governance defines institutions as ―‘rules of the game‘ that emerge
from formal laws, informal norms and practices, and organizational structures in a
given setting‖ that create incentives that shape actions (2000a, p. xii). The IMF‘s
conference on second generation institutional reforms similarly reflected a
consensus on a broad definition of institutions (albeit focused mainly on the market)
that includes organizations as well as ―constraints or frameworks‖ within which
markets operate (Camdessus, 1999). This lack of one definition and understanding
of what specifically goes into it added to the confusion and ambiguity, and also
seems to have hindered the synthesis and application of research, learning from
experience, and the crafting of effective policies.

Commonly Used Definitions of Institutions
Beyond the paradigmatic differences mentioned above, individual scholars
introduced their own ways of specifying what institutions are. The most commonly
used definitions of institutions refer to ―rules of the game‖ in economics (North,
1990); ―shared concepts‖ in political science (Ostrom, 1999); and ―social structures‖
in sociology (Scott, 2001). They are divergent and focus on different aspects of
institutions. This sub-section first briefly summarizes these conceptual frameworks
338

of institutions, and then provides a critical analysis of their strengths and gaps in the
literature in terms of their utility for practitioners of institutional reforms.
As mentioned above, economist-historian Douglas North is one of the most
influential scholars in institutional studies across the social sciences. While North‘s
definition of institutions gave burst to research in rational choice schools of
institutional analysis across social science disciplines, it did not resolve the
conceptual problems in either academia or practice. This redefinition of institutions
as ―rules,‖ as opposed to more commonly used definition that combined both rules
and organizations, still did not address the ambiguity about the use of the term; it
even may have contributed to the existing confusion.
For example, ―enforcement mechanisms‖ and their diversity and dynamics
remain poorly understood. North himself does not elaborate in great detail what
those enforcement characteristics are and how they differ from organizations. If by
enforcement mechanisms North means organizations, according to his modified
definition, organizations would be part of institutions. Thus, although he
distinguishes institutions from organizations, his definition of institutions as ―rules
of the game and their enforcement mechanisms‖ dilutes this distinction.
Furthermore, while the distinction between rules and organizations may be
useful at one level of social organization, it leaves out other types of organizations
that set and monitor those rules. For example, the social situations have not only
rules (institutions) and players (organizations), but also, using the same game
metaphor, ―referees‖ (enforcers and monitors of those rules) and maybe even rule
339

makers. In other words, institutional processes are more complex that the definition
suggests. Thus, North‘s definition seems to flatten the hierarchical nature of
organizations, and give the illusion of homogenous players playing under the same
sets of rules driven by self interests. This paints a distorted picture of social reality,
especially when applied to the world of hierarchical/layered government institutions
distinct from market settings.
While North mentions other important factors such as mental models,
culture, or ideas that shape players‘ choices along with the rules, he did not
sufficiently explore the dynamics among them - how specifically the rules interact
and co-exist with those other factors in shaping behavior. Others also have
struggled with this question, but have not yet proposed clear explanation.
64

In addition, some academics and practitioners referring to North take this
analytical distinction between formal and informal institutions for the actual, and
often treat formal and informal constraints as competing alternatives (O‘Donnell
1996, Collins, 1999). In addition, some researchers took this distinction even
further, by portraying informal institutions as detrimental to and undermining
formal institutions (ibid, see also World Bank 1997a, 2002a). This understanding is
misguided. As will be discussed in greater detail in the next chapter, most actual
(vs. abstract) formal institutions are enforced through both formal and informal

64
Personal communication with Peter Boettke at Social Change Workshop, University of Virginia,
July 2007

340

mechanisms, and this is true not only in developing countries, but in the West as
well (Ellickson, 1991, Helmke and Levitski, 2004).
Elinor Ostrom is another influential scholar in institutional analysis. She,
along with her colleagues, particularly at the Workshop in Political Theory and
Policy Analysis at Indiana University, has been developing and applying analytical
frameworks to practical questions in political and policy sciences. Ostrom
originally defined institutions as ―shared concepts used by humans in repetitive
situations organized by rules, norms, and strategies.‖ In this definition rules mean
―shared prescriptions (must, must not, or may) that are mutually understood and
predictably enforced in particular situations by agents responsible for monitoring
conduct and for imposing sanctions.‖ Norms mean ―shared prescriptions that tend
to be enforced by participants themselves through internally imposed costs and
inducements.‖ Strategies are ―regularized plans that individuals make within the
structure of incentives produced by rules, norms, and expectations of the likely
behavior of others in a situation affected by relevant physical and material
conditions‖ (1999, p. 37).
In her later work for the Swedish International Development Agency (SIDA)
she and her colleagues used a simpler framework following North: ―Institutions are
formal and informal rules that are followed by most affected individuals. Such rules
structure incentives in all forms of human exchanges‖ (Ostrom et al., 2002, p.2).
Her most recent definition is much broader: ―Institutions are the prescriptions that
humans use to organize all forms of repetitive and structured interactions including
341

those within families, neighborhoods, markets, firms, sports leagues, churches,
private associations, and governments at all scales‖ (2005, p. 3).
Ostrom and her colleagues also developed a comprehensive Institutional
Analysis and Development (IAD) framework and extensively applied it in the field.
The framework maps out three nested levels of analysis that include constitutional,
operational, and action situations, where behavior of actors at each next level is
shaped by the rules and norms set by the higher level.
Ostrom and Crawford in their recent work also proposed ―a syntax of a
grammar of institutions.‖ They propose that any institution – rule or norm – applies
to participants with specific attributes; has specific modal verbs (may, must or must
not); states the action outcome or process; specifies conditions of situations where
rules or norms are to be applied; and states what happens if the rule or norm is not
followed (2005, p.140). These components have been coded as: ―attribute,‖
―deontic,‖ ―aim,‖ ―conditions,‖ and ―or else‖ (ADICO) (2005, p. 139).
While Ostrom and her colleagues have been at the forefront of applied and
comparative institutional analysis, the analytical tools they use also have some
limitations. The contradiction is that this group of scholars‘ analysis is still
grounded in the rational choice model of the individual, despite their own assertion
that the model‘s assumptions do not hold in most situations (Ostrom, 2005, p. 238).
Another limitation is the mechanical approach to mapping institutions: the members
of this group seem to be more concerned with individual components and layers of
institutions, but less with exploring the dynamics among them.
342

To date, the prominent sociologist Richard Scott‘s work (2007) embodies
the most comprehensive summary and synthesis of the institutional analysis
scholarship generated by divergent schools and disciplines over time. His synthesis
led Scott to propose the following all-encompassing definition of institutions:
• Institutions are social structures that have attained a high degree of
resilience.
• Institutions are composed of cultural-cognitive, normative, and regulative
elements that, together with associated activities and resources, provide
stability and meaning to social life.
• Institutions are transmitted by various types of carriers, including symbolic
systems, relational systems, routines, and artifacts.
• Institutions operate at multiple levels of jurisdiction, from the world system
to localized interpersonal relationships.
• Institutions by definition connote stability but are subject to change
processes, both incremental and discontinuous (Scott, 2001, p.48).

In this definition institutions are defined very broadly. It is also fragmented – Scott
does not show how the key pillars of institutions – ―cultural-cognitive, normative,
and regulative elements‖ – are linked and related to each other.
To sum up, the overview of the most influential conceptual frameworks of
institutions from three disciplines revealed that they focus on different aspects and
functions of institutions. The review also identified the following four issues in the
broader institutional analysis literature.
The first is a lack of consensus and clarity on what exactly institutions are,
which hinders communication among scholars and synthesis of existing scholarship
across disciplines. This problem also frequently leaves practitioners uncertain of
how to proceed in their investigations. As was discussed in the previous chapters, a
343

lack of clear definition combined with a lack of practical analytical frameworks led
to vague policy recommendations, which in turn affect the design and
implementation of the institutional reforms (see also Jutting, 2003, Orrnert 2005).
A logically consistent, parsimonious, empirically-based, and consistently used
definition might be more helpful for analyzing individuals‘ and groups‘ behavior in
relation to institutional change.
Second, although enforceability is the essence of institutions (inter alia,
North 2005), none of the reviewed frameworks other than North explicitly addresses
this dimension. The reviewed definitions imply that institutions are self-
enforceable. For rational choice institutionalists, such enforcement is assumed to be
guaranteed by virtue of the alignment of rules/norms with self-interests and/or by
external forces such as government, society, or informal groups. For sociological
institutionalists, enforcement is assumed to be in place by virtue of alignment of
organizational goals and norms with individuals‘ values. But these are ideal, not
actual, conditions, whereas practitioners are left to deal with actual conditions where
enforcement of laws and norms is problematic and no clarity exists as to how to
secure such alignment of rules with self interests and /or values. This lack of
explicit treatment of enforcement conditions is especially limiting when applied to
the context of developing countries where formal institutions often do not translate
into actual practice due to enforcement problems. As demonstrated in the previous
chapters, most public sector reforms have failed partly due to poor enforcement of
the changes in laws and organizational structures.
344

Third, while according to sociological institutionalism and institutional
analysis of organizations literature institutional perspective is grounded on an open-
systems model which treats social phenomena as part of larger dynamic and open
environment, institutions have been treated as autonomous pieces by proponents of
the rationalist school. The role of environments has not received sufficient
treatment in rationalist school. As mentioned above, the latter had greater influence
on donor policies. Hence, while the literature talks a lot about the need for tailoring
reforms to the local context, practitioners are not clear about how such tailoring to
specific environments should be carried out in practice.
Fourth, although all three definitions converge on the idea that institutions
structure behavior and provide predictability for social actions, and that they operate
at multiple levels and contexts with which they interact and produce varying
outcomes, none of the frameworks provide insights into how those elements of
institutions relate to each other. A mere recognition of the complexity and
interconnectedness of institutions and the importance of the contextual factors is
insufficient for advancing the research and informing an effective design and
implementation of institutional reforms.
So far, two strands of research have attempted to examine and illuminate
these dynamics. One of these studies was carried out by Helmke and Levitski
(2004). These authors analyzed existing research in comparative political science,
and developed a typology of informal institutions subject to their interaction with
formal institutions. These interactions can be complementary, accommodating,
345

substitutive, or competing, depending on the extent to which formal and informal
institutional outcomes converge or diverge. This rich study presents a significant
contribution to institutional analysis by moving away from simplistic dichotomous
thinking that formal institutions are good and informal institutions undermine them.
Still, the study has at least two limitations. First, the authors treat formal and
informal institutions as separate but parallel phenomena, whereas in practice their
effect is often fused. Second, the study falls short of answering a key important
question - what explains the degree to which the institutional outcomes converge or
diverge.
De Soysa and Jutting (2007) also generated a framework which attempts to
map how formal and informal institutions interact and affect development. Their
work is a part of the OECD Development Action Committee‘s (DAC) efforts to
explore and understand how informal institutions help or hinder development to
better inform policy about the role of informal institutions. The authors of this
study define institutions as formal and informal rules of the game that shape human
interaction, and informal institutions as ―socially sanctioned norms of behavior
(attitudes, customs, taboos, conventions and traditions); extensions, elaborations,
and modifications of formal rules outside the official framework.‖ Enforcement
mechanisms of informal institutions are ―self enforcement mechanisms of
obligation, expectations of reciprocity, internalized norm adherence (standard
operating procedures), gossip, shunning, ostracism, boycotting, shaming, threats,
and the use of violence‖ (ibid, p.31). The framework shows that development
346

outcomes result from multiple factors, including external factors (i.e. meta-
institutions and context); formal and informal institutions, and their interaction; and
the actions of political and other powerful players. The framework is useful in that
it brings informal dimensions of institutions into the discourse and shows how they
are affected by and affect the reform process. Unfortunately, this framework also
has a number of limitations. First, some of the key concepts – building blocks – of
the framework are vaguely defined. For example, the definition of informal
institutions, which encompasses traditions and customs, overlaps with ―culture,‖
which is also treated as a factor external to institutions. It also does not answer the
key question – what makes institutional outcomes ―good‖ or ―bad.‖
In sum, the critical overview of the existing conceptual frameworks in
institutional analysis scholarship across disciplines in light of the practitioners‘
challenges revealed that, despite significant progress in improving the understanding
of institutions, the scholarship still needs practical and empirically grounded
conceptual framework for institutions. The existing ones do not clearly illuminate
the essential components and varieties of institutions, as well as the nature of
connections between them, and do not adequately address enforcement mechanisms.
In addition, the existing concepts of institutions are either static and/or atomistic,
portraying institutions as isolated rules of the game that can be easily changed, or
too amorphous and complex to be subject to effective change. The first view
ignores that institutions are dynamic and embedded webs of rules and norms, and
are influenced not only by individual‘s will but also by organizational and other
347

factors. Institutions not only have temporal continuity, which is evident in the
studies of institutional path dependency, but also have vertical and horizontal
dimensions whereby one set of institutions are embedded on others – thus not only
the type of institutions matter (formal or informal) but their dynamics. The second
leaves out the role of agency and forgets that successful and effective institutional
change is not impossible as evidenced from history.
A more comprehensive conceptual framework of institutions proposed by
scholars of institutional analysis in other disciplines beyond economics (Scott, 2007;
Campbell, 2004; Ostrom, 2005; Helmke and Levitski, 2004) has been largely
overlooked by donors. In addition, while these definitions of institutions are more
encompassing and comprehensive, the main drawback they share is that none of
them explain how these various elements of institutions relate to each other, interact,
and, most importantly, what makes some institutions effective and benevolent.
Understanding the structure of institutions and the dynamics of interactions among
these elements and the institutional environments can help to better understand how
to design effective institutional reforms.
How does conceptual ambiguity pose obstacles for understanding
institutional change? For one, poor conceptualization of what institutions are makes
it hard to understand what institutional change is. The structure and components of
institutions remain ambiguous, and thus there is no way of looking into what really
happens inside of institutions when the institutions change. Thus from this
standpoint institutional change remains a black box. This is especially problematic
348

for practitioners engaged in attempting to create effective institutions and/or change
existing ones. In addition, this limitation also hinders synthesis of both practical
and theoretical knowledge on institutions and institutional change.
The way these conceptual limitations affect the pace of research can be
demonstrated in the following example. Several cross-sectional studies in NEI
examined links between institutions and development, and found a robust positive
relationship between them, and identified which functions of institutions contribute
to growth (inter alia, Rodrik et al., 2002, Easterly, 2001, Dollar and Kraay 2002,
Knack and Keefer, 1995). These studies, among others, influenced donors‘ policies.
The key limitation of nearly all these studies is conceptual – they do not clearly
distinguish the content (design or specification of rules) of institutions from the
functions they perform and from the quality of their enforcement. They tended to
use as independent variables such measurements as ―strength of the rule of law,‖
―risk of appropriation,‖ and ―a well-functioning judiciary system.‖ These are more
than institutions as in ―rules of the game‖; they also imply the quality of their
enforcement and functions they deliver. ―Rules‖ may exist on paper, and be of good
quality, but when they are not enforced their impact on growth can be minimal. Or,
even if enforced, they may not deliver the expected functions. It would be ironic if
economists and donors, just having rediscovered institutions to correct the idea of
self-regulating markets, slipped to another misguided assumption that rules are self-
enforcing.
349

Why is it important to make a distinction among the functions of institutions,
the content of institutions/rules, and their enforcement? Research has provided little
guidance to practitioners as to how best to determine the optimal institutional
content (i.e. specific configuration of rules) that matches desirable functions, and
how to improve the quality of enforcement of those institutions (inter alia, North,
2005). Donors, influenced by these studies, make heroic assumptions by
prescribing that developing countries adopt certain rules that perform desirable
functions in developed ones, assuming those rules would perform the same
functions. But copying the content of rules/institutions alone does not automatically
warrant delivery of those functions. As has been examined in depth by early
comparative public administration scholars, in the first wave of institutional reforms
many developing countries adopted formal laws and organizations emulating
Western models, but they served more like facades and did not deliver expected
functions; actors‘ behaviors and social situations remained under the umbrella of
different sets of institutions (Riggs, 1964). This drawback has not been corrected
since, and might have been reinvigorated with the new ―institutions matter‖ agenda.
Furthermore, donors also often assume that if good quality institutions (read ―rules,
laws, and/or organizations‖) are introduced in developing countries, they will be
automatically enforced. At best donors‘ efforts to improve enforcement have been
confined to standard capacity building technical assistance projects such as
providing equipment and training, which rarely deliver expected outcomes.
350

At the same time these studies are valuable in that they trigger other more
important questions, such as: What is the nature of the link between the functions of
institutions, the content (design or specific configuration) of rules, and their
enforcement? What kind of design is likely to deliver the desirable functions?
What kind of content is likely to be more enforceable? These questions are yet to be
answered in order for practitioners to promote effective and good quality
institutions. More focus on identifying how to design high quality institutional
content with adequate enforcement to deliver certain functions could help
understand what kinds of institutions are desirable, how they operate, influence and
shape behavior, and how they change in different contexts. These gaps can be
traced back to a more basic problem discussed above – i.e. the ambiguities of what
institutions are in the first place. A more relevant and comprehensive conceptual
framework could help answer these questions.
Examination of these and other studies with a similar focus identified a few
other drawbacks that partly stem from the conceptual ambiguity (Jutting, 2003). In
addition to the vague definition of institutions (some studies did not even explain
what they meant by institutions), a broad range of phenomena were covered under
the umbrella of high quality institutions, including ―political stability‖ and ―social
capital,‖ making analysis of what exactly institutions are and how they influence
development problematic. Most studies, not surprisingly, had issues with
measurement of the quality of institutions. Some of the studies rely on subjective
measures such as perceptions that do not always capture the effect of the whole
351

range of institutions including informally enforced ones, which evade accurate
measurement. Furthermore, while these studies suggest robust relationships
between the quality of institutions and growth indicators, they do not always clearly
illuminate the direction and nature of the causality. The causality may go in either
direction. Although some of the methodological challenges have been partially
addressed by other works (Asemoglu et al., 2001), scholars caution that ―we must be
modest and admit that we are still at the beginning of the process of understanding
how exactly specific aspects of institutions influence economic outcomes‖
(Asemoglu, 2008, p. 2).

Overview of the Institutional Change Literature
This section provides a general overview of institutional change literature
which received most attention in economics, political science and sociology.
Within each discipline one can find at least two opposing schools – on one extreme
are those who hold a rational choice model of individual behavior, and on another
extreme are those who hold a more socialized model of individual behavior (Scott,
2007, Campbell, 2004). Theories on institutional change have been largely
polarized along these two extremes: rational choice schools on one extreme,
sociological institutionalism on the other, whole historical institutional accounts
somewhat combine a mix of the two. Compared to the above three schools,
organizational development literature has paid most attention to the process and
dynamics of institutional change in the context of organizations. This is why an
352

overview organizational development literature is provided in greater detail
compared to the rational choice, sociological, and historical institutionalism schools
below.

Rational Choice Institutionalism
On the one extreme are those for whom institutional change is seen as a
process subject to deliberate design, where self-interested individuals drive such
change. This camp includes rational choice institutionalism (including NIE) which
embraces methodological individualsm – an assumption that micro level individual
actions are motivated by logic of instrumentality (or logic of consequences) and
decision making is based on calculation of costs in relation to benefits to maximize
one‘s interest/well being (March and Olsen, 1989). This camp abides by a
definition of institutions as rules and norms that are strategically used by individuals
for this end. Although the NIE researchers claim that, in contrast to neoclassical
economics, they have embraced the idea that individuals are boundedly rational (i.e.
their rationality is bound by limits of information and cognitive capacity based on
newer research from brain science), the former‘s underlying assumption has been
subjected to little modification (Campbell, 2004). Some within this school treat
institutions as an outcome of a competition among rational (calculative and utility
maximizing) individuals and holds that institutions are created to reduce transaction
costs by groups and individuals to secure their interests and pursue their goals
353

(North, 1990, World Bank, 1997a). As mentioned before, this view had most
impact on donors‘ policies.

Sociological Institutionalism
On the other extreme are those who view institutional change as emergent
process, where the unit of analysis is not individuals but organizations responding to
their complex environmental influences. Sociological institutionalism schools hold
that, instead of creating institutions, individuals are molded by institutions. In this
view institutions are equated with organizational scripts and, in Selznick‘s terms,
norms ―infused with value.‖ The model of individual behavior held by this school
is overly boundedly rational. In this view, institutions are seen as autonomous and
macro level phenomena that shape society by redefining individual and group
identities. The rules and routines that define institutional processes are based on the
logic of appropriateness, and participants in the process act not as much out of
rational self-interest but rather out of a sense of duty and obligation (March and
Olsen, 1989, as reviewed by Atkinson 1990). Researchers in this school observed
that institutions do not result from deliberate change, as advocated by rational
choice schools, but from complex dynamic interactions among many factors that
include pressures, normative influences, and institutional logics. Thus, they hold,
institutional change is outside of individual‘s control and not subject to effective
design (March and Olsen 1989). Furthermore March and Olsen argue that
institutional change is highly indeterminate – once it is initiated it is impossible to
354

predict what it will generate. That is why planned efforts to transform institutions
are described using a metaphor of a garbage can, as ―highly contextualized
combinations of people, choice opportunities, problems, and solutions‖ which no
one controls (March and Olsen 1989, p. 80). From this perspective, expecting that
the institutional reforms will achieve expected outcomes is a ―hopelessly optimistic
idea‖ (Atkinson, 1990, p. 843).

Historical Institutionalism
Some historical institutionalists share a macro level perspective on
institutional change and often tend to focus on systems/governance level.
Researchers in this perspective embrace both logics of instrumentality and
appropriateness, i.e. hold that individuals are driven both by self interest
maximization motives as well as influenced by norms emanating from their
environments. Historical institutionalism has been focused more on description (vs.
explanation) of institutional change, using different models such as punctuated
equilibrium (Campbell, 2004), incremental or evolutionary change (Thelen 2004),
or path dependence (Pierson 1994). Among these, path dependency has been
emphasized more than others, it holds that once institutions are in place they will
have effect on future decision making and institution building processes (Campbell,
2004).

355

Organizational Development
Organizational development is a group within organizational studies
concerned with organizational change, development, and learning. These terms are
often used interchangeably because there is a significant overlap in their meanings
in the context of organizational change.
Organizational change is not the same as individual change, neither is it a
simple aggregation of changes in individual behaviors of organization‘s members
(Crossan at al., 1999). Instead, organizational change could be seen as a function of
all of the following components: (1) aggregation of changes in organizational
members‘ behaviors; (2) change in organization‘s formal structure and
institutions/norms; and (3) change in organizational culture.
65
While this list is not
exhaustive, all of these components are equally important for effective change.
However, it seems that popular organizational reforms tended to focus
predominantly on formal-structural aspects of organizational change. For example,
widely applied models of change, such as reengineering and TQM were primarily
concerned with changing formal structures of organizations (Vancina and Taillieu,
1996, Hackman and Wageman, 1995). This bias persists despite the significant
theoretical findings that stressed importance of the cultural aspects (Smircich, 1983)
in organizational processes. Indeed, survey of several organizational changes

65
Schein (1990) defines culture as ―(1) a pattern of basic assumptions, (b) invented, discovered, or
developed by a given group, (3) as it learns to cope with its problems of external adaptation and
internal integration, (d) that has worked well enough to be considered valid and, therefore, (e) to be
taught to new members as the (f) correct way to perceive, think, and feel in relation to those
problems.
356

suggests that intervention in social factors (that include culture, management style,
interaction processes, informal patterns and networks, and individual attributes)
generated most change in individual behavior (Robertson at al., 1993). This
contrasts with the findings that the technology interventions (job design, technical
procedures and systems, etc.) did not show positive correlation with the changes in
individual behavior (ibid). In Nonaka‘s (1984) terms formal aspects of
organizations would be considered as ―explicit‖ elements of organizations, whereas
culture or mental models of organizations would fall on the ―tacit‖ side. Perhaps
due to the fact that changing culture is a complex process, combined with the
dominance of the rationality principle (Chin and Benne, 1976, Mumby and Putnam,
1992) oriented towards ―combination‖ and reinterpretation of explicit knowledge
(Nonaka, 1987), cultural aspects did not receive sufficient attention in actual
organizational change processes.
Organizational change can be viewed as a participatory or top-down process.
Although research findings demonstrate positive effect of participation on
organizational change processes, the top-down strategies prevail in practice (Miller
and Monge, 1986). Organizational change is often complicated by several process-
factors. One of them is communication problems inherent to human beings as
―imprecision of language is complicated by cognitive maps that act as unique filters
on the communication: we tend to ‗see/hear what we believe‘ rather than ‗believe
what we see‘‖ (Crossan at al., 1999). Further, as political process, organizational
change can be fairly vulnerable in maintaining its legitimacy and keeping its
357

members‘ support for change. Change requires profound transformation, which in
turn requires time and firm commitment. Therefore it is also possible that
employees‘ and leaders‘ enthusiasm might fade away in view of slow/negative
initial outcomes. The past failures
66
can surely undermine the future initiatives as
well, further reinforcing self-fulfilled prophesies in organizations. Furthermore, as
Marshak (1993) illustrated in the example of Kurt Lewin‘s influential defreeze-
change-freeze model, the dominant Western models seem to be more static and
outcome oriented, whereas focusing on the process would secure continuity and,
hence, more effectiveness in organization in a longer term. Change fails to generate
effectiveness unless it has encompassed all the ―processes of learning, innovation,
and improvement as core organizational processes‖ (Mohrman and Mohrman,
1992).
Organizational development scholars agree that underlying assumptions
organization and its members hold greatly influence the outcomes of organizational
change and organization‘s overall operation. Argyris (1977), for example, talks
about ―theories in use.‖ Schein (1990) holds that the key to changing culture is the
underlying tacit assumptions of individuals. Cooperrider and Srivastva (1987)
voice similar view – that ―through our assumptions… we largely create the world
we later discover.‖ Once organization‘s knowledge is institutionalized in its
structures and routines, they reinforce that old knowledge and assumptions, and
―feed-back‖ the ―cognitive maps‖ (assumptions) of the members of organization

66
For example, only TQM alone is said to have generated 70% of failure rate, please see Vancina
and Taillieu, 1996.
358

(Crossan at al., 1999). Thus, unless change starts from questioning the assumptions
behind the system that created the problems in the first place, organizational change
is likely to result at most in cosmetic changes, without reaching the root causes of its
ineffectiveness (Argyris, 1977, Senge, 2006). Organizational learning therefore
process should not be limited to simple adaptation/correction to external challenges
(single-loop), but must occur in ―double-loop‖ track, i.e. investigating and
understanding the underlying assumptions of a problem and tackle those
assumptions (Argyris (1977).

Critical Analysis of the Gaps in the Literature
Limited collaboration between these four strands of research has taken place
(Elickson, 1991, Zucker, 1984, Campbell, 2004, Scott, 2007). In contrast,
collaboration among different disciplines within these paradigms has been more
successful. For example, rational choice institutionalism has been influential and
facilitated cross pollination among political science, economics, and in public
administration disciplines (Ferris and Tang, 1993). Meanwhile, sociological
institutionalism has been more popular in sociology and organizational sciences
(Scott, 2007).
In terms of the approach to explaining institutional change, one can
distinguish between reductionistic
67
and all-encompassing theories as two extremes.

67
As mentioned in the introductory chapter, ―four cardinal sins‖ in social sciences include
essentialism (tendency to ignore the distinctions among different levels and assume more
homogeneity in the phenomena than they actually possess); reductionism (an attempt to illegitimately
359

On one extreme there are reductionist theories that attempt to explain institutional
change either by reducing it to individual motivation to maximize self interests (in
the case of rational choice institutionalism) or historical path dependencies
(historical institutionalism). They are reductionist approaches because institutional
change results from dynamics of multiple factors, and limiting explanation to any
one factor us misleading. For example, rational choice schools have been criticized
on many accounts. Srivastva (2004) argued that rational choice institutionalists
assert that self interest maximization drives change, but overlook the role of culture
and leadership in shaping institutional change. Psychological experiments and field
research established that self interest is not always the driving motivator of
behavior, but sense of fairness is (Ostrom, 2005, Howard, 2006). Even if
individuals had cognitive capacity and necessary information, the changes in actors‘
preferences, unintended consequences, and multiple effects of institutional changes
refute the functionalist arguments reducing existing institutions to one determinant –
deliberate human design (Pierson, 2004). Similarly, historical institutionalists like
Thelen have been criticized for overlooking the role of ideas (Beland, 2007). Such
examples that point out a wide range of other factors influencing institutional
change left out by reductionist theories abound. What is common to critics,

―reduce the complexities of social life to a single, unifying principle of explanation or analytical
prime mover,‖ p. 3); reification (an ―illicit attribution of agency to entities which are not actors or
agents,‖ p.5), and functional teleology (―attempts to explain the causes of social phenomena in terms
of their effects, where effects refer to outcomes or consequences viewed as performances of
functions,‖ (Sibeon, 2004, p. 6).

360

however, is that none propose a comprehensive framework that encompasses all the
key factors.
On the other extreme there are theories in sociological institutionalism that
portray institutional change as being too complex evading any meaningful
intentional design. Those who embrace complexity recommend emergent change
that emphasizes flexibility, adaptation and innovation on the part of the change
agents given that, in complex environment planning, change is difficult due to many
hard to anticipate conditions along the way (inter alia, Checkland 1993). Still, even
the latter need models of that complex reality to have a general idea of where and
how institutional change takes place, and how institutions operate and effect change,
to be helpful and applicable.
Organizational development field found is in the middle ground between
these two extremes, and have proposed tools for practitioners engaged in the process
of organizational change. Unfortunately the insights and tools from organizational
development literature have not informed the design of donor-promoted institutional
reforms to sufficient degree, as this strand of literature has been overshadowed by
other more dominant school that influence donors.
The rationalist and sociological institutionalism have been treated and
presented as competing paradigms by members of these schools and even some
observers who attempted to synthesize them (Campbell, 2004, Frederickson and
Smith, 2003). They can be competing and mutually exclusive if the social reality is
assumed to be flat and homogenous, as these perspectives implicitly hold. This
361

essentialist thinking would not be problematic if each school did not assume that
their view of institutions based on a limited perspective is superior to others and can
explain all institutional phenomena. For the last decade, scholars observed an
emergence of the ―second institutional movement‖ in the wake of understanding of
the complexity of institutional change, recognition of the limitations of any one of
these schools to explain institutional change, and a need for dialogue among them in
the scholarly community (Campbell and Pederson, 2001, p.2). This dissertation
contributes to the efforts of this movement.
A more important observation is that while a distinct focus of these different
schools and disciplines and essentialist tendencies in research enabled exploration of
specific aspects and levels of institutional phenomena in greater depth, it also left
some important gaps that hinder adequate understanding of institutional change.
For example, rational choice economics and other political economy schools in
political science and public administration that share with it key assumptions on
human behavior focus on micro level analysis and reduce explanations of
institutional change to the individual level such as maximization of self-interest.
Organizational development field tends to focus on mezzo/organizational level. Not
surprisingly, this group of scholars tended to focus on organizational level changes.
History tends to focus on macro level institutions (Scott, 2001). Because institutions
cut across all these levels, the source of change is not confined to any one level, but
lies in the dynamics among different factors. Moreover, each discipline focuses on
different spheres of activity (market, politics, society, etc.).
362

From the ontological standpoint of stratified social reality (described in
greater detail in the introduction), these perspectives are complementary and valid
each within its own level. Rational choice assumptions that individuals drive
institutional change hold in a micro level with shorter timeframes and smaller scale
institutions. Organizational level changes fall within the mezzo level, and historical
perspective focuses on changes with longer timeframes and larger scale institutions
at macro level.
In addition, from a stratified ontological perspective, all patterns of change
can co-exist. What looks from a micro level perspective as a drastic revolutionary
change may appear in the big picture of macro level analysis as an
incremental/evolutionary change. Similarly, what appears as a revolutionary change
from macro level (such as transition from planned to market economy) may turn out
to be series of micro-level incremental adjustments over time. Furthermore,
formally enforced rules and laws are more subject to conscious design than
informally enforced norms, so it is hard to make a blanket assertion about
institutional change without specifying the level of analysis and an aspect or a
dimension of institution.
This tendency towards essentialism and fragmentation create challenges for
a better understanding of institutional change. First, the schools focus on different
extremes of institutional processes, but leave out what happens in between these
extremes. Often institutional change is not only the result of human intent or
evolutionary or external influences, but rather a combination of all (Scott, 2007,
363

Campbell, 2004, North, 2005). Second, such arguments are reductionist and self
justifying: each perspective attempts to prove that one‘s theory holds by looking at
specific sets of phenomena, disregarding others. Third, such fragmented approach
limits synthesis and thus a better understanding of actual institutional change cut
across all levels. Fourth, focus on one level of analysis and/or one direction of
causality frequently overshadows other more interesting questions. For example,
rational choice schools do not normally ask what makes some individuals more
effective in shaping institutional change or how institutions affect and shape
individuals‘ preferences and influences. Similarly, sociological and historical
institutionalism schools also could account for how specific individuals shape
organizations, its norms, and values, and how specific organizations shape values
and norms of their organizational fields and why.

Conclusion
Although institutional perspective has proliferated across social sciences for
the past few decades, much more work remains to be done in terms of theorizing
about institutional change processes and address the gaps (Scott 2001, North 1991,
2005). The ―second generation‖ research in institutional analysis, which intended to
address the gaps identified above, has yet to generate practical tools. For example,
more recent attempts to consolidate research and revisit the conceptual tools (inter
alia Scott 2008, Campbell 2004, Ostrom 2005) intended to move the field forward,
had limited success. As mentioned above, despite the complexity of the institutional
364

reforms, expectations about/for them have increased, but the research has not caught
up with the demand for knowledge. This chapter proposed that several reinforcing
factors explain this lag.
In academia, this deficiency of practical knowledge has not been addressed
for several reasons, the most important of them being lack of conceptual clarity and
essentialism combined with disciplinary fragmentation. This contrast between the
models of institutions and social reality on the one hand, and the complexity of
social reality on the other hand, contributes to poor understanding of institutional
phenomena, and generating knowledge applicable for practice of reforms.
At the same time, such reforms also provide unique opportunities for
researchers to observe and generalize about the most pressing questions in
institutional theory. These questions include: What are the components of
institutions? How do they interact? How do [components of] institutions newly
introduced to a given context interact with the existing institutions, or how do
reforms affect the existing institutions? How do institutions change?
The answers to such questions could be more helpful in generating more
practical and applicable insights for those engaged in attempts to build and maintain
effective institutions and tailor them to specific circumstances. Right now these
limits in the scholarship seem to be contributing to donors‘ reductionist, simplistic,
and one-sided approach to institutional reform, as exemplified in the prevalence of
one-size fits all and best practices approaches.
365

This chapter concludes that a more fruitful avenue for answering such
questions and moving forward in understanding institutional phenomena is the need
to disaggregate institutional dimensions and study their dynamics under the
influences of contextual factors. North started by distinguishing formal and
informal elements of institutions, but these dynamics are yet to be clearly explained
(North, 1990, 2005, Helmke and Levitski, 2004). There is still a lot of room for
research to illuminate how mental models, cultural norms, and institutions are
related, and how enforcement can be secured (North, 2005). The stratified critical
realist ontology is a fertile basis for addressing these questions. These tasks are
undertaken in the next chapter. It addresses some of the key gaps in institutional
analysis literature identified above by developing a set of new analytical tools
drawing from the existing scholarship in multiple disciplines.

366

Chapter 10

Analytical Tools and Propositions on Institutional Change

There is nothing more practical than a good theory.
Kurt Lewin, 1951, p.169

Frameworks, models, and theories are examples of analytical tools. They
reflect underlying assumptions about social reality and serve as lenses for
perceiving and making sense of the world. Models are simplified versions of social
phenomena. Sometimes models are interchangeably used with metaphors. Models
can serve as building blocks for theories. In the social sciences, theories make
specific testable assumptions about relationships among social phenomena to
identify patterns or generalizations about social reality. Propositions, sometimes
referred to as theories, if they are provable, help analysts to describe and diagnose
social phenomena and predict future outcomes. Frameworks are meta-theories that
map key elements (components, variables) of complex social phenomena in
question, as well as linkages and interactions among those elements. Several
theories can be compatible with one framework. (Ostrom, 2005)
Social scientists explicitly rely on such analytical tools to codify and
accumulate knowledge by making informed guesses and testing those using
empirical data. Practitioners, even when they do not always make their analytical
367

tools explicit, also use such tools, or, simply, in this case, a certain set of
assumptions on the nature of the institutions, relevant processes and situations – to
describe, predict and design policies, including those pertaining to institutional
reforms.
While adequate analytical tools can facilitate effective decision-making
pertaining to complex processes, the limitations of such tools may distort
researchers‘ and practitioners‘ understanding of and approaches to solving
problems. When there is inadequate understanding of institutional components and
processes, one approach to reforms may just replace another without substantive
changes, which appears to have been the case so far based on the reviews and
analyses presented in the previous chapters. That is why subjecting researchers and
practitioners‘ frameworks, models, and assumptions to critical review is essential
for advancing research and improving practice.
Parts I and II of this study subjected donors‘ practices and their models and
theories to critical review and identified their limitations – that leading donors‘
public sector reform promotion efforts have been largely based on ambiguous or
inadequate models of institutions and several unjustified assumptions (myths) on
institutional reforms. The first half of Part III - chapter nine – identified a lack of
conceptual clarity and disciplinary fragmentation in academia that resulted in
limited progress in understanding institutional change with detrimental impact on
practice as well.
368

This chapter‘s task is to develop clearer and more comprehensive analytical
tools and propositions to improve understanding of institutional change and draw
practical implications for institutional reforms. The new framework, the two
accompanying models proposed in this chapter, and propositions drawn from them,
intend to contribute to promotion of more relevant and effective institutional
reforms. These tools and propositions are based on the synthesis of existing
scholarship from several social science disciplines. The chapter then discusses how
those propositions and the practical insights drawn from them can help practitioners
to diagnose and address key problems that institutional reforms have struggled with
– such as poor enforceability of government-made rules and corruption. Examples
from Kyrgyzstan‘s public sector reforms will be used along with other cases to
illustrate relevance of such tools for practice.

Conceptual Framework of Institutions
The proposed conceptual framework of institutions is not new – it shares
commonalities with those of the early institutionalists and introduces some original
elements. What is new is that this framework identifies the key components of
institutions. The two additional models help to better understand how those
different levels and components of institutions are linked, how they interact, and
how institutions are enforced. The framework brings together and builds on
empirical evidence and theoretical scholarship from different disciplines discussed
in the previous and current chapter.
369

The framework is grounded on the assumption that institutions display
characteristics of open systems
68
by virtue of evolving along with and structuring
the processes of the living systems (i.e. human communities). Living systems are
characterized as being interconnected, self-organizing, and coevolutionary (Harder
et al., 2004). Interconnectedness means that the ―defining qualities of the system
are the relationships among the various parts of the system‖ (ibid, p. 83). Parts of
self-organizing systems ―engage in patterns of interaction that serve to maintain the
homeostasis of the system, a dynamic equilibrium in which there is constant change
and adaptation in the context of holding a steady state within a certain band of
parameters‖ (ibid, p. 84). Coevolutionarity ―refers to the fact that systems evolve
along with their environments in a mutually reinforcing pattern of influence‖ (ibid,
p. 84). This framework, in contrast to the currently dominant mechanistic paradigm,
in which institutions have been equated with isolated and static rules and/or
organizations, brings back the original intent of institutional analysis to place rules,

68
Open systems paradigm in organizational studies was borrowed from biology in response to the
limits of the mechanistic (closed system) approach to social systems. Open systems perspective
holds that organizations are embedded in their environment with which they closely interact.
Organizational ecology and sociological institutionalism schools are based on this paradigm, whereas
scientific management is an example of the school based on assumptions of mechanistic/closed
systems paradigm.
Katz and Kahn (1978, pp. 23-30) identified the following ten characteristics of open systems:
1. Importation of energy from the environment (resources, people, etc.).
2. Throughput (transform resources available to them).
3. Output (export some resources to the environment).
4. Systems as cycles of events.
5. Negative entropy (through input of energy/resources).
6. Information input, negative feedback, and a coding process (to maintain steady state).
7. The steady state and dynamic homeostasis (and a tendency toward growth to ensure survival).
8. Differentiation and specialization.
9. Integration and coordination.
10. Equifinality (many paths to same end).

370

individuals, and organizations in their broader environment and emphasize
interdependencies among actors and their environments (Scott, 2007).
According to the open systems paradigm, institutions could be described as a
dynamic phenomenon – a web of prescriptions constantly evolving and adjusting to
their changing environment. The implication of applying the open system model is
that institutional design and intervention processes have to account for this
complexity and mutual influences among the elements of institutions and their
environments. Distinguishing among various levels and dimensions of institutions
and understanding the dynamics among them and with their environment could help
to design better informed interventions.
Institutions are defined as sets of shared and enforceable prescriptions and
different forms of organizational arrangements that structure behavior and
relationships among individuals, organizations, and/or their systems. This definition
encompasses both rule- and organization- centered notion of institutions, and is
more aligned with the way this term is used among practitioners. Institutional
reforms involve changes not only in those prescriptions, but also in their respective
organizational arrangements.
Prescriptions refer to rules and norms, which can be constraining or
enabling. Examples of prescriptions include government-made rules, laws, binding
and non-binding sanctions, resolutions, declarations, conventions, constitutions,
provisions, regulations, adjudications, social and group norms and customs, and so
forth.
371

Organizational arrangements also structure behavior and relationships
among different social actors. These arrangements range from small groups such as
organizational units or informal cliques, to formal and informal organizations, and
sets of organizations, such as national level governance systems that encompass
political, economic, and societal institutions. Social organization at every level,
along with its respective prescriptions, serves as a tool for ordering and regulating
behavior of the players at the next lower level of organization.
The set refers to the linked or clustered nature of prescriptions structuring
the behavior of players (Nabli and Nugent, 1989). For example, bureaucrats‘
behavior and relationships with the public and elected officials are regulated not by
one prescription, but normally by a set of formally and informally enforced
prescriptions. Bureaucrats, according to the internal organizational rule may report
to the minister. At the same time they may also follow a customary norm of
reporting to the head of the respective department in president‘s office, even if it is
not mandated in any official document. Similarly, organizational arrangements are
also embedded in one or more sets of higher order organizations. For example, the
department where bureaucrats work might come under a central ministry as part of
the government. At the same time bureaucrats would belong to their families,
which are embedded in a close knit clan network they may identify with to a greater
extent than with members of their profession as public servants.

372

Institutional Matrix
The following matrix maps the boundaries and key elements of institutions
by sharedness (vertical axis) and type of enforcement mechanisms (horizontal axis).
It also provides some examples of institutions that fall in each cell. In practice the
lines are often blurred, and, as will be elaborated below, most institutions involve
both formal and informal enforcement mechanisms. This framework describes
institutions as a set of nested organizations and behavioral prescriptions operating at
different levels (national/macro vs. organizational/mezzo vs. individual/micro)
enforced by a range of different and often complementary mechanisms.

373

Table 3: Institutional Matrix

Levels
where
instituti
ons
operate

Components of
institutions
Formally enforced
institutions
Informally enforced
institutions

Macro
level
Prescriptions

Government-made rules such
as constitution and national
government-made rules
Norms shared by a large
social group

Enforcement
mechanisms
Legal enforcement by
government using
administrative and judicial
mechanisms
Enforcement by large social
groups (such as ethnic
groups, clans, tribes, etc.)
using peer pressure, appeal to
shared values, habits,
shaming, and other means

Mezzo
level

Prescriptions

Government-made/official
rules pertaining to the
internal working of
organizations and/or local
governments

Norms shared by members of
the organization

Enforcement
mechanisms

Enforcement by organization
itself based on formal
organizational rules and
government‘s enforcement
mechanisms
Enforcement by groups using
peer pressure, shaming,
appeal to shared values,
habits, and other means

Micro
level

Prescriptions

Official organizational rules
pertaining to behavior of
small formal groups/units
(e.g. a regulation on an ad-
hoc investigative committee
or unit within an
organization)

Shared norms and values by
members of the group
Enforcement
mechanisms
Enforcement by group itself
based on its formal rules as
well as organization‘s and
government‘s enforcement
mechanisms
Enforcement by group and
self using peer pressure;
appeal to shared values, and
internalization of shared
norms and values of the
group.

374

Defining Characteristics of Institutions
Prescriptions have to be (1) shared by a relatively stable group and (2) be
enforceable to qualify as institutions. Each of these characteristics is explained
below and illustrated through visual models.

Sharedness: a nested model of institutions
If a prescription only structures the behavior of one individual and is not
shared among a relatively stable group of people (which can be of various
scopes/sizes), it would be a personal rule or strategy, but not an institution. The
boundaries of the social system to which those prescriptions apply define at which
level those institutions operate and are shared. The nested model inserted below
(figure 5) roughly distinguishes the following three levels of the social environment
where institutions are shared and operate: micro (the level of the smallest group(s)
immediately surrounding the individual), mezzo (organizational level), and macro
(inter-organizational and governance level).
Examples of institutions operating at the micro level include rules and norms
structuring relationships among individuals within smaller social groups such as a
family, teams, informal and formal groups. Mezzo level institutions include rules
and norms structuring behavior within formal (i.e. part of or registered with the
government) and informal (not officially registered as an organization and therefore
not directly regulated by the government) organizations. Macro level institutions
include rule and norms – a constitution being an example of such formal rule – that
375

structure behavior among different organizations and sectors within a governance
system.
Institutions are nested, that is, each level is embedded in the next higher
level. For example, mezzo level prescriptions, such as those structuring the
behavior of bureaucratic organizations, are in turn embedded in the governance
(macro) level (see figure 5 below). Thus, each next level is characterized by greater
complexity of processes, linkages, and dynamics among the institutional
components and their respective environments, because the higher level institutions
encompass the lower level ones. For example, an informal clique or organizational
unit within a government organization, in comparison to the entire organization and
even more so compared to the entre public administration system, is characterized
by simpler structure and processes by virtue of being small and more cohesive.
The nested model of institutions below illustrates this characteristic of
sharedness of institutions.

376

Figure 5: A Nested Model of Institutions

The nested nature of institutions is not entirely new. Ostrom‘s Institutional
Analysis and Development (IAD) framework discussed in the previous chapter is
based on an understanding that social reality is layered and institutions operate at
these different layers (2005). Layered notion of social reality is also commonly
used (Sibeon, 2004). But, there has been little discussion of how the prescriptions
stemming from these various layers interact and relate to each other.
Individuals‘ behavior is influenced by stimuli/prescriptions from different
levels along the sharedness dimension. Such stimuli/prescriptions may not intersect
377

at all, or if they intersect, they may be complementary or competing. For example,
if there is no prescription/law enacted at national level dealing with sexual
harassment at the workplace, the organizational level prescriptions, whether they are
written or unwritten, will fill the void. Organizational and national level civil
service rules may compete with each other if national level rules require merit-based
hiring procedures but organizational level hiring procedures are based on
personal/friendship ties. In this case the organizational level rules are likely to
trump the macro level rules partly because people are more likely to respond to the
stimuli from more proximate sources (see evidence on this in the next section).
When the macro and mezzo level prescriptions are aligned, the macro level
prescriptions are more likely to be implemented.
Propositions:
1. National level changes may not necessarily change behavior unless
mezzo/organizational and micro level rules and norms are transformed.
2. When higher central/national and lower organizational level
prescriptions clash, the latter are likely to prevail.

Enforcement model of institutions
Another defining characteristic of institutions is their enforceability. Shared
prescriptions can be subject to formal and/or informal enforcement. Rules and
prescriptions enacted by official government authority are backed by the
government‘s enforcement powers, such as administrative and judicial
378

systems/mechanisms. Norms, in contrast, are not backed by the government‘s legal
mechanisms such as judiciary and police. For example a village community‘s
informally shared and enforced norms in the process of organizing a funeral do not
typically intersect with official rules. Informal enforcement is a function of
mechanisms not directly related to official authority, as in the example of the village
community above. Various types of enforcement mechanisms outlined in the
institutional framework above co-exist. For example, the behavior of civil servants
is structured by sets of formal (that is, written and officially enforced) government-
made rules and organizational arrangements they belong to. The bureaucrats‘
behavior is shaped by unwritten norms shared within their unit, organization, or
personal friendship and family circles. Finally, the bureaucrats‘ behavior is shaped
by their cognitive/mental models.
69

Three basic types of enforcement mechanisms corresponding to three
common sources of prescriptions mentioned above could be identified. These
include (1) government-made rules backed by legal enforcement; (2) informal
enforcement of norms by informal organizations; and (3) personal enforcement
through self-help and internalization of prescriptions into one‘s mental models.
Scott‘s (2001) different pillars of institutions – regulative, normative and cultural-
cognitive correspond to these three types.

69
―Mental models are internal representations that individual cognitive systems create to interpret the
environment‖ (North, 1993). Mental models are built and redefined as a result of learning about the
environment and experiences, including interactions with others (ibid).

379

Out of these three, mental models are least visible, followed by norms,
which are still implicit but are internalized and recognized by members of an
organizational arrangement within the boundaries of which those norms operate.
Government-made rules are the most visible. The metaphor of an iceberg could be
used to illustrate this configuration. Figure 6 below synthesizes in a simplified
model key ideas and research discussed above and in the previous chapters.
380

Figure 6: Enforcement Mechanisms Model of Institutions

Several misconceptions among researchers and practitioners exist on the
functions and differences of formally and informally enforced institutions as was
mentioned in the previous chapters. For example, they tend to emphasize the
competing nature of formal and informal institutions as if they were mutually
exclusive alternatives. They also hold that formal institutions are superior to
informal, and that formal institutions are strictly enforced by government and
informal institutions are enforced by informal groups. But, in fact, they often co-
381

exist and have their own unique features and functions that the other cannot always
effectively fulfill, and can equally be used to serve corrupt officials‘ objectives.
Formally and informally enforced institutions indeed have major differences in how
they come into existence and how they have changed. Ellickson (1991) identified
general advantages and disadvantages of both: ―Government-made rules,‖ normally
clear and explicit, can override the parochial norms of close-knit groups
70
that may
favor the members of the group at the expense of outsiders, and thus keep them
from discriminating toward others, have capacity to prevent/control disputes
between such groups, and can be fairer than some norms with regards to minorities,
for example. Norms, on the other hand, tend to be reliable, cheaper in terms of
enforcement (as they reduce the need for legal enforcement), and less time-
consuming (compared to formal government-made rules which normally require
compliance with elaborate procedures, for example in dispute resolution cases),
although they are often harder to recognize for outsiders.
Social norms, compared to government-made rules, are more difficult to
manipulate in pursuit of private interests, because generally social norms
incrementally evolve and change and this process is not under the control of any one
individual or group (Helmke and Levitski, 2004, Ellickson, 1991). Social norms are
sometimes superior to government-made rules, ―both because distant lawmakers

70
―Close-knit group‖ is defined as a ―a social network whose members have credible and reciprocal
prospects for the application of power against one another and a good supply of information on past
and present internal events (Ellickson, 1991, p.181)

382

may be less informed than the norm makers and also because selfish interest groups
can generally manipulate government-made rules more easily than norms‖
(Ellickson, 1991, p. 250), all of which discourage members from taking disputes to
the legal system. Ellickson summarized his findings as follows:
To govern their work-day relationships members of a close-knit group tend
to develop informal norms whose content served to maximize the objective
welfare
71
of group members. This hypothesis suggests that people often
choose informal custom over law not only because custom tends to be
administratively cheaper but also because the substantive content of
customary rules are more likely to be welfare maximizing (ibid, p. 283).

This finding applies particularly well to institutions in countries where corruption is
endemic, the administrative system is imitative, and legitimacy of the state is low, as
illustrated in Kyrgyzstan‘s case in Part II of this study. Comparative review of
administrative systems of many developing countries also lends support to the
observation summarized above: Weak or ineffective enforcement and neglect of
government–made rules (formalism) is indeed one of the pervasive features of
governance systems in developing countries (Heady, 2001).
Government-made rules and social norms also play out differently at
different levels. Government-made rules are pervasive in contemporary societies,
and exist at all levels that fall under government regulation. But such rules mostly
regulate situations and relationships at macro/governance and mezzo/organizational
levels, but focus less on the micro level. Norms also operate at all levels. Their
scope ranges from customary international law to group norms among friends.

71
Ellickson defined welfare broadly as ―all things and conditions that people value‖ (1991, p. 168).

383

Norms tend to be more pronounced at group and organizational levels where face-
to-face interaction and communication is possible and people are dependent on
common pool resources (Ostrom, 2005). Other fields, such as law, also lend
support to the observation that tighter or more cohesive networks (that is, smaller-
scale communities, as opposed to a large group such as nation, for example) are
more successful in generating and enforcing norms to govern internal disputes
(Ellickson, 1991). Research in psychology examining how proximity affects
behavior similarly found that oxitocin – a trust hormone released in the brain – is
generated through face-to-face interaction. They hypothesize that this hormone
serves as ―‗social glue‘ that holds entire families, communities and societies
together, without needing the government to monitor transactions‖ (Zak, 2008).
72

This ―social glue‖ seems to have stronger hold in communities consisting of up to
150 members (Dunbar, 1997, as cited in Howard, 2006, p. 681). Social
psychologist Stanley Milgram‘s (1969) famous studies
73
were among the earliest
experiments demonstrating how decisions are more biased towards the stimuli
which have greater proximity to the subject.
Based on this literature it could be suggested that government-made rules
might be more appropriate for regulating macro-level situations where the proximity

72
Zak (2008) also inferred that this is one of the reasons why it is easier to cheat in impersonal
transactions, as has been demonstrated in the most recent financial crisis in the US.

73
Milgram (1969) found that with light persuasion, the majority (60%) of subjects would administer
shocks up to 450 volts on ―learners‖, not knowing that these shocks where not real. He then
discovered that only about 32% of the subjects who held the hands of learners on the shock plate
were administering shocks in excess of 400 volts.

384

effect dissipates, i.e. ―social glue‖ is not as strong. In contrast, informally enforced
norms can be more effective and efficient at regulating situations where face-to-face
communication is prevalent and the social glue or proximity effect holds.
Another important observation drawn from multiple disciplines is that
despite popular assumptions, government-made rules do not directly shape
behavior, but are mediated through individuals‘ norms and mental models which
shape how those abstract rules play out in practice. Research in organizational
studies suggests that government-made rules – which, as a product of political
consensus, often tend to be amorphous and confusing – are implemented by way of
being filtered through groups‘ and individuals‘ normative-cognitive frameworks
(Edelman and Suchman, 1997). In other words, ―rules in the book‖ become ―rules
in use‖ through organizations‘ and professions‘ rules and norms (ibid).
Member behavior more readily conforms to the normative expectations
embedded in the culture and individuals are more willing to act in ways
desired by the organizations and its members. It is the informal social
structure, rather than the formal, that serves as the primary basis for creating
and sustaining commitment among members of an organization (Robertson
and Tang, 1995).

Government-made rules, as any other external information, are further filtered
through individuals‘ mental models. This is why the same abstract rules will have
different manifestations in different communities and countries because they are
filtered through and are transformed by different sets of norms and mental models.
Sociologists also noted that ―now, it is widely understood that regulative systems
often exert only weak effects and may bring about change not by exerting coercion
385

but by stimulating other institutional mechanisms such as normative and identity
processes‖ (Scott, 2001, pp. 208-209). The literature on representative bureaucracy
also found that bureaucrats interpret and implement policies and government-made
rules through the lens of their own cultural and social backgrounds (Dolan and
Rosenbloom, 2003). Some economists have argued that changing government-
made rules affects behavior indirectly by activating informal structures (North,
1993
74
).
How do these types of prescriptions relate to each other? The influence
among these elements runs both ways – mental models and norms influence how the
rules are perceived and translated into practice; government-made rules also can
shape mental models and norms (Edelman and Suchman, 1997). The link between
mental models and norms seems to be stronger than the link between norms and
rules, especially where the latter are borrowed from outside and have not evolved
internally (Berkowits et al., 2003). Individuals with similar worldviews develop
shared mental models as a result of ―repeated, free, face-to-face, open
communication‖ (Denzau and North, 1994). Norms are thus embedded on mental
models of the members of a group or community who share those norms, because

74
―The [dominant] rationality assumption of neoclassical theory would suggest that political
entrepreneurs of stagnating economies could simply alter the rules [i.e. formal institutions] and
change the direction of failed economies… the difficulty of turning economies around is a function
of… the belief systems of the actors… While the [formal] rules may be changed overnight, the
informal norms usually change only gradually… And economies that adopt formal rules of another
economy will have very different performance characteristics than the first economy because of the
different informal norms and enforcement… Both [formal] institutions and belief systems [i.e.
informal institutions] must change for successful reform since it is the mental models of the actors
that will shape choices‖ (North, 1994).

386

norms evolve molding and informed by mental models of the individual members.
Government-made norms are linked with norms and mental models if those rules
legalize existing norms (as in prohibition of physical violence against other people),
and/or if those rules were created through a participatory process resulting in rules
informed by norms and mental models of the respective community members and
officials (Evans, 2004, Berry et al., 1993).
The iceberg metaphor is therefore a normative one – it portrays the
government-made rules which have organically emerged and/or were built on
shared norms and mental models of individuals subject to that rule. But, in reality,
in many developing countries the content of government-made rules sometimes
clash with norms and mental models of the people. As mentioned before,
Kyrgyzstan‘s civil service rules, for example, require merit-based hiring procedures,
while the widely accepted norms of civil servants and people take it for granted that
government positions are determined based on informal ties. Thus, in countries
where rules are not aligned with norms, the rules are detached from their normative
and cognitive foundation, rendering the rules artificial and largely irrelevant to
practice. Partly, this gap between rules and norms/practice – that Fred Riggs called
formalism, prevalent in developing countries – exists when government-made rules
are imposed top/down and/or copied from other countries without regard to the
norms that are in place and how they influence the way rules play out in practice.
(Such incongruence between rules and norms seems to have widened even in
developed countries in the second wave of reform, embodied in the New Public
387

Management movement, in which some rules informed by business practices and
introduced in the public sector clashed with norms of the latter.)
Based on the above discussion and research, the following propositions
could be advanced:
1. Enforceability of government-made rules is not primarily a function of
the government‟s enforcement capacity (although it is an essential
precondition), but first of all it is a function of congruence between those
rules and informally enforced norms and mental models.
2. When the government‟s legal enforcement capacity is low, and the
prescriptions contained in government-made rules clash with the norms
and/or mental frameworks, the latter two trump the rules.
3. When prescriptions stated in government made-rules are congruent with
the prescriptions stated in norms and mental models, the rules are more
effective.
4. The larger, the less cohesive, and the less interdependent the group is,
the lower is the effectiveness of the norms, and the greater the need for
government-made rules.

Practical Inferences Drawn from These Tools for Institutional Reforms
The sections above proposed a new conceptual framework for institutions,
and illustrated the key components of institutions and the linkages among those
388

components through the institutional matrix and nested and enforcement models of
institutions. Then it drew six propositions from the two models.
How can these analytical tools help to better understand and address
challenges associated with institutions and reforms? This section applies these tools
to diagnose the key problems observed in governance institutions and to draw
inferences for practice to illustrate the utility of those tools (testing those six
propositions is beyond the scope of the study.) Specifically, the two key problems
that institutional reforms have struggled to address in Kyrgyzstan and elsewhere are
the poor enforceability of government-made rules and the issue of corruption. The
insights from this example apply to other countries as well given the similarities of
governance systems, institutions, and institutional reforms of many developing
countries.
One of the common challenges associated with institutions and reforms is
lack of enforcement. As evident in parts I and II, many government-made rules have
been adopted to implement public sector reforms, but few are enforced. Why? As
discussed in Part II, various factors contribute to weak enforceability (i.e. high level
of formalism), including limited resources; weak bureaucratic capacity; detrimental
example set by the political leadership who themselves ignore government-made
rules; and frequent changes in government-made rules. In many other countries
experimenting with administrative reforms, formal administrative structures often
serve as façades while the actual behavior remains a latent function of other
institutions (Riggs, 1964, Baimyrzaeva, 2005). This is more evident where central
389

government enforcement is weak. Most developing countries‘ governance
institutions are indeed characterized by weak central control and enforcement.
Pervasive institutionalized (systemic) corruption is another major problem in
Kyrgyzstan and many other developing countries. The sources of corruption range
from system-wide to more localized. Systemic or institutionalized corruption in
Kyrgyzstan has roots in the emergence of the corrupt network of oligarchs that has
significant influence on major political and economic decisions in the country; the
imbalanced political system where government authority is concentrated in the
hands of the executive; shared norms and assumptions among the public and public
servants that the government is a source of personal rent; and the assumption of
primacy of needs and interests of friends and family over public‘ interest. More
manageable factors contributing to corruption include low salaries in the face of
economic hardship; lack of clear job descriptions, legal complications, and frequent
changes in government-made rules; lack of transparent policy/decision making
process, and so on.
The problems of poor enforceability of government-made rules and
institutionalized corruption are related and reinforcing, as has been discussed in
Kyrgyzstan‘s example in Part II. Both can be analyzed from the lens of the nested
model, the enforcement model, as well as the propositions drawn from them.
The nested model and propositions drawn from it when applied to
institutional reforms suggest the following insights in terms of addressing the two
problems mentioned above. Currently, donors‘ institutional reforms are
390

predominantly focused on changing national government-made rules. But support
for these reforms and the momentum dissipates before organizational level
government-made rules and norms are altered. The nested model suggests that rules
at different levels of the governance system also need to be congruent for the
reforms to be effective. In Kyrgyzstan, for example, formal institutional changes
promoted at the central level rarely trickle down to the organizational and personal
levels, as has been the case with civil service reforms. In contrast, a few reforms in
Kyrgyzstan that directly focused on changing local level institutions, such as donor
reforms provided in support of land management at municipal levels in separate
cities, had better success than those initiated at central levels (Kaganova et al. 2008).
The research on the effect of proximity in determining behavior suggests
that when officials are detached from their constituents by way of their lifestyles
and work environments, they may be more prone to be devoid of moral empathy
with people and shift responsibility higher along the hierarchy (Milgram, 1969).
This is one of the reasons why an impersonal bureaucratic system contributes to the
mutual alienation of people and authorities (Weber, 1922) and aggravates
bureaupathologies (Caiden, 1991). This inference is especially important in
governance systems where corruption is prevalent. Flattening or opening
government organizations by ensuring greater face-to-face communication may be
one of the ways of addressing this problem. Hence, more efforts need to be directed
at strengthening and opening up local level institutions to increase officials‘
responsiveness.
391

Using the enforcement model to assess the effectiveness of donor-promoted
institutional reforms in terms of their ability to address poor enforceability of rules
and high levels of corruption suggests that the donors‘ current measures are not only
ineffective, but also may work against the desired purpose. As reviewed in Part I,
poor enforceability of government laws, rules, and regulations has been on the radar
of donors for a limited time. In the second wave of reforms, for example, the
extreme form of neoliberal reformers influencing donor policies held that instead of
regulating and enforcing rules, governments would be better off letting the private
sector self-regulate through competition. In the third wave of reforms, rule of law
and the government‘s regulatory capacity gained attention as key ingredients of
good governance.
Corruption, using the enforcement model, also could be diagnosed as a
design problem, resulting from the misalignment of formally and informally
enforced prescriptions – among the government-made rules, norms, and mental
models. In most countries with stronger traditional or collectivistic mores,
government-made rules prescribe that officials and civil servants treat citizens
equally. But, bureaucrats and officials in more traditional societies often obey the
prescriptions of their social groups rather than the prescriptions stated in
government-made rules. In other words, according to the norms that bureaucrats in
traditional societies are socialized into, they are expected to give preferential
treatment to their kin. In such situations, following the social norm is labeled as
patronage and corruption, but little is done to address the discrepancy among these
392

conflicting prescriptions at the design level. The typical anti-corruption measures
mentioned before have had limited effect because they attempt to address the
consequences or symptoms of this problem, but ignore the roots of the problem –
the norms that enable corruption. When such norms remain intact, changing
government-made rules does not help; and if anything, the changes in the latter are
used and molded to fit into the prevailing norms. The hope that those mores would
change of their own volition if government-made rules are changed does not
materialize given that both the public and the officials share similar norms.
Currently, donors are relying on a combination of approaches to improve a
government‘s effectiveness, including the enforceability of government-made rules,
and the ability to fight corruption. One of them is the ―best practices‖ approach,
which assumes that recipient countries‘ governance institutions can be fixed by
copying institutions and best practices from rich countries. Another approach is
capacity development/building, which informs donors‘ efforts to strengthen the
government‘s capacity through organizational/institutional restructuring, functional
reviews, training, and transfer of skills and equipment.
The effectiveness of these approaches is questionable in light of the
discussion above. The commonly-used approaches are based on the assumption that
enforceability of law depends on the extent to which government institutions in
recipient countries resemble those in developed countries as well as on the
government‘s enforcement capacity. These assumptions resulted in measures that
make up technical assistance – changing government-made rules and organizations,
393

providing training and technical advice, etc., – without much success as reviewed in
part I and II. If anything, in Kyrgyzstan, at least, such measures generated the
opposite side effects: they led to further proliferation of poorly enforceable
government-made rules; they also enabled vested interests to manipulate the reforms
to tailor institutions to their own interests, and opened the doors for corruption.
The propositions drawn from the enforcement model suggest different sets
of measures for institutional reforms. The model suggests that enforceability of
government-made rules is not primarily a function of the government‘s enforcement
capacity (although it is an essential precondition), but first of all it is the function of
congruence between those rules and informally enforced norms and mental models.
The implication of this proposition is that government-made rules have to either
build on existing norms, and/or that the norms need to be changed along with the
rules, to ensure they are congruent. Indeed, the countries that have had success with
building new institutions – such as Japan in the aftermath of WWII (Westney,
1987), and even the way Soviet Central Asian institutions were built, as reviewed in
chapter six – did exactly that.
When looked at from this lens, donor-promoted reforms that rely on
importing formal institutional designs from OECD countries actually seem to
increase the misalignment of norms and government-made rules. Thus, it becomes
even more challenging to enforce rules, given that government capacity in these
countries is already low. Legal changes are developed by overworked civil servants
and modified and passed in nontransparent environments which make reforms
394

vulnerable to misuses. Donors/consultants typically work under tight timelines with
limited information about local conditions. Both work under political pressures to
produce and show results. As a result, copying from an existing model becomes a
quick solution, but not always the most effective one. The enforcement model
suggests that in this situation changing government-made rules would be akin to
replacing the tip of the iceberg, whereas the basis of the iceberg does not move. The
model suggests that changing government-made rules is insufficient; and that in
addition to clear legislation, social norms and mental models have to be
concurrently changed.
In sum, the enforcement model suggests that if behavior is a function of
government-made rules, norms, and individual mental models, reforms should focus
not only on legal/regulatory elements but also on normative and cognitive aspects of
institutions. Effective institutional change appears to involve changes in rules,
norms, and mental models all together, resulting in their effective alignment. It is
their dynamics – e.g. how they interact, whether they are cohesive (especially the
values and assumptions underlying them), whether they reinforce or undermine each
other – that seem to determine whether reforms succeed in changing behavior of the
target population or not.
Indeed, one of the distinct features of advanced countries with effective civil
service systems and relatively lower corruption is that they have invested in
developing and maintaining a distinct professional ethos of civil servants through
rigorous education, socialization, and other measures (Heady, 2001).
395

Unfortunately, many of the reforms in developing countries, such as Kyrgyzstan, at
best, focus on short term ad-hoc training and legal changes, without a concerted
effort to build and sustain the changes in normative aspects of civil service
institutions. To increase effectiveness of civil service reforms, practitioners could
do a better job by targeting the normative and cognitive aspects of institutional
change along with regulative elements. This could be done, for example, through
greater attention to education and social-cultural and professional development of
civil servants.
Thus, reforms need to be based on careful study and understanding of the
basic norms and assumptions, and should attempt to introduce government-made
rules more aligned with norms and mental models. Better alignment of different
components of institutions could increase enforceability of new or altered
institutions, especially in countries with weak government capacity to monitor and
implement government-made rules. Obviously, studying norms and assumptions is
frequently difficult, and not all of them mesh well with human rights (the institution
of bride kidnapping in Kyrgyzstan is one such example). This is another reason for
carefully attending to norms and changing them when needed.
Attending to the role and changes of mental models is especially important
considering that formal rules have lesser legitimacy in most post-colonial countries
(Roy, 2000). The colonial institutional structures actually reinforced local tribal
developments, instead of enhancing individual and egalitarian structures compatible
with Western-style democracy (Mamdani, 1996, as cited in Jenkins and Plowden,
396

2006, p.17). Repeated misuses of law and formal mechanisms by external
occupants and local leaders taught individuals to distrust formal institutions and rely
more on social norms, even when the latter had dysfunctional features. Behavioral
economics supports this notion that individuals tend to follow ―ours‖ but oppose
―others‖ (Arieli, 2009). These mental models seem to be further reinforced by
failed reforms and continued misuses of formal authority by corrupt officials.
How do norms and mental models change? The organizational
development/learning field, briefly mentioned in chapter eight, suggests focusing on
informal means such as leadership style, participation in decision-making, greater
autonomy and discretion, and shared norms and values (Robertson and Tang, 1995).
Formal and informal leadership has received attention in change literature. The
education system, media, and symbols and artifacts used in a complementary
reinforcing fashion can also help build shared values and norms. A note of caution
is in order. These measures have been used and misused by socialist and
authoritarian regimes (as was pushed to the extreme in the former USSR), and
reformers have to be careful of going too far in cultural engineering. At the same
time, a certain level of social cohesion that rests on commonly accepted and shared
norms and values, on which consensus exists, seems to be essential for building a
stable and effective social order. And reformers cannot afford to ignore this aspect
of institutional change.
Participation and dialogue seem to be among the more effective tools of
developing norms and rules that are aligned with mental models of individuals, in
397

addition to increasing political accountability. When government-made rules are
imposed top-down, and, moreover, simply borrowed from other countries without
regard to existing norms, they are not always easily aligned with norms and mental
models. An interesting parallel could be drawn between learning and institutional
reforms to illustrate this point, because both processes ideally would result in altered
(rewired) mental models. Psychologists and educators found that the ―brain‘s
activity is in direct proportion to its engagement with actively stimulating
environments‖ (Ewell, 1997, see also Howard 2006, Medina, 2009). Learning
exercises requiring direct engagement are found to be more effective in altering (or
rewiring) the learners‘ mental models, compared to listening to a lecture (ibid).
Similarly, transformation of mental models aligned with rules may be also less
feasible when subjects are not involved in the process of creation of rules. Studies
of participatory institutional reforms suggest that reforms involving widespread
public participation have been more effective compared to traditional top-down
processes (Pateman, 1970, Sen, 2000 and 2002, as cited in Evans, 2004, see also
Yankelovich, 2007). At the same time, those institutional reforms that relied on
some form of participation without in-depth or widespread engagement have not
been as successful (Civic Engagement Institute (CEI), 2004). Daniel Yankelovich
suggests that the key to effective change is exposing underlying assumptions – i.e.
mental models – and subjecting them to conscious and critical review (Yankelovich,
2007). Dialogue can be conducive to this (ibid, see also Senge, 2006).
Organizational development literature lends support to this observation: the
398

behavioral change of individuals and organizations is a function of the change in
mental models (Senge, 2006) or ―double loop learning‖ (Argyris, 1977). Such
incremental and steady participatory process that emphasizes dialogue may ensure a
greater fit among these three components of institutions than the current ―best
practices‖ methods.
At the very least, institutional reforms need to be designed by individuals
immersed in the recipients‘ norms and culture. Indeed, the donor-promoted public
sector reforms had better outcomes when they involved local experts in the process
of designing and implementing institutional reforms promoted by outsiders (Jenkins
and Plowden, 2006,Westney, 1987). However, leading donors such as the World
Bank tend to not involve local experts in projects in their own countries (Shirley
2006, personal communication).
Furthermore, addressing corruption should not be confined only to popular
reactive measures such as changing government-made rules, creating new
organizations, or even prosecution or shaming – which may add to devaluation of
government-made rules – but need to be complemented by proactive measures at
the design level as well by addressing the norms. At present, government-made
rules are designed without regard to norms and mental models of the recipient
societies and groups. There is also little concern with how the reforms are affecting
those norms and mental models. This study suggests that institutional reforms, in
order to be effective, need to (1) be informed by and foster shared norms and mental
399

models; (2) design formal government-made rules and organizations aligned with
informally enforced norms and mental models.
Ultimately, for donor-promoted institutional reforms this means that donors
may be more relevant and effective in helping recipient countries not by directly
involving themselves in rewriting or crafting new institutions. Rather, they could
help recipient countries (1) establish participatory procedural institutions – such as
those pertaining to the policy making process – instead of focusing on changing
substantive rules; and (2) concentrate more efforts in educational institutions that
would instill stronger public service values among civil servants and officials. This
way, effective participatory procedures and more values driven cadres may lead to
more meaningful and locally tailored institutions, which can be incrementally
adjusted.
Ironically, much of the research and practice concerned with decentralization
has been focused on the instrumental value of participation and decentralization
such as competition, control, and lowered costs (World Banks, 1997a, 2002a.). The
prevalence of rational choice model of individual behavior contributed to the
tendency of academics and practitioners to emphasize instrumental logic, leading to
a focus on the watchdog and checks and balances function of participation. But this
model fails to account for the normative and cultural-cognitive dimensions of the
individual, and thus the effect of participation on the norms and mental models has
been overlooked. Meanwhile, it is precisely participation in decision-making that is
the most powerful means of changing norms and mental models, and also increasing
400

accountability. It is hoped that this discussion will draw attention to the potential of
decentralized and participatory institutional systems to generate and maintain shared
mental models, norms, commitment, and interpersonal trust in the context of donor-
promoted institutional reforms. In addition, it must be emphasized that reform of the
policy making process and institutions has been the most neglected part of public
sector reform by donors.
Greater attention to education of civil servants is also needed, but that
objective has been rather scattered. There has also been much talk about the need to
tailor institutions to their context, but without guidance of how to actually go about
it. The inferences generated from the tools and propositions in this chapter could
help to substantiate these important issues, give more specific tools to practitioners,
and remedy the oversights.

Conclusion
This chapter addressed the disconnect between international development practice
and the broader pool of knowledge from different disciplines. Specifically, it
addressed two important gaps that have contributed to the limited success of donor-
promoted institutional reforms in developing countries. These gaps are (1) a lack of
synthesis of research in institutions across disciplines, and (2) a lack of
comprehensive understanding and the application of that knowledge by donors.
Together, these gaps represent a deficiency of practical knowledge.
401

It proposed a new framework for institutions drawing from the strengths of
the existing studies from various disciplines, including from public administration,
political science, sociology, economics, organizational studies, law, and psychology.
The framework elaborated on key components of institutions, defined as sets of
shared and enforceable prescriptions and different forms of organizational
arrangements that structure behavior and relationships among individuals,
organizations, and/or their systems. This definition bridges the conflict between the
rule- and organization- centered definitions, as well as the use of the term in practice
and in academia. This definition also captures the layered nature and multiple
enforcement mechanisms of institutions.
The framework was also used to build two models of institutions to explore
the dynamics between the levels of institutions. These models generated a number
of propositions that should be further tested. If verified, these tools and propositions
could help to improve the outcomes and relevance of donor-promoted institutional
reforms.
402

Chapter 11

Conclusion

This study was undertaken to identify how donor-promoted public sector reforms in
developing countries could be improved in order to generate more beneficial
outcomes. Donor programs offer great potential in terms of improving
administrative institutions in developing countries where local political will is often
weak and the public is frequently disempowered and unlikely to initiate or
participate in changes. This potential is not being realized to its full promise.
Given the increased recognition of the importance of effective public sector within
the field of development – in both theory and practice – over the last decade, and
given the poor track record of reforms in the past, this study established what
researchers and practitioners can learn about institutional reform:
1. through systematic analysis of the five decades of donor-promoted public
sector reforms in developing countries,
2. from the analysis of how those donor-promoted public sector reforms played
out in a specific country context, and
3. from interdisciplinary scholarship on institutional change.
The three above-named areas have each been addressed the preceding chapters.
This chapter provides a summary and discussion of the findings of the present
research. Section one, below, provides a summary of the study‘s key findings. The
remaining two sections discuss the contributions of this study to practice and
403

research. The chapter then concludes with a discussion of future research and
questions that arise as a result of this work.
This study has identified and addressed the disconnect between international
development practice and the broader pool of knowledge from different disciplines.
Specifically, it found that two important gaps have contributed to the limited
success of donor-promoted institutional reforms in developing countries. These
gaps are (1) limited synthesis of research in institutions across disciplines, and (2) a
lack of comprehensive understanding and the application of that knowledge by
donors.
75
Together, these gaps represent a deficiency of practical knowledge.
Reforms designed and promoted without adequate understanding of institutions and
institutional change may be harmful to recipient countries, given that the latter‘s
decisions are made by poorly accountable officials in nontransparent environments.
Kyrgyzstan‘s reforms illustrate the importance of this lesson.
To address these gaps –a lack of synthesis of institutional theory and the
disconnect between the latter and the practice – the study has employed a new
theoretical framework, two institutional models, and several propositions on
institutional change. These tools are based on the synthesis of existing research
from a variety of disciplines relating to institutions and institutional change. The
key proposition is that the enforceability of government-made rules is primarily a
function of the alignment of rules with norms and mental models of individuals in

75
As mentioned above, new institutional economics was the only strand of institutional theory that
influenced donors‘ practice, but it has limitations such as the inability to account for normative
aspects of institutions.
404

that setting. This congruence is more important than government‘s enforcement
capacity, especially in developing countries where such capacity is often missing.
For practitioners this means that reforms need to focus on increasing such
congruence between rules, norms, and mental models. Ironically donors‘ ―best
practices‖ approach can increase incongruence between norms and rules by copying
rules and organizational forms from other societies with different sets of norms and
mental models. It is therefore expected that one way of increasing such congruence
would be to help recipient countries to reform their procedural institutions instead of
attempting to design substantive institutions for them. Participatory policy making
institutions, for example, may have greater chance of generating government rules
and organizations more aligned with norms and mental models of the public.
Further implications are discussed in the concluding section of this chapter.

Summary of the Key Findings of the Study
Part I of this study mapped and analyzed the record of the five decades of
donor-promoted public sector reforms in developing counties, with specific
attention to the role of ideas and theories informing reforms. Three waves of
institutional reforms were compared according to the ideas and theories that have
informed reforms, how they informed the content and approach to reforms, and
what outcomes they generated. This was made possible by locating each reform
within its respective policy environment. This review revealed that analysts of the
first wave of institutional reforms – from the 1950s to 1960s – had already distilled
405

a valuable set of lessons on the content of reforms and the way they have been
promoted. Namely, they found that successful institutions should: (1) be systematic
(e.g., transform the overall system to have an impact, instead of focusing on isolated
parts of the system); (2) be participatory (e.g., involve beneficiaries‘ input at all
stages of the reform process as opposed to being top down, supply driven, and
externally determined); (3) be tailored to recipients‘ unique context and needs as
opposed to importing formal models from select developed countries; (4) attend to
the reforms‘ actual outcomes, impact, and consequences, instead of focusing mainly
on inputs and outputs; and (5) be based on a good understanding of the process of
artificial institutional change, design principles, and consequences of such
interventions as opposed to guesses and unfounded assumptions and beliefs. The
first wave also revealed that administrative reform is not a technical process; that
reformers have to account for a state‘s political and social context and the dynamics
that arise in relation to such forces. Last, analysts learned that administrative reform
involves the comparatively straightforward aspect of changing formal laws,
organizations, and procedures, but also the much more challenging task of inspiring
shifts in attitudes, mindsets, and the cultures of those involved.
Unfortunately donors, disappointed with their failed experience and
unwilling to challenge their underlying assumptions, were reluctant to directly apply
lessons learned from earlier reforms or address obstacles to reforms. In particular,
they neglected the need for further research in the area. Donors ultimately moved
406

away from institutional reform as their primary focus and moved to focus on
projects that offered more tangible outcomes.
Academia‘s response was very similar to that of the donors. Although the
issues listed above were identified in the research agenda of comparative public
administration scholars at the time – 1950s through the 1960s – they did not receive
sufficient support and understanding. In fact, just the opposite occurred. Scholars
such as Fred Riggs, who raised that generation of development scholars, were
marginalized and harshly criticized for challenging the dominant ethnocentric
assumptions underlying research and policy. In the rest of the social sciences,
especially in sociology and organizational sciences, institutional theory evolved
rather rapidly. Few made the connection between the practice of institutional reform
in international development and institutional theory in the social sciences. The
comeback of institutional theory in international development is associated with the
third wave of reform, when economists ―rediscovered‖ institutions.
After a transitional period in the 1970s, the second wave of reforms was
introduced in the period between the 1980s and the early 1990s. In contrast to the
first wave of reforms, which were intended to build government institutions, this
second wave was concerned with cutting and downsizing government institutions
and capitalizing on the energy of market institutions to bring about development.
This wave of reforms painfully rediscovered the lessons from the first wave of
reforms. Such painful lessons once more underscored the importance of effective
407

government institutions and brought the necessity for improvement of this sector to
the forefront of donors‘ development promotion agenda.
Although donors have slowly started to acknowledge and attempt to remedy
these limitations in the third, most recent, wave of reforms, such efforts have mostly
been confined to changes in policy documents that have yet to be fully translated
into practice. While institutional change may require long timeframes, this inability
to change how donors do business also stems from the fact that reformers have
neglected the biggest lesson of all: there is a deficiency of practically applied
knowledge. This critical deficiency fuels other commonly mentioned obstacles to
reforms, such as perverse incentives at both ends of the aid system. As summarized
in the beginning of the first chapter of this study, practitioners still lack a sufficient
and adequate understanding of institutions and institutional change processes that
are critical to informing efforts at deliberate institutional reforms. Interestingly, at
the same time the social sciences have seen a surge of interest in institutions and
institutional processes. But the research community has not been able to provide
adequate practical guidelines to inform reforms. This is partly because the study of
institutions has often been fragmented, with different disciplines focusing on
different aspects of institutions. In addition, while there has been a fair amount of
intersection between practitioners of organizational development and institutional
theory, few have attempted to generate applied and practical inferences from
institutional theory for the benefit of international development practitioners.
408

In view of this deficiency in practical knowledge, official development
assistance provided in the form of technical assistance to help developing countries
reform their institutions is still informed by a number of unsupported assumptions.
These assumptions go back to the founding of international development as a field,
on a belief about the potential for Western knowledge and expertise to transform
developing countries out of their backward status into modernity. The assumptions
are still alive and well due to their embeddedness in the architecture of the
development industry. In this manner, the initial assumptions of the field have
become self-reinforcing. These assumptions include the belief that donors know
how to build effective institutions in developing countries; that Western models of
institutions are universally applicable and superior to recipients‘ local institutions;
that changes of laws and organizations at the central level will have the most
impact; and that one-time changes in laws and organizations will result in expected
institutional change. While donors‘ critics, and more recently donors themselves,
have begun to subject these assumptions to critical review, it has been hard to
reverse them because the very existence of official development agencies depends
to some degree on these assumptions. The prevalence of such assumptions in
informing such reforms renders them vulnerable to misuse and abuse by
unaccountable officials operating in non-transparent environments. This
phenomenon was demonstrated in the case of Kyrgyzstan in part II of this study.
Part II of this study - chapters six, seven, and eight – illustrated how these
still unsupported assumptions continue to inform the content and process of donor-
409

promoted public sector reforms and how they are played out on the ground. The
example of Kyrgyzstan‘s public sector reforms demonstrates how such reforms have
been carried out with extensive donor support for the last 20 years.
Donors have made significant efforts to reform and build effective public
sector institutions in Kyrgyzstan over the past 20 years. They have managed to
keep government focused on reforms, and have invested large amounts of funding
to provide technical assistance in the form of policy advice, training, and equipment
to facilitate the effective functioning and reform of administrative institutions.
Their accomplishments have been particularly notable in technical aspects, such as
e-governance reforms.
The most salient problems reformers of public sector institutions have faced,
as illustrated in the Kyrgyzstan case study, are of a political and normative nature.
Kyrgyzstan‘s political leadership often lacks accountability to the public, and
officials‘ power is rarely checked by democratic mechanisms. Their resistance to
substantive public sector reforms ensures that the administrative system – which is
often referred to as an ―administrative resource‖ – remains under their control. In
addition, in Kyrgyzstan, as in many developing countries, changes in laws do not
translate into changes in practice because governments often have poor legitimacy,
public service as a value is non-existent, and using public office to serve one‘s
interests and the needs of the friends and family has been the norm. Not
surprisingly, donors‘ reliance on altering laws and formal organizational structures
and providing short-term training has not addressed such obstacles and has similarly
410

failed to positively affect actual practices. Although donors realize the limits of the
conventional approach, their strategies remain roughly the same.
Donors‘ efforts in Kyrgyzstan have been undermined not only by the lack of
political will on the ground, but also by several drawbacks in their approach to
reforms. Common institutional constraints in donor-recipient relationships and
donor industries, such as limited resources, perverse incentives, and donors‘ non-
interference/neutrality principle, are further aggravated by a poor understanding of
recipients‘ institutions on the ground and how institutions change.
Part II of this study also found that unjustified assumptions about the nature
of institutions and institutional change, combined with a poor understanding of the
institutions in the recipient country, result in series of limitations in the process and
design of donors-promoted reforms. The key limitation of the latter was that
donors‘ proposed measures for reforms have been fragmented and incomplete – that
they overlooked political and normative aspects of the institutional change process.
Such interventions, introduced in the nontransparent policy environment of
Kyrgyzstan, where policy makers face little accountability, not only limited the
effectiveness of donor interventions, but also contributed to unintended side effects
by enabling officials and their friends and family to use reforms to advance their
own interests. Because Kyrgyzstan‘s policy environment and governance
institutions have a lot in common with other developing countries – as is the case
with the reform policies of leading donors – the findings from this case study may
have value for understanding how these processes apply to other countries as well.
411

Part III therefore presents some propositions to address the deficiency of
practical knowledge. Specifically, chapter nine surveyed the interdisciplinary
institutional analysis literature and found that the existing analytical tools are not
entirely suitable for analyzing the complex case of donor-promoted public sector
reforms in developing countries, primarily because different disciplines have
focused on different aspects of institutional reforms. For example, changes in laws
and organizations are perceived very differently in the fields of law, public
administration, and political science. Change in the normative aspects of
institutions has received the most attention in the organizational
development/behavior field (Argyris, 1977, Senge, 2006). Change in mental models
has been studied in greatest depth by researchers in education (inter alia, Ewel,
1997) and psychology (Howard, 2006). But, due to limited disciplinary cross-
pollination, few have synthesized relevant research from these disciplines. Even
fewer have studied the interactions among laws/organizations, norms, and mental
models in the context of donor-promoted institutional reforms in the development
field.
Hence, the two key factors explaining why practitioners feel they do not
have sufficient practical knowledge on institutional reforms are that, institutional
theory has been fragmented in social sciences (i.e. different disciplines focused on
different aspects of this phenomenon), and few have applied this knowledge to
generate practical inferences for donors promoting institutional reforms in
developing countries. These factors have added to the difficulty of understanding
412

institutional change processes and seem to have limited donors‘ contribution to
addressing the challenges of institutional reforms in the field of international
development.
Chapter ten proposed a more comprehensive conceptual framework that was
elaborated using an institutional matrix and two models of institutions. The
sharedness/nested model illuminates how institutions are nested and describes the
dynamics among the different levels of institutions. The enforcement model further
illustrates how components of institutions interact and how rules are enforced. The
tools draw from the synthesis of empirical and theoretical scholarship from relevant
disciplines. These tools were then applied to diagnose the key challenges in
governance systems and reforms – poor enforceability of government-made rules
and systemic corruption – in Kyrgyzstan and many other developing countries. A
set of recommendations have therefore been generated for addressing the above
problems, and improving reforms overall. Such recommendations hold potential for
contributing to improved practice.

The Study’s Potential Contributions to Practice
It is widely acknowledged that the best practices model does not work, and
reforms and institutions need to be tailored to the context and actual needs of
recipient countries. Yet the best practices model is still alive and well, partly
because no better alternative has been proposed in its place.
413

This study has proposed a new comprehensive framework of institutions and
with that a new way of thinking about institutions. The framework elaborates on key
components of institutions. In this manner, institutions are defined as sets of shared
and enforceable prescriptions and different forms of organizational arrangements
that structure behavior and relationships among individuals, organizations, and/or
their systems. This definition bridges the conflict between the rule- and
organization- centered definitions, as well as the use of the term in practice and
academia. This definition also captures the layered nature and multiple enforcement
mechanisms of institutions. The framework was also used to build two models of
institutions to explore the dynamics between the levels of institutions. These
models generated a number of propositions that will be the subject of follow-up
research. If verified, these tools and propositions could help to improve the
outcomes and relevance of donor-promoted institutional reforms.
The nested model proposed that, that among the various levels of
institutions, those at the lower levels trump those at higher level when they clash.
For practitioners this means that changes in national level institutions may not
necessarily change behavior unless institutions at the organizational and local levels
change. The alignment of rules across these levels is therefore essential.
The enforcement model describes how institutional enforcement
mechanisms interact. It proposes that, contrary to common assumptions within the
donor community, the effectiveness of institutions depends neither on the extent to
which it replicates the models in developed countries, nor solely on the power of
414

external/government enforcement. More importantly, the effectiveness of
institutions is a function of the extent to which rules are aligned with the norms and
individuals‘ mental models. When government-made rules/organizations are
imported from the outside, the professional ethos of bureaucrats, upon which those
rules rest, are not similarly imported. Instead, the government-made rules are
imposed on a different set of norms and mental models of bureaucrats in recipient
societies, which results in misalignment of institutional components. Thus, when
formal government-made rules are not supported by the norms and mental models,
then government-made rules play out in practice according to the prescriptions
contained within local norms and mental models.
Hence, legal changes alone are not sufficient for institutional change; the
latter requires wholesale changes and alignment of prescriptions contained in all
three: in government-made rules, norms, and mental models. In Yankelovich‘s
words, you can‘t change behavior based on norms by government-made rules; ―you
have to fight norms with other norms.‖(Kleiner, n.d.) Ideally, the change process
should be participatory because stakeholders‘ mental models transform best through
direct engagement. While identifying and changing norms and mental models is a
challenging task, and must be approached with extreme caution, this is not an
impossible task. This has been demonstrated at the organizational level, as discussed
in chapter nine. More recent studies involving public participation in institutional
reforms, discussed in chapter 10, also lend some support to the feasibility of
aligning norms and mental models with rules. But further research is needed to
415

better understand changes in norms and mental models in the context of governance
reforms, given that macro/governance level changes may be different and more
challenging from mezzo/organizational level changes (Sibeon, 2004).
This study has further inferred that donors probably cannot aid recipients
through grand and sweeping reform designs, as has been common practice for the
past five decades. Donors seldom have a good understanding of the intricacies of the
complex institutional reform processes or the institutions of recipient countries. The
historical overview in Part I demonstrated the extreme difficulty of designing
targeted and implementable institutional reforms at governance level.
At the same time donors have an important role to play in countries where
political will for reforms is lacking. In such a system, the public is frequently
disillusioned and disempowered to demand and act on changes. In this context
donors could have a greater potential for positive impact in developing counties
through fostering incremental changes. For example, donors‘ assistance could
better employed in establishing participatory procedural institutions – i.e. promote
reforms to help developing countries build participatory policy making process –
instead of focusing on changing substantive rules. In addition, donors could
concentrate more efforts in their assistance on educational institutions to inspire and
maintain stronger public service values among civil servants and officials. In this
way, effective participatory procedures and more values driven cadres may provide
more meaningful and locally tailored institutions, which may then be adjusted
locally.
416

As mentioned above, this work has also synthesized the lessons learned from
five decades of donor-promoted institutional reforms in developing countries. These
lessons can be useful for practitioners and students of other types of institutional
reforms ranging from nation building to organizational development across
countries. The findings of this study do not imply that the existing measures are not
relevant. Rather, when viewed from the lens of the new institutional framework,
existing measures are incomplete because public sector institutions, especially
administrative institutions, are political and normative by nature and these features
must be accounted for. This study proposed tools and recommendations to account
for such features. The proposed measures are therefore intended to complement the
existing measures and correct their inherent biases, not replace them.

The Study’s Contributions to Research
The study makes several contributions to the literature on institutional reform and
institutional analysis. Overall, the study‘s strength is that it has synthesized
empirical and theoretical scholarship from a number of disciplines including public
administration, political science, sociology, organizational theory, law and
psychology. Bridging comparative public administration with institutional analysis
scholarship enriches both fields and generates new propositions for researchers and
practitioners that can be further tested and elaborated.
The substantive methodological and theoretical contributions of the study
are the following. First, the example of Kyrgyzstan offers a substantive contribution
417

to comparative public administration. This is an area where this country so far has
received scant attention. Second, in terms of methodology, the study has employed a
novel approach for systematically analyzing existing knowledge on public sector
reforms across time. A comparative analysis of the three waves of reforms to
improve our understanding of public sector institutions is valuable because ―without
the capacity to undertake systematic, comparative institutional assessments,
recommendations of [institutional] reform may be based on naïve ideas about which
kinds of institutions are ―good‖ or ―bad‖ and not on the analysis of performance‖
(Ostrom, 1996, p. 41). The three waves of public sector reform have not been
analyzed as systematically as has been done here. The analysis identified a number
of unfounded assumptions (myths) underlying donor practices that have
accumulated over several decades, subjected them to critical review, and proposed
more empirically-grounded propositions on institutional change.
Third, in terms of theoretical contribution, the institutional matrix proposed
in chapter ten can be useful for comparative public administration, given that a
notable dearth of suitable theoretical frameworks is one of the factors hindering
further advancement in comparative public administration as a discipline (Jreisat,
2005). The conceptual framework of institutions can also be a useful tool for
comparative studies in other social sciences, including comparative political science
and comparative policy. The framework falls within the structuralist school, and
addresses one of the main criticisms of the latter. The structuralist perspective in
comparative political science and public administration has been criticized for its
418

inability to include actual phenomena that fall beyond the formal structures, given
the formalistic institutional environments in many developing countries (Heady,
2001).
Further, the study has advanced the debate in the development literature over
whether external aid harms or benefits developing countries. Much of the debate so
far has been based on the assumption that aid is homogenous and its effect is the
same across different countries and interventions. Some studies indicate that not all
types of aid hurt poor countries, but precisely the technical assistance (Ear, 2005).
But no in depth study examined how specifically technical assistance aid can be
detrimental to recipient countries. Furthermore, while many donor reports admit
that their institutional reforms did not succeed in delivering expected outcomes,
almost none of them examined what actual changes the reforms triggered. If
reforms often do not achieve their expected outcomes, and if the quality of
institutions is the key determinant of governance quality, how do the failed reforms
reshape existing institutions in recipient countries? The case study of Kyrgyzstan
found that donor-promoted reforms may contribute to the creation of dysfunctional
and corrupt institutional systems, given that in nontransparent environments of the
recipient countries, reforms can be used to advance the personal interests of
unaccountable officials.
Ultimately, this study draws attention to the impact and importance of
deficiencies in practical knowledge as a key problem that is limiting the
effectiveness of donor-promoted institutional reforms. This gap has not received
419

sufficient attention in the literature. The literature on aid effectiveness tends to
focus more on cultural and structural limitations, as well as perverse incentives to
donors, recipients, and middle-men. Yet, rarely has anyone offered an in-depth
study of how deficiencies in practical knowledge affected the outcomes of the
reforms. The study found that other obstacles in the aid system – for example poor
accountability of both donors and recipient governments, and recipients‘ weak and
poor enforcement capacity – are aggravated by the knowledge deficiency.
Therefore, the study suggests that addressing the deficiency of practical knowledge
may offer a more cost-effective window for introducing change in this complex and
varied system in and around aid delivery.

Future Directions for Research
The present study has developed analytical tools and propositions that are designed
to address some of the challenges and limitations of the donor-promoted
institutional reforms in developing countries. As such, these efforts provide models
that did not exist prior to this study. These models offer opportunities for further
testing and refinement. Such analyses represent a necessary and useful further
contribution to our understanding of the practices listed above.
Public participation in the deliberative decision making literature has seen a
surge of interest in both the academic and applied communities, but there remains a
lot of room for research and practical experimentation. Unfortunately, currently the
instrumental value of these measures is emphasized, but normative and cognitive
420

aspects are ignored. There is particular need for investigations focusing on the
potential of these processes to change norms and mental models in order to achieve
greater congruence between rules, norms, and mental models.
Current research in the area is very fragmented at the moment. For example,
there is a growing interest in public administration and political and policy sciences
in civic engagement or participatory governance (inter alia, CEI, 2004). But the
practice of participatory decision making/governance remains piecemeal and limited
in Western world (Lukensmeyer and Torres, 2006). Large donors such as the World
Bank and the United Nations have also been attempting to foster more participatory
processes, but their efforts have been limited and often tend to clash with the
existing cultural and structural legacy of the development industry, which has
proven difficult to change. In contrast, many nonprofit and advocacy organizations
working in the context of international development more successfully applied ideas
from participatory governance processes to smaller scale interventions by grassroots
advocacy organizations (inter alia, Caldwell, 2002). Those scholars who have
drawn attention to the promises of participatory governance in hopes of addressing
the limitations of the representative democracy and corruption relied on a limited
number of case studies (Evans, 2004), but more systematic research is still needed.
421

References

Abdrazakov, Ishenbai. (2010). Kyrgyzstan: Kurultai has to speak only the truth (in
Russian), Kabar, February, 4, 2010. Retrieved from
http://www.centrasia.ru/newsA.php?st=1265437980

Accra Agenda for Action (AAA) (2008). Retrieved from
http://www.oecd.org/document/3/0,3343,en_2649_3236398_41297219_1_1
_1_1,00.html

Acemoglu, Daron. (2008). Interactions between Governance and Growth. In D.
North, D. Acemoglu, F. Fukuyama & D. Rodrik (Eds.), Governance, growth
& development decision-making, (pp. 1-9).Retrieved from:
http://siteresources.worldbank.org/EXTPUBLICSECTORANDGOVERNA
NCE/Resources/governanceandgrowth.pdf

Acemoglu, Daron, Johnson, Simon & Robinson, James A. (2001). The Colonial
Origins of Comparative Development: An Empirical Investigation,‖
American Economic Review 91 (5), 1369–1401. Retrieved from:
http://www.jstor.org/stable/2677930

Alestina, A. and Giavazzi, F. (2002). The Politics Of Foreign Aid (Newspaper
Columns). Retrieved from
Http://Post.Economics.Harvard.Edu/Faculty/Alesina/Columns/Foreign_Aid.
Pdf

Almond, Gabriel A., Powell, Jr., G. Bingham, Strom, Kaare, & Dalton, Russell J.
(2000). Comparative politics today: a world view, 7th ed. New York:
Longman.

Argyris, Chris. (1977). Double loop learning in organizations. Harvard Business
Review, 55, 115-125.

Arieli, Dan. (2009). Predictably irrational. New York: Harper Collins Publishers.

Aslund, Anders. (1999). Why has Russia's economic transformation been so
arduous?Proceedings of The Annual Bank Conference On Development
Economics. Washington, D.C: The World Bank.

Bakiev, Kurmanbek. (2009). We know how easily bureaucracy can subvert…
(President‘s address to the nation). Kabar, July 28, 2009. Retrieved from
http://www.centrasia.ru/newsA.php?st=1248845880
422

Baibolov, K. (2007). Interview to Sergei Kojemyakin (in Russian). Bely Parohod,
April 9, 2007

Baimyrzaeva, M. (2005). Institutional reforms in Kyrgyzstan, Central Eurasian
Studies Review, 4, 29-35. Retrieved from http://www.cesr-
cess.org/PDF/CESR_04_1.pdfBaimyrzaeva.

Bandstein, Sara. (2005). Donor approaches to the development of institutions:
formal and informal rules: a partial overview. Retrieved from www.sida.se

Bardhan, Pranab (2002). Decentralization of governance and development, Journal
of Economic Perspectives, 16 (4), 185-205. doi:
10.1257/089533002320951037.

Barnard, Chester. (1971). The functions of the executive. Cambridge: Harvard
University Press.

Barnett, Stanley & Nat Engel (1982). Effective institution building: a guide for
project designers and project managers based on lessons learned from the
AID portfolio. Program Evaluation Paper No. 11. Washington, DC: U.S.
Agency for International Development.

Beland, Daniel. (2007). Ideas and institutional change in social security:
conversion, layering, and policy drift
.
Social Science Quarterly 88 (1), pp.
20-38. doi:10.1111/j.1540-6237.2007.00444.

Bellah, Robert. (1982). Social science as practical reason, The Hastings Center
Report, 12 (5), 32-39. Retrieved from: http://www.jstor.org/stable/3560663

Bekbolotov, Kumar. (2006). On the Way to Ideal Bureaucracy: Future of Public
Service in Kyrgyzstan. Institute for Public Policy. http://www.ipp.kg

Berkowitz, Daniel, Pistor, Katharina, & Richard, Jean-Francois. (2003). The
transplant effect. The American Journal of Comparative Law, 51(1), 163-
203.

Bernstein, Robert. (1978). The restructuring of social and political theory.
Philadelphia: University of Pennsylvania Press.

Berry, J. M., Portney, K. E., and Thomson K. (1993). The Rebirth of Urban
Democracy.Brookings Institution: Washington, DC.

423

Bertucci, Guido, Larry Cooley, Patricia FnPiere, Paul Hughes, and Nick Manning.
(2008). The state and international development management: commentary
from international development management practitioners. Public
Administration Review, 68 (6), 1002-3. doi: 10.1111/j.1540-
6210.2008.00949_1.x

Bevir, Mark, Rhodes, R.A.W. & Weller, Patrick. (2003). Traditions of governance:
interpreting the changing role of the state. Public Administration 81 (1),1-17.
doi: 10.1111/1467-9299.00334.

Blase, Melvin G., (1986). Institution building: a source book, rev. ed. Columbia:
University of Missouri Press.

Bossuyt, J. (2001). Mainstreaming institutional development: why is it important
and how can it be done? Maastricht : ECDPM. Retrieved from
http://www.ecdpm.org/Web_ECDPM/Web/Content/Navigation.nsf/index2?r
eadform&http://www.ecdpm.org/Web_ECDPM/Web/Content/Content.nsf/0/
23A5B57588BD59DFC1256E230037B558?OpenDocument

Bohnet, Iris, Huck, Steffen, & Frey, Bruno S. (2001.) More order with less law: on
contract enforcement, trust, and crowding. The American Political Science
Review. 95 (1) 131-144. Retrieved from:
http://journals.cambridge.org/download.php?file=%2FPSR%2FPSR95_01%
2FS0003055401000211a.pdf&code=9e7f56839a37a802329e7a33e0a9df0e

Brinkerhoff, Derick W. (2008). The state and international development
management: shifting tides, changing boundaries, and future directions,
Public Administration Review, 68 (6), 985-1001.

Brinkerhoff, Derick W. & Arthur A. Goldsmith.( 2005). Institutional dualism and
international development: a revisionist interpretation of good governance.
Administration & Society, 37 (2), 199-225. doi: 10.1177/0095399704272595

Burnside, Craig & Dollar, David (1997). Aid, policies, and growth. Policy
Research Working Paper No. 1777) Retrieved from World Bank Website.
http://www-
wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2000/02/2
4/000009265_3971023104021/Rendered/PDF/multi_page.pdf

Caiden, Gerald. (1991). Administrative reform comes of age. New York:
DeGruyter.
424

Caiden, Gerald. (1993). What really is public maladministration? In F. Lane (Ed.),
Current Issues in Public Administration, New York: St. Martin‘s Press, pp.
469-478.

Caiden, Gerald. (2004). Are Administrative Cultures That Different? Forthcoming

Gaiden. Gerald. (2006). Assessing institutional reform, revised as, Challenges to
institutional reform. A paper presented at the International Political Science
Association Conference, Japan, Revised at the University of West Indies,
Trinidad and Tobago.

Caiden, Gerald and Pachampet Sundaram. (2004). The Specificity of Public
Service Reform: India. Public Administration and Development, 5, pp. 1-
11.

Caldwell, Richard. (2002). CARE: Project design handbook. Atlanta, GA:
Cooperative Assistance and Relief Everywhere, Inc. (CARE). Retrieved
from http://www.ewb-
international.org/pdf/CARE%20Project%20Design%20Handbook.pdf

Camdessus, M. (November,1999). Second generation reforms: reflections and new
challenges, Opening Remarks presented at the International Monetary Fund
Conference on Second Generation Reforms, Washington, D.C. Retrieved
from: http://www.imf.org/external/np/speeches/1999/110899.HTM

Campbell, John L., & Pedersen, Ove P. (Eds.). (2001).The rise of neoliberalism and
institutional analysis. Princeton: Princeton University Press.

Campbell, John L. (2004). Institutional change and globalization. Princeton:
Princeton University Press.

Carothers, T. (2003a, July 20). It‘s too soon for democracy. The Washington Post.
In the Carnegie Endowment for International Peace. Retrieved from:
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=71
3&prog=zgp&proj=zdrl

Carothers, T. (2003b, January). Promoting the rule of law abroad: the problem of
knowledge,Carnegie Paper No. 34. Retrieved from:
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=11
69&prog=zgp&proj=zdrl

425

Chang, H.J. (2001, November), Institutional development in developing countries in
a historical perspective: lessons from developed countries in earlier times.
Paper presented at the European Association of Evolutionary Political
Economy, Siena, Italy.

Chandler, David. (2005). Empire in denial: the politics of state building. London:
Pluto Press.

Channel, Wade. (2005). Lessons not learned: problems with western aid for law
reform in postcommunist countries, Carnegie Papers, November 57.

Checkland, P. (1993). Systems thinking, systems practice. Chichester: John Wiley
& Sons, Inc.

Cheung, Anthony. (2005). The politics of administrative reforms in Asia:
paradigms and legacies, paths and diversities. Governance: An International
Journal Of Policy, Administration, and Institutions, 18(2), 257–282.

Chin, R. and Benne, K. D. (1976). General strategies for effecting change in human
systems. In W. G. Bennis et al. (eds), The Planning of Change, 2nd ed.

Chowdhury, Tanweena. (2003). A Review of Current and Recent Public
Administration Reform Interventions Implemented by UNDP (1999-2003).
UNDP. Retrieved from
http://europeandcis.undp.org/uploads/public/file/2A_FINAL_Review%20of
%20PAR%20Projects%201%20Dec%202003.doc

Civic Engagement Institute. (2004). Civic engagement in the 21st century: toward
a scholarly and practical agenda. Proceeding of the University of Southern
California Civic Engagement Initiative in conjunction with the USC Jesse
M. Unruh Institute of Politics, Retrieved from: http://www.usc-
cei.org/?url=speakers.bios.php

Coleman, J. (1990). Metatheory: explanation in social science. In J. Coleman
Foundations of social theory. (pp. 1-23). Cambridge: The Belknap Press of
Harvard University Press.

Collier, D. (1991). The comparative method: two decades of change. In D. A.
Rustow and K.P. Erickson (Eds.) Comparative political dynamics (pp. 7-31).
New York: HarperCollins.

426

Collins, K. (1999). Clans, pacts, and politics: understanding regime transition in
Central Asia (Kyrgyzstan, Uzbekistan, Tajikistan) (Doctoral dissertation).
Stanford University, Stanford, California.

Cooley, Alexander. (1999). Depending fortunes: aid, oil and the formation of the
post-Soviet colonial states. (Doctoral dissertation). Columbia University.

Cooley, Alexander. (2000). International aid to the former Soviet States: agent of
change or guardian of status quo. Problems of Post-Communism, 42(4), 34-
44.

Cooperrider, D. L. and Srivastva, S. (1987). Appreciative inquiry in organizational
life. In R. W. Woodman and W. A. Pasmore (eds.), Research in
Organizational Change and Development, (1), 129-169.

Cope, S., Leishman, F., & Starie, P. (1997). Globalization, new public management
and the enabling state: futures of police management. The International
Journal of Public Sector Management, 10 (6), 444-460.
doi:10.1108/09513559710190816

Cortell, Andrew and Peterson, Susan. (2001). Limiting the unintended
consequences of institutional change. Comparative Political Studies, 34(7),
768-799.

Creswell, John. (2002). Research design: qualitative, quantitative, and mixed
methods approaches (2nd ed.). Thousand Oaks, CA: Sage Publications.

Crossan, M. M., Lane, H. W., and White, R. E. (1995). An organizational learning
framework: From intuition to institution. Academy of Management Review,
24, 522-537.

Crush, Jonathan (Ed.). (1995). Power of development. London: Routledge.

De Soysa, Indra & Jütting, Johannes. (2007). Informal institutions and development:
how they matter and what makes them change. In J. Jütting, Denis
Drechsler, Sebastian Bartsch, Indra de Soysa (Eds). Informal institutions:
how social norms help or hinder development, OECD Publishing Paris:
France.

427

De Capitani, A., & North, D. (1994). Institutional development in third world
countries: the role of the World Bank. HRO Working Paper 42, Human
Resources Development and Operations Policy, The World Bank. Retrieved
from: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1994/10/
01/000009265_3961007105710/Rendered/PDF/multi_page.pdf

Denzau, Arthur T., & North, Douglass C. (1994). Shared mental models: ideologies
and institutions, Economic History, 47 (1), 3-18. Retrieved from:
http://129.3.20.41/eps/eh/papers/9309/9309003.pdf

Dia, Mamadou. (1996) Africa's management in the 1990s and beyond: reconciling
indigenous and transplanted institutions, Directions in Development,
Washington, D.C: World Bank.

Diamond, Larry. (1999), Institutions of accountability, Hoover Digest, Hoover
Institute: No. 3, Retrieved from:
http://www.hoover.org/publications/digest/3512991.html

Dill, Valery. (2007). Need to fight not with corruption but with mafia (in Russian).
Interview with Elena Avdeeva. Bely Parohod. Retrieved from
http://www.parohod.kg

DiMaggio, P. J. & Powell, W.W. (1983). The iron cage revisited: institutional
isomorphism and collective rationality in organizational fields. American
Sociological Review 48, 147-160.

Dolan, Julie and Rosenbloom, David. (2003). Representative Bureaucracy: Classic
Readings and Continuing Controversies, Armonk, NY: M.E. Sharpe.

Dollar, D. and A. Kray. (2002). Institutions, trade, and growth. Paper prepared for
the Carnegie-Rochester Conference Series on Public Policy.

Dollar, David R., & Pritchett, Lant . (1998). Assessing aid: what works, what
doesn‟t, and why. Policy Research Report. Washington, D.C: World
Bank. Retrieved from: http://www-
wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2000/02/2
3/000094946_99030406212262/Rendered/PDF/multi_page.pdf

Dukenbaev, Askat and William W. Hansen. (2003). Understanding Politics in
Kyrgyzstan. DEMSTAR Research Report No. 16. Retrieved from
http://www.demstar.dk/papers/UPKyrgyzstan.pdf

428

Dukenbaev, Askat and Tanyrykov, Valimjan. (2001). Politico-Administrative
Relationships in Kyrgyzstan. The United Nations Public Administration
Network (UNPAN), New York: United Nations. Retrieved from
http://unpan1.un.org/intradoc/groups/public/documents/nispacee/unpan0055
76.pdf

Ear, Sophal. (2007). Does aid dependence worsen governance? International
Public Management Journal, 10 (3), 259-286. doi :
10.1080/10967490701515580

Easterly, William. (2001). Can institutions resolve ethnic conflict? Economic
Development and Cultural Change, Vol. 49, No. 4, pp. 687-706.

Easterly, William. (2002a). The elusive quest for growth: economists adventures
and misadventures in the tropics. Cambridge, MA: MIT Press.

Easterly, W. (2002b). The cartel of good intentions: markets vs. bureaucracy in
foreign aid. Center for Democracy Working Paper 4. Retrieved from:
http://www.cgdev.org/content/publications/detail/2786

Eaton, Joseph W., (Ed.). (1972). Institution building and development: From
concepts to application. Beverly Hills: Sage.

Edelman, Lauren B. & Suchman, Mark C. (1997). The legal environments of
organizations. Annual Review of Sociology, 23 (1) 479-515. Retrieved from:
http://web.ebscohost.com/ehost/pdf?vid=4&hid=6&sid=4cdf50e0-d563-
486a-b263-ae569ec36076%40sessionmgr11

Ellickson Robert. (1991). Order without law: how neighbors settle disputes.
Cambridge, Massachusetts: Harvard University Press.

Ellison, Brian. (2007). Public Administration Reform in Eastern Europe: A
Research Note and a Look at Bulgaria, Administration & Society, 39, 221

Engel, P, Keijzer, N., & Ornemark, C. ( 2007). Responding to change, learning to
adapt in development cooperation. European Centre for Development Policy
Management Policy Management Brief No. 19. Maastricht: ECPDM.
Retrieved from:
http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/979DE
481204D6C36C12572D70040CBE6/$FILE/19-e%20NK%20CO%20PE.pdf

Escobar, Arturo. (1995). Encountering development: The making and unmaking of
the third world. Princeton, New Jersey: Princeton University Press.
429

Esman, Milton. (1988). The maturing of development administration, Public
Administration & Development, 8 (2,) 125-134. doi:
10.1002/pad.4230080202

Evans P. (2004). Development as institutional change: the pitfalls of monocropping
and the potentials of deliberation. Studies in Comparative International
Development, 38(4), 30–52.

Ewell, Peter. (1997.) Organizing for Learning: a new imperative. American
Association for Higher Education bulletin, December.

Farazmand, Ali. (2001). Handbook of comparative and development
administration, 2nd ed. New York: Marcel Dekker.

Ferris, James. M. & Tang, Shui-Yan. (1993). The new institutionalism and public
administration: an overview. Journal of Public Administration Research
and Theory, 3 (2), 4-10.

Frederickson, H. George. (2008). A Weber for our time: the life and work of Fred
W. Riggs. Public Administration Review, 68(6), 977-978. doi:
10.1111/j.1540_6210.2008.00947_2.x

Frederickson, H. George, & Smith, Kevin B. (2003). Public administration theory
primer. Boulder, Colorado: Westview Press.

Frederickson, H. George, & Walling, D. (1993). Research and knowledge in
administrative ethics. In T. Cooper (Ed.) Handbook of Administrative
Ethics, (pp.37-58). New York: Marcel Decker.

Fukuyama, Francis. (2004). State-building: governance and world order in the
twenty-first century. Ithaca, New York: Cornell University Press.

Fukuyama, Francis. (2008). What do we know about the relationship between the
political and economic dimensions of development? In D. North, D.
Acemoglu, F. Fukuyama & D. Rodrik (Eds.), Governance, growth &
development decision-making, (pp. 25-34).Retrieved from:
http://siteresources.worldbank.org/EXTPUBLICSECTORANDGOVERNA
NCE/Resources/governanceandgrowth.pdf

Girishankar, Navin. (2001). Evaluating public sector reforms: guidelines for
assessing country-level impact of structural reform and capacity building in
the public sector. OED, Washington, DC: World Bank.

430

Goldsmith, Arthur A.(1992). Institutions and planned socioeconomic change: four
approaches. Public Administration Review, 52, (6), 582-587.

Goyal, Vikram. (1994). Technical assistance for institutional development. In S.
Schiavo-Campo, World Bank Discussion Papers, No. 241,Institutional
Change and the Public Sector in Transitional Economies, (pp.149-168).
Washington D.C: World Bank. Retrieved from:
http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1996/01/
01/000009265_3961219104849/Rendered/PDF/multi_page.pdf

Gjelstrup, Gunnar & Sorensen, Eva, (Eds.). (2007). Public administration in
transition: theory, practice and methodology. Copenhagen: DJOF
Publishing.

Gradstein, Mark & Konrad, Kai A. (Eds.) (2006). Institutions and Norms in
Economic Development, Cambridge, MIT Press

Gray, Cheryl, Randi Ryterman and Joel Hellman. (2004). Anticorruption in
Transition 2: Corruption in Enterprise-State Interactions in Europe and
Central Asia 1999-2002, Washington D. C.: World Bank. Retrieved from
http://lnweb18.worldbank.org/eca/ecspeExt.nsf/Attached/Poverty%20Reduct
ion%20and%20Economic%20Management2/$FILE/wb%20Anticorrupt2%2
0pub.pdf

Grindle , Merilee S. 1997a. Divergent cultures? When public organizations perform
well in developing countries. World Development. 25,(4) 481-495.
Retrieved from:
http://proquest.umi.com/pqdweb?did=708982&sid=1&Fmt=3&clientId=944
&RQT=309&VName=PQD

Grindle, M. (1997b). Good government imperative: human resources,
organizations, and institutions, In M. Grindle (Ed.), Getting Good
Government: Capacity Building, in the Public Sectors of Developing
Countries (pp. 3-30) .Cambridge, MA: Harvard University Press for the
Harvard Institute for International Development.

Grindle, Merilee. (2004). Good enough governance, poverty reduction and reform in
developing countries. Governance: An International Journal of Policy,
Administration, and Institutions, 17 (4), 525–548. Retrieved from:
http://kfeweb.files.wordpress.com/2008/03/good-enough-governance-
grindle.pdf

431

Grosenick, E.,& Gibson, P. (2001). Government ethics and organizational culture.
In T. Cooper (Ed.), Handbook of Administrative Ethics,2
nd
edition (pp. 243-
261). New York: Marcel Dekker.

Hackman, J. R., & Wageman, R. (1995) Total quality management: empirical,
conceptual, and practical issues. Administrative Science Quarterly, 40, 309-
342.

Hansen, Hans Krause, Dorte Salskov-Iversen, and Sven Bislev. (2002). Discursive
globalization: Transnational discourse communities and new public
management. In Towards a Global Policy (eds) Morten Ougrad and Richard
Higott, 107-124. London: Loutledge.

Hartmut, Elsenhans. (2002). The political economy of good governance. In J.
Jreisat, (Ed.) Governance and Developing Countries,(pp. 33-57), Boston:
Brill.

Hayek, Friederich A. (1981). Law, legislation and liberty : the political order of a
free people, Vol 3. Chicago: University of Chicago Press.

Heady, Ferrel. (1998). Comparative and international public administration:
building intellectual bridges. Public Administration Review 58(1), 32–39.

Heady, Ferrel. (2001). Public administration: a comparative perspective, 6th ed.
London: Taylor & Francis, Inc.

Helmke Gretchen, & Levitsky, Steven. (2004). Informal institutions and
comparative politics: a research agenda. Perspectives on Politics, 2(4), 725–
740. Retrieved from:
http://www.wcfia.harvard.edu/sites/default/files/883__informal-
institutions.pdf

Heron, J. (1981). Philosophical basis for a new paradigm. In Reason, P. and
Rowan, J. (eds) Human inquiry: a sourcebook of new paradigm. New York:
John Wiley & Sons.

Hetmanek, Allen. (1975). Kirgizistan and the Kirgiz, in Zev Katz, Rosemarie
Rogers and Fredrick Harned, (eds.) Handbook of Major Soviet Nationalities,
New York, pp.238-261

Hirschmann, David. (1994). Institutional development in the era of economic policy
reform: concerns, contradictions and illustrations from Malawi. Public
432

Administration and Development, 13 (2), 113-128. Doi:
10.1002/pad.4230130203

Hoffman, Katharina. 2010. The EU in Central Asia: successful good governance
promotion? Third World Quarterly, 31(1), 87-103. DOI:
10.1080/01436590903557397

Hooghe, Liesbet, & Marks, Gary. (2003). Unraveling the central state, but how?
Types of multi-level governance, American Political Science Review, 97
(2), 233-243. Retrieved from:
http://web.ebscohost.com/ehost/detail?vid=4&hid=8&sid=16a1f767-41d8-
499c-8d69-cf77da3a7c5a%40sessionmgr11

Holmes, Leslie. (2006). Rotten states? Corruption, post-communism, and
neoliberalism. Durham, NC: Duke University Press.

Horrocks, Ivan, & Bellamy, Christine. (1997). Telematics and community
governance: issues for policy and practice. The International Journal of
Public Sector Management, 10 (5), 377-387. doi:
10.1108/09513559710180600

Hout, Wil. (2010). Between development and security the European Union,
governance and fragile states. Third World Quarterly, 31 (1), 141-157.
doi: 10.1080/01436590903557462 retrieved from
http://dx.doi.org/10.1080/01436590903557462

Howard, Pierce J. (2006). Owners‟ manual for the brain: everyday applications
from mind-brain research. Austin, Texas: Bard Press.

Huntington, Samuel P. (1969). Political order in changing societies. New Haven:
Yale University Press.

Huskey, Eugene. (1997). Kyrgyzstan: The Politics of Demographic and Economic
Frustration, in Ian Bremmer and Ray Taras, (eds.) New States, New Politics:
Building the Post-Soviet Nations, Cambridge, UK, 1997 p. 658.

Hyden, G. (2002). Operationalising governance for sustainable development. In
Jreisat, J. (Ed.) Governance and Developing Countries, (pp. 13-33). Leiden:
Brill.

433

Ilibezova, E. (2002). Approaches to Fighting Corruption in Kyrgyzstan (in Russian).
In Reform of State Governance: Ways of Improving Effectiveness of
Executive Branch. Proceedings for the Conference that took place on
September 19-20, 2002. UNDP, Bishkek. Pp. 38-44.

Imanaliev, Muratbek. (2007). Issues of National Statehood in Central Asia, Institute
for Public Policy, www.ipp.kg

International Crisis Group (ICG). (2003). Youth in central Asia: losing the new
generation, Asia Report No. 66. Retrieved from:
http://www.crisisgroup.org/library/documents/asia/ntral_asia_losing_the_ne
w_generation.pdf

International Crisis Group. (2005). Kyrgyzstan: a Faltering State. Bishkek/Brussels,
Asia Report 109. Retrieved from
http://www.crisisgroup.org/home/index.cfm?id=3838&l=1

International Monetary Fund (IMF). (2000). World economic outlook report. Focus
on transition economies. Retrieved from:
http://www.imf.org/external/pubs/ft/weo/2000/02/pdf/chapter1.pdf

International Monetary Fund (IMF). (2001). Transition economies: an IMF
perspective on progress and prospects. Retrieved from:
http://www.imf.org/external/np/exr/ib/2000/110300.htm l

International Monetary Fund. (2003, April).World economic outlook: growth and
institutions. Washington DC: IMF. Retrieved from:
http://www.imf.org/external/pubs/ft/weo/2003/01/pdf/front.pdf

International Monetary Fund. (IMF). (2007). Technical assistance: building capacity
as the foundation for growth. Retrieved from: http,
//www.imf.org/external/np/exr/ib/2007/041107.htm

The International Republican Institute (IRA). Kyrgyzstan National Opinion Poll for
2005, 2006, and 2009. Retrieved from http://www.iri.org/countries-and-
programs/krygyz-republic/krygyz-republic

Israel, Arturo. (1987). Institutional development: incentives to performance.
Baltimore: Johns Hopkins University Press.

Jenkins, Kate & Plowden,William. (2006). Governance and nation-building: the
failure of international intervention. Northampton, Mass: Edward Elgar.

434

Johnson, Gordon. (2002). Lessons for today from the Marshall Plan. CIPE.ORG
Feature Service: Technical Paper Series. Retrieved from:
http://www.cipe.org/publications/papers/pdf/mplan.pdf

Jones, Garth N. (1976). Frontiersmen in search for the ‗Lost Horizon‘: the state of
development administration in the 1960s, Public Administration Review 36,
(1), 99-110.

Jones, L, R.,& Klingner, Donald. (2007). The consummate comparative public
administrationist: a tribute to Ferrel Heady, 1916 – 2006. Public
Administration Review, 67 (2), 188-196, doi: 10.1111/j.1540-
6210.2007.00706_1.x

Jreisat, Jamil E. (1975). Synthesis and relevance in comparative public
administration, Public Administration Review, 35 (6), 663-671.

Jreisat, Jamil. (2002). Comparative public administration and policy. Boulder, CO:
Westview Press.

Jreisat, Jamil E. (2005). Comparative public administration is back in, prudently.
Public Administration Review 65(2), 231–42.

Jutting, J. (2003). Institutions and development: a critical review, OECD
Development Centre, Technical Papers No. 210. Organisation for Economic
Cooperation and Development, Paris.

Jütting, Johanes, Denis Drechsler, Sebastian Bartsch, Indra de Soysa (2007).
Informal institutions: how social norms help or hinder development, OECD
Publishing Paris: France.

Lane, Jan-Erik, & Ersson, Svante. (2000). The new institutional politics:
performance and outcomes (pp. 1-22). London: Routledge.

Langlois, Richard N. (1986). Rationality, institutions and explanation. In R.N.
Langlois (Ed.) Economics as a process: essays in the new institutional
economics, (pp. 1-25). New York: Cambridge University Press.

Lincoln, Y. and Denzin, N. (2000). The seventh moment: out of the past. In
Handbook of qualitative research, (ed) Denzin, N. and Lincoln, Y. Thousand
Oaks, CA: Sage.

435

Lukensmeyer, Carolyn, & Torres, Lars Hasseblad. (2006). Public deliberation: a
manager's guide to citizen deliberation. IBM's Center for the Business of
Government. Retrieved from
http://www.americaspeaks.org/_data/n_0001/resources/live/IBMpubdelib.pd
f

Kamp, Marianne. (2004). Between women and the state: mahalla committees and
social welfare in Uzbekistan. In P.J. Luong (Ed.) The transformation of
Central Asia: states and societies from soviet rule to independence,
(pp. 29-58). Ithaca: Cornell University Press.

Kasybekov, Usen. (2009). Builalangan Too (―Saddled Camel‖). Press KG (social
and political analysis weekly), No 13 (13), p. 2, December 25.

Kasymov, N. (2006). Appointment Problems in Civil Service (transcripts of the
roundtable discussion organized by Institute for Public Policy). Kyrgyzstan
Brief, (3), pp. 15-24 . Retrieved from www.ipp.kg

Katz, D., and R.L. Kahn. (1978). The Social Psychology of Organizations. New
York: John Wiley & Sons

Kaufmann, Daniel. (2003, March 11). Rethinking governance: empirical lessons
challenge orthodoxy. Washington DC: The World Bank. Retrieved from:
http://siteresources.worldbank.org/INTWBIGOVANTCOR/Resources/rethin
k_gov_stanford.pdf

Kaufmann, Daniel, & Kraay, Aart. (2002). Growth without governance, Economía,
3 (1), 169-229. Retrieved from JStor.
http://www.worldbank.org/wbi/governance/pubs/growthgov.html

Kettl, Donald F. (2000). The transformation of governance: globalization,
devolution, and the role of government. Public Administration Review, 60
(6), 488-497. Retrieved from:
http://www.jstor.org/pss/977432

Kleiner, Art. (n.d.). Thought leader (interview with Daniel Yankelovich). Retrieved
from
http://www.danyankelovich.com/thoughtleader.pdf

436

Knack, Stephen. (2000). Aid dependence and the quality of governance: a cross-
country empirical analysis, Policy Research Working Paper 2396,
Washington DC: World Bank. Retrieved from: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2000/08/
26/000094946_00081406502627/Rendered/PDF/multi_page.pdf

Knack, Stephen and Keefer , P. (1995). Institutions and economic performance:
cross country tests using alternative institutional measures. Economics and
Politics, Vol. 7, No. 3, November, pp. 207-227.

Knack, Stephen, & Keefer, Phil. (2000) Institutions and economic performance:
cross-country tests using alternative institutional measures. In S. Knack (Ed.)
Democracy, governance and growth, (pp. 56-78). Ann Arbor: University of
Michigan Press.

Kobonbaev, Maks. (2004, May 27). Corruption in the private and government
sectors: the challenges of reforms in Kyrgyzstan. Paper presented at the
Center for New Institutional Social Sciences Research Workshop,
Washington University, St. Louis.
Retrieved from: http://cniss.wustl.edu/workshoppapers/maks2.pdf

Kooiman, Jan. (1996). Research and theory about new public services
management: review and agenda for the future. The International Journal of
Public Sector Management,9(5-6), 7-22. doi: 10.1108/09513559610146311

Korten, David. (1983). Learning from USAID field experience: institutional
development and the dynamics of the policy process. Washington, DC:
National Association of Schools of Public Affairs and Administration.

Korten, David. (1990). Getting to the 21
st
century: voluntary action and the global
agenda. Sterling, VA: Kumarian Press.

Kotchegura, Alexander P. ( 1997, April). Civil service systems in comparative
practice. A paper presented at the International Conference, Bloomington
(Indiana, USA). Retrieved from
http://www.indiana.edu/%7Ecsrc/kotch1.html

Krueger Anne O., Michalpoulos, Constantine & Ruttan, Vernon W. (1989). Aid and
development. Baltimore: John Hopkins University Press.

437

Krugman, Paul. (2009). How did economists get it so wrong? New York Times,
September 2. Retrieved from
http://www.nytimes.com/2009/09/06/magazine/06Economic-
t.html?_r=1&pagewanted=all

Kyrgyz Government. (2003). National Poverty Reduction Strategy 2003-2005.
Comprehensive Development Framework of the Kyrgyz Republic to 2010:
Expanding the Nation‟s Potential, Bishkek. Retrieved from
http://cdf.gov.kg/en/cdf/nspr/new/prsp_last.htm

Kubicek, Patrick. (2000). Post-communist political studies: ten years later, twenty
years behind? Communist and Post-Communist Studies, 33 (3), 295-309.
doi: 10.1016/S0967x(00)00008-8

Lamb, Michael. (1994). Some governance dimensions of institutional reform. In
S. Schiavo-Campo (Ed.), Institutional Change and the Public Sector in
Transitional Economies, World Bank Discussion Papers, no. 241. (pp. 129-
134). Washington D.C: World Bank.

Lavergne, Réal & Saxby, John. ( 2001, January) Capacity development: vision and
implications. Capacity Development Occasional Series, Canadian
International Development Agency (CIDA) Policy Branch No. 3. Retrieved
from: http://www.acdi-
cida.gc.ca/INET/IMAGES.NSF/vLUImages/CapacityDevelopment3/$file/C
apDevOSNo3-E.pdf

Lewin K. (1951). Field theory in social science: Selected theoretical papers. New
York, NY: Harper & Row.

Loveman, Brian. (1976). The comparative administration group: development
administration, and anti-development, Public Administration Review, 36 (6),
616-621.

Luong, Pauline. (2000). After the break-up: institutional design in transitional
states, Comparative Political Studies, 33(5), 563-592. doi:
10.1177/00/10414000033005001

Mamdani, Mahmood. (2002). When victims become killers: colonialism, nativism
and the genocide in Rwanda. Princeton: Princeton University Press.

March, James & Olsen, Johan P. (1989). Rediscovering institutions: the
organizational basis of politics. New York: Free Press.
438

Marshak, R. J. (1993). Lewin meets Confucius: a re-view of the OD model of
change. Journal of Applied Behavioral Science, (29), 393-415.

Medina, John. (2009). Brain Rules: 12 Principles for Surviving and Thriving at
Work, Home, and School. Pear Press.

Merton, Robert. (1957). Bureaucratic structure and personality. In R. Merton (ed).
Social theory and social structure. New York: The Free Press

Meyer, J. W. & Rowan, B. (1991). Institutionalized organizations: formal structure
as myth and ceremony. In W.P. Howell & P.J. DiMaggio (Eds.) The new
institutionalism in organizational analysis (pp. 41-62). Chicago: University
of Chicago Press.

Migdal, Joel. (1988). Strong societies and weak states: state-society relations and
state capabilities in the third world. Princeton, N.J: Princeton University
Press.

Mikhailov, Grigori. (2010). Kyrgyzstan will have two kurultais simultaneously.
Kurmanbek Bakiev acknowledged the imitative democracy (in Russian).
Nezavisimaya Gazeta, February 19, 2010. Retrieved from
http://www.centrasia.ru/newsA.php?st=1266531240

Milgram, Stanley. (1969). Obedience To authority: an experimental view. New
York: Harper and Row.

Miller-Adams, Michelle B. (1997). The World Bank in the 1990s: understanding
institutional change. (Doctoral dissertation.) Columbia University.

Miller, K. and Monge, P. (1986). Participation, satisfaction, and productivity: a
meta-analytic review.‖ Academy Of Management Journal, (29), 727-753.

Moe, Terry. (1984). The new economics of organization. American Journal of
Political Science 28, 739-777.

Messick, Richard. (1999, February). Judicial reform and economic development: a
survey of the issues. The World Bank Research Observer, vol. 14, no. 1,
117–36. Retrieved from:
http://siteresources.worldbank.org/INTLAWJUSTINST/Resources/Research
ObserverPaper.pdf

439

Mikhalev, V. and G Heinrich. (1999.) Kyrgyzstan: a case study of social
stratification, World Institute for Development, chapter 167, United Nations
University. Retrieved from
http://www.wider.unu.edu/publications/wp164.pdf

Mohrman, S. A. & Mohrman, A. M., Jr. (1993). Organizational change and
learning. In J. R. Galbraith, & E. M. Lawler (Eds.) Organizing for the
future: the new logic for managing complex organizations, (pp.87-108).
San Francisco: Jossey-Bass.

Morita, Sashika & Durwood, Zaelke. ( 2005, April) Rule of law, good governance,
and sustainable development . A paper presented at the 7
th
International
Conference on Environmental Compliance and Enforcement, Proceedings,
Volume 1, Marrakech, Morocco.

Mumby, D. K. & Putnam, L. L. (1992). The politics of emotion: a feminist reading
of bounded rationality. Academy of Management Review, 17 (3), 465-486.

Murzaev, Salih. (2003). National Strategy for e-Government in Kyrghyzstan.
Presentation at the 11
th
NISPAcee Annual Conference

Musakojoev, S. (1997). Monitoring Macroeconomic Regulation. A presentation
made at the conference Public Sector Management for Transition and
Development in Kyrgyzstan, Yssyk Kul, Kyrgyzstan, June 4-6, 1997.
Proceedings of the Conference, UNDP/UNOPS Project, Management
Development in Kyrgyzstan (KYR93/001), pp. 40-52.

Nabli, Mustapha & Nugent, Jeffrey. (1989a). The New Institutional Economics
and its applicability to development. World Development, vol. 18, no 9,
1333-1347.

Nabli, Mustapha & Nugent, Jeffrey. (1989b). New Institutional Economics and
development: theory and applications to Tunisia. Amsterdam: North-
Holland (Contributions to Economic Analysis Series)

Fankfort-Nachmias, Chava and Nachmias, David. (2000). Research Methods in the
Social Sciences, 6
th
ed., New York: Worth Publishers.

Naim, Moises, (1999, October 26). Fads and fashion in economic reforms:
Washington Consensus or Washington confusion? Working Draft of a Paper
Prepared for the IMF Conference on Second Generation Reforms,
Washington, D.C. Retrieved from:
http://www.imf.org/external/pubs/ft/seminar/1999/reforms/Naim.HTM1
440

Newland, C.A. (2003). Governance, Facilitative States, and Twenty-First Century
Public Administration. In Krishna Tummala (Ed.) Encyclopedia of life
support systems. Paris, France: UNESCO

Nonaka, I. (1994). A dynamic theory of organizational knowledge creation.
Organization Science, (5) 14-37.

North, Douglass. (1990). Institutions, institutional change and economic
performance. New York: Cambridge University Press.

North, Douglass C. (1993). The new institutional economics and development,
Economic History No. 9309002, EconWPA. Retrieved from:
http://129.3.20.41/eps/eh/papers/9309/9309002.pdf

North, Douglass C. (1994). Economic performance through time. American
Economic Review, 84, (3), 359-368. (originally delivered as his Nobel prize
lecture on December 19, 1993).

North, Douglass C., & Thomas, Robert P. (1973). The rise of the western world: a
new economic history. Cambridge: Cambridge University Press.

Nugent, Jeffrey. (2002). The New Institutional Economics: Can It Deliver for
Change and Development? A paper presented for the Workshop on
―Paradigms of Change‖ held in Bonn, Germany, May 23-25, 2002.

Nugent, Jeffrey. (2004). The Role of Institutions in Economic Performance. A
paper presented at the International Conference on ―Institutional and
Development Performance‖ of the Arab Planning Institute held in Beirut,
Lebanon, June 8-9, 2004.

Nunberg, Barbara. (1999). The state after communism : administrative transitions
in Central and Eastern Europe , World Bank and Sectoral Studies.
Washington, DC: World Bank. Retrieved from: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2000/02/
24/000094946_99031910563028/Rendered/PDF/multi_page.pdf

O‘Donnell, Guillermo. (1996, March). Another institutionalization: Latin America
and elsewhere, Kellogg Institute Working Paper 222 , Kellogg Institute of
International Development, University of Notre Dame. Retrieved from:
http://kellogg.nd.edu/publications/workingpapers/WPS/222.pdf

441

Olcott, Martha. (1996). Central Asia's New States: Independence, Foreign Policy,
and Regional Security, US Institute for Peace: Washington.

Omuraliev, Kubanychbek. (2005). Reform of the State (Power) Structure Shall
Start in the President‟s Administration. July 7. Retrieved from www.cgg.kg
on December 5, 2005.

Omuraliev Kubanychbek (n.d..) Reducing regulatory and administrative barriers to
entrepreneurship in Kyrgyzstan: major results and outstanding issues.
Institute for Public Policy, Retrieved from
http://www.ipp.kg/en/analysis/563/

Organization for Economic Cooperation and Development (OECD). (1995).
Governance under pressure. Paris: OECD

Organization for Economic Cooperation and Development (OECD). (1997). Issues
and development in public management: survey 1996–1997 Organization for
Economic Cooperation and Development. Paris: Organization for Economic
Cooperation and Development Publication Ser