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UNRISD News Number 20


Spring/Summer 1999

ESSENTIAL MATTER

Democratization and Public Sector Reform

The World Summit for Social Development was held amid wide-ranging changes in the way most societies are governed. In much of the world, authoritarian regimes have lost power in competitive elections, as attempts are made to establish better forms of political representation and accountable government. These changes influenced Summit decisions about institutional arrangements for the eradication of poverty, the promotion of employment and social integration. Social development was not limited to the provision of more money for social programmes or better formulation of social policies. It was also necessary to improve the institutions that support social programmes, conflict resolution and efficient use of resources.

Participants at Copenhagen considered democratization a pillar of this "enabling environment" for promoting the Declaration and Programme of Action. It offered prospects for better citizen participation in the formulation of public policies—especially those important for the well-being of deprived social groups. Democratization would also allow citizen groups and government authorities to channel social claims to public institutions without the use of violence. Finally, it would further the development of law-governed, civic-based societies that would respect basic human rights.

This faith in democracy as a framework for solving the world's social problems raises the following questions. What progress have countries and multilateral institutions made in promoting democratization? What setbacks have been experienced in various regions or countries and why? Has democratization led to better social policies and enhanced participation in the way institutions are governed? What do governments, international organizations and citizens need to do to improve the quality of their governance institutions?

A chapter of the UNRISD report for Copenhagen Plus Five, Taking Global Responsibility for Social Development: Policy Reform and Institutional Change in the 1990s, will seek to answer such questions. It will draw together ongoing UNRISD work on governance, policy making and public sector reform, as well as commissioned papers from experts in the fields of democratization and human rights. Four key issues will be addressed: technocratic policy making and democratization; interest groups, social pacts and democratization; public management reforms; and plural forms of governance and ethnically segmented societies.

Technocratic policy making and democratization
Concerns for democratic governance seem to be in conflict with global market forces, which increasingly restrict economic policy making to selected experts in the executive branch of government. Key economic institutions—central banks, finance ministries and tax authorities—are being empowered at the expense of expenditure-driven ministries, especially those dealing with social affairs and general administration. Decision makers in national economic institutions are being made more accountable to global financial markets and lending organizations than to parliaments and people. The promotion of open market economies, international competitiveness and stable finance takes precedence over policies concerned with consensus building, conflict management and social equity.

Openness in policy making, though often touted, is not always practised. Indeed, in some contexts, policy makers associate democratization with populist demands that might subvert their technocratic visions and macro-economic plans. Furthermore, in many new democracies that are pursuing economic reforms, social policies tend to be residual and reactive rather than comprehensive and proactive. Efforts to limit participation in policy making, as well as the content of social policy, may produce outcomes in which politics are formally democratic, but governance in the policy field may be authoritarian. This may make it difficult to consolidate democracy in developing and transition societies. It may also lead to bizarre situations in which democratization itself is associated with social exclusion, limited public choices and the exit of dissatisfied social groups from mainstream institutions. This may have negative consequences for development and stability.

How have countries and multilateral institutions coped with conflicting pressures for economic stability and openness, legislative oversight of public policies, and civic participation in policy making? In addition, how has the making of social policy fared in new democracies? Given existing global market constraints, which countries are doing well and which are not, and why?

Interest groups, social pacts and democratization
Organized interest groups—for example, labour unions; professional, artisan and trader associations; and peasant organizations—clearly have a stake in democratization. The participation of interest groups in policy making has long been recognized as a central feature of democratic accountability, the regulation of social conflicts and successful implementation of public policies. In established democracies, rights of organization and collective action enjoyed by labour unions have been added to rights of participation in the governance of the macro economy itself. Indeed, the survival of democracy and the market have been linked to the capacity of countries to reconcile the interests of workers, employers and the state through "corporatist" or participatory arrangements.

However, the same global forces that are challenging the powers of parliaments in economic policy making are also undermining the role of organized interests in this sphere. Trade union rights and the governance roles of labour in macro-economic policy are being questioned on the basis of the need to promote labour market flexibility, higher productivity, price stability and industrial order. Such concerns have affected labour unions in both industrialized and developing countries. They have implications for the construction of social pacts that will support industrial peace and political stability.

Still, democratization in developing and transition societies is associated with labour legislation that seeks to advance the political rights of labour unions. There are also attempts in many emerging democracies to establish or reconfigure social pacts or tripartite institutions for macro-economic policy dialogue and industrial peace. How have these social pacts fared to date? How open and accountable are they to the groups that participate in them? How have they addressed the tensions between concerns for economic stability and the demands of unions for social protection and livelihood improvement?

Public management reform
Successful democratization and social development require effective states that can establish and defend basic rules of contestation, and protect disadvantaged groups and communities. However, the 1990s have witnessed a decline in state capacity in many developing and transition societies. Expenditure needs have outpaced revenues and tax capacities. Economic crises and stabilization policies have affected public sector employment and wages. And in less-developed countries heavily dependent on foreign aid, donor incentives for project implementation have affected the internal coherence and workload of bureaucracies.

As a result, the major lending organizations and many governments have attempted to introduce market policies into public sectors. These have focused on decentralized forms of management. Relations between departments are governed by contracts as opposed to hierarchy. Important departments that deal with financial and economic matters are delinked from the general civil service. Employee performance indicators and fixed-term employment contracts are introduced, and salary structures are realigned to provide incentives to fewer employees (mostly at the managerial level). Purchasing and provisioning functions of ministries are separated to allow for contracting out of services and efficient response to consumers.

These reforms seek to create a standardized, market-friendly, lean, consumer-oriented and managerial state. What are their implications for the livelihoods of state employees, the distribution of responsibilities and power within bureaucracies, the effectiveness of service delivery, social equity and democratic accountability?

Plural forms of governance and ethnically segmented societies
Especially in ethnically segmented countries, it is essential to craft institutions that respect democratic rules of electoral competition, while also generating broad support among contending groups and parties. Such institutions should facilitate meaningful dialogue, compromise and consensus on key issues of public life. The failure of democratization to produce appropriate institutions and rules for governing ethnically segmented societies has led many countries in the 1990s to major crises of insecurity, civil strife and war.

Efforts to reform the public sectors of crisis-ridden states have thus also focused on governance issues. These reforms deal with issues of decentralization; changes in electoral rules to favour proportional rather than majoritarian outcomes in legislative and executive branches of government; power-sharing arrangements; and mainstreaming of human rights in national institutions.

How successful have these initiatives been? What is holding back progress in the implementation of reforms? Recent evidence suggests that parliamentary government and non-majoritarian electoral rules offer better prospects than presidential government for consolidating democracy and implementing public policies. Coalition governments in parliamentary democracies increase the number of actors whose choices must be co-ordinated to reach agreements. It is assumed that the process of co-ordination will itself increase the effectiveness of policy making. What are the implications of these findings for countries that have opted for the presidential road to democracy?


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