Anti-Corruption Organizations Require Systems Thinking

When asked why their country is not more developed, or why there is so much poverty, most people in the world blame corruption (see this blog).  Corruption is present in every nation, and the struggle against it is never complete. In this post, I’d like to make the case for bringing systems thinking into corruption work.

First, let’s start with an obvious point that is often overlooked.  Corruption is defined as the abuse of public office for private gain, but it manifests itself in extraordinarily diverse ways, in terms of the individuals involved, the kind of corrupt act, the potential damage to the public, and the sector in which it takes place, amongst others.  Here are a few types of corruption:

• Mid-level officials steal stocks of life-saving drugs and sell them on the black market
• The executive requires a large, fixed monthly payment from the police force, as a means of sharing corrupt earnings
• Passengers pay an intermediary – and indirectly the immigration office manager – to jump to the front of an immigration line
•  A local official, at the behest of the MP, adds names of political supporters to a list of safety net beneficiaries
• Various officials take a portion of all construction contracts
• Teachers skip school to work elsewhere, but still earn a salary

One simple conclusion emerges upon describing the various forms of corruption. Because it varies widely, both simple explanatory theories and broad generalizations about the effect of corruption tend to be inaccurate.  Corruption is not just cultural, or only the result of a lack of supervision.  Similarly, not all forms of corruption are horribly damaging for the public. 

Some have tried to argue that corruption is either good for development, or not a top priority (Huntington, 1968; or other blogs cited here). These arguments fail to acknowledge the variety of forms of corruption. Indeed, some forms could potentially help development under certain conditions. Other forms may be relatively benign.  However, one need only conduct a simple exercise to comprehend the pervasiveness of damaging forms of corruption: name a development priority area in which corruption is not the greatest, or among the greatest impediments to advancement.   It would be difficult to find such an area in the majority of countries. 

Given that reducing some forms of corruption is critical for development, the question is, what can be done about it?  Unfortunately, I think that many anti-corruption organizations suffer because they fail to adapt to the dynamic social systems that support corruption.  Systems thinking is an essential step in developing, adjusting and executing a strategy to fight corruption.

Systems thinking as an integral part of organizations is not new.  It was popularized by Peter Senge in his classic 1990 book, The Fifth Discipline.  Its essence is that organizations need to incorporate an understanding of the complex, dynamic systems in the world in order to fulfill their mission.  Corruption plays a role in many socio-political systems that must be understood to make corruption efforts effective.  (For an excellent study in some such systems, see The Wire, my favorite TV show, which provides an analysis in terms of the interlink between the drug trade, policing, and politics.)

Here is a simple example of a system in corruption.  In the majority of countries of the world, patronage is required in the lead up to an election, which usually involves distributing some free items (such as money, rice, or jobs).  In order to spread wealth, politicians must raise funds.  Most of these funds will be collected through corruption while in power, either in the form of money raised or favors earned.  Corruption therefore forms a foundation of power for politicians, via patronage networks; and political power then allows them to use the government apparatus to conduct corrupt acts.  Impeding the various forms of corruption that support the patronage networks would therefore threaten the political survival of those who manage them.

                                                         Political Power
                                                         |                      ^
                                                         |                       |
                                                         |                       |
                                                        V                      |
                                             Corruption --------> Patronage

This very basic system diagram – which represents systems thinking - has important implications for fighting corruption.  One advantage is that it lets you know what you’re up against.  In this example, it suggests that political leaders have a strong interest in maintaining some forms of corruption, because their political power – and therefore their ability to be corrupt - depends on it.  As a result, an anti-corruption organization that focuses on the forms of corruption that support patronage can expect a strong reaction from political leaders.  Activists need to develop a contingency strategy to respond to the various tactics that politicians may take to undermine their activities.  Or, if an anti-corruption project seeks to reinforce checks and balances that limit the types of corruption that are needed for patronage, the effort will likely face opposition from politicians and their allies.

The system diagram also indicates that, for many forms of corruption, real reform would require a weakening of the strong, dynamic systems that rely on corruption, such as these patronage networks.  In the short or even medium term, this is unlikely.  If corruption is reinforced by other elements of the system, then a transformation of the system may be necessary.  Therefore, the fight against corruption should be seen as a long-term struggle that requires a multi-pronged strategy. 

Similarly, an immediate approach that seeks to grab low hanging fruits should begin with a contextual analysis to determine the precise forms of corruption that are not supported by these strong and dynamic systems. If there are not powerful individuals opposing the anti-corruption effort, the likelihood of progress should increase.

The diagram also suggests that a success in reducing corruption in one area may actually increase the corruption elsewhere.  Patronage requires resources, so even if an anti-corruption efforts is successful, the necessity will push those involved to seek out other corruption opportunities.  Such an effect is frequently discussed in economics, with the analogy of stepping on a balloon.  The net effect may be the same for the public, thus neutralizing any gains won through the successful reduction of corruption in the particular area.

Instilling smart approaches to fight corruption are critical.  Too much of this work takes a standard, technocratic approach of ‘capacity building’ for an anti-corruption commission and supreme audit institutions, or generally promoting transparency and open data.  More targeted approaches with systems thinking is needed to increase the effectiveness of anti-corruption work.

A Bangladesh without Foreigners

Here is a recent editorial I wrote for The Daily Star in Bangladesh.
http://www.thedailystar.net/op-ed/bangladesh-without-foreigners-1267627

One of the natural results of the recent terror attacks in Bangladesh is contemplation.  Some are rightly focused on the immediate need to understand how these unprecedented acts of violence could happen, and how to stop them.  But the fact that one major attack targeted foreigners in Bangladesh makes me wonder, what would Bangladesh be like without the foreigner presence?

I first came to Bangladesh in 2002, and have lived in the country for several years and visited numerous times since then.  This is the first time in memory that many of my foreigner friends and colleagues in Bangladesh are hesitant to stay in or visit the country.   As we foreigners count our blessings that we were not among the victims at the Holey Bakery, we also recognize that it could have easily been us that night.  The fear is amplified by both the brutality and the utter lack of sense behind the attacks. 

In the recent past, few major areas of economic and social progress that would have happened without a partnership with a foreign individual or organization with a presence in Bangladesh, even if all progress was completed with Bangladeshi leadership.  The main markets for the garment industry are the US and Europe, whose buyers have large offices in Dhaka with other buyers visiting the country frequently.  The aid industry supports many government programs, as well as the enormous NGO system in Bangladesh.  Academic partnerships have similarly been crucial in creating life saving health institutions such as ICDDR,B, involved in life-saving interventions that include  ORS.  Foreigners, particularly from Sri Lanka and India, contribute greatly as skilled employees for a number of industries, particularly garments.  This is not to say that the record is perfect, with numerous disastrous aid projects and imposed, destructive policies, amongst other negative effects; but the partnership has been positive on the whole.

As we look to the future, these areas of progress have been firmly established in the country, so even if many foreigners would depart, it is difficult to imagine they would vanish.  But one wonders, which other partnerships for progress are endangered?  Where are the major new areas where a partnership with foreigners in Bangladesh can make further contributions?  I would argue that four areas are vital to maintain growth and ensure Bangladesh progresses further as a Middle Income Country.

New Businesses

While the garment industry is strong, sustained growth requires the development of new sectors.  Export of light manufacturing goods is one of the most promising sectors, but as with garments, this requires the presence of buyers in the country, who will provide business opportunities and work with manufacturers to improve their capacity.  Similarly, the growing technology sector of Bangladesh should be greatly enriched through international business and the exchange of ideas.  Reliance on the garment industry to sustain growth is a risky approach for the economy. 

Investment

To continue developing, Bangladesh requires major investments in infrastructure.  Everyone knows the current infrastructure in Dhaka is woefully inadequate.  Indeed, several of the victims of the terrorism were reported to be visiting Dhaka to advise the government on the construction of a badly needed metro system.  Foreign governments and other institutions are needed to both provide advice and financing for infrastructure. 

A Skilled Labor Force and Higher Education

Most large businesses in Bangladesh identify the lack of highly skilled, well-educated employees as a key constraint, leading many to offer such jobs to Sri Lankans and Indians.  These foreigners play a critical role in meeting this need.  At the same time, it is clear that Bangladesh needs to further develop its higher educational institutions.  While foreign investment in universities has been limited, exchange with foreign universities will play a critical role in producing critical research for the country, as well as improving the quality of higher education.

Climate Change

Bangladesh has received worldwide attention as one of the main victims of climate change.  While some progress has been made, adapting to this challenge will require large-scale programs, with cooperation on a number of fronts.  The West should rightfully bear the costs of many of these programs.  At the same time, their presence is required to offer these resources, as well as cooperate to produce technical analyses to understand the varied effects of climate change.

The need to prevent terrorism in Bangladesh is obvious, but it’s important to keep in mind what is at stake.  As if a general sense of fear and sadness isn’t enough, there are also grave threats to the partnerships that have yielded economic and social progress of the country.  Re-establishing a general sense of security in the coming months and years may prove to be pivotal to the future of Bangladesh.  The country may continue its current, admirable progress or see that progress grind to a halt.

What's the Use of Development Plans?

Nearly two years ago, I was part of a team that drafted the background paper on governance, justice and human rights for the current Seventh Five Year Plan of the Government of Bangladesh.  Bangladesh still drafts a Soviet/ Indian style Five Year Plan, as led by the Planning Commission of the government.

This experience presented valuable lessons on planning, and especially how to think about the value of a planning exercise.  Ex ante, one would think this planning document is the master plan, directing practically all government initiatives related to development.  This is incorrect, as is the case with most planning documents. This is not to say that the document is useless; instead, it requires a different conception of the function of a planning document.  To explain this, let me present some important contextual realities.

First, I quickly realized that there is a major issue in terms of implementation. I thought that, to provide some context and accountability, I should dedicate a section of the paper to a stocktaking of what had been completed under the Sixth Five Year Plan.  The results were not encouraging.  Of the 72 activities related to governance, justice and human rights that appeared, just 13 had been completely implemented, 38 had been partly completed, and 21 had not even begun to be implemented.    Granted, these topics – governance, justice and human rights – tend to be a difficult and contentious area.  But this is a rather mediocre track record.

Second, I realized that the process for generating the plan does not generate sufficient ownership.  After starting the paper, I learned that the main Five Year Plan is written by an outside think tank for the government, then goes through an extensive review by the government.  This process clearly raises concerns regarding ownership by the ministries involved.  One such concern is first mover advantage: as long as the planned action – planned being the operative word – was not somehow controversial, it was quite possible it would remain in the document.  But if the idea didn’t stem from the responsible ministry, it’s quite possible the action would be tolerated in the plan, but with no intention of following through.  Ideally, a given ministry composes the relevant section of the overall plan, to ensure ownership.  Simply having the ability to edit an outside product is not sufficient to build on genuine intentions. 

That said, we also realized that the plan is not the main driving force behind government action, but it can help to serve as a rationalization for action.  If a well-placed individual in government wants to implement an activity, then its appearance in the Five Year Plan can further justify implementation.  This became the priority in developing our recommendations: identify genuine champions within the ministries, and if their ideas had a reasonable possibility of generating positive results, strongly recommend these actions. 

The experience brings up serious questions about the value of a plan in development organizations in general.  In the technocratic development practitioner’s view, a plan is made to set things in stone, then a budget and implementation indicators are developed, the project is financed, and then executed. However, this becomes ridiculous once one acknowledges two realities.  First, the implementing organization – or the branch that implements - often feels little ownership over the plan.  Such plans are generally developed by an outside consultant at the request of the funding organization, with the funding organization hiring that person and financing the work.  The consultant usually has little contextual knowledge, and few days in which to develop the plan.  Moreover, because the funding cycle takes so long, this exercise may have been completed years before implementation begins; further learning may have emerged, senior staff been replaced, and country conditions transformed.

Second, unless the program is a routine development intervention, everything changes once implementation begins. The plan may be comprehensive with a substantial consultative process, but when things begin, challenges emerge, and the intervention may prove to be ineffective.  

To make matters worse, the financing bureaucracies face difficulties in allowing for flexible implementation plans, at times demanding that the implementing organization stick with it.  In such cases, the implementing organization often pretends to go through the motions, so as not to interrupt the flow of resources; they may do so, even if they realize that the plan will not achieve the targets.  Moreover, the lack of flexibility discourages innovation and the testing of a variety of approaches to see what works. 

All of this is to say that a more realistic planning approach is needed.  We shouldn’t simply scrap plans, though they are sometimes useless.  Instead, a greater focus on process is needed, one that is long-term, inclusive, and on-going, that provides the opportunity for revisions along the way and for learning by doing.  Ideas such as flexible planning and the development of a learning organization (i.e. the Fifth Discipline) should be taken up by both financing and implementing bureaucracies.  I haven’t found a good example in development of flexibility that appears in this article from Harvard Business School, but I’m curious to find one.

Technocrats Prioritize Development Projects: Thoughts on Cost Benefit Analysis in Bangladesh

Over the past couple of months, I have worked for the Copenhagen Consensus Center, writing two studies on nutrition.  Their approach is to complete benefit to cost ratios, after a long process of consultation on priority areas.  In other words, for every dollar spent on this intervention, x dollars of benefit will result. In Bangladesh, they hired a variety of analysts to calculate 75 such ratios.  The Economist provides a summary of this work.

I am not naturally prone to such an analysis.  The world is complex, so how can we boil it down to one number?  It smacks of a technocratic, top down approach to development that often harms more than it helps.  However, I’m emerging from the exercise with some positive views, primarily after seeing the types of interventions prioritized after the exercise.

I developed my most upbeat opinions of the exercise during a nutrition conference jointly organized by the Copenhagen Consensus Center with local partners.  My two papers analyzed what we might consider the most basic and proven nutrition interventions, primarily consisting of supplements for pregnant women and for infants in their first 1,000 days.  As part of the dissemination of this and other nutrition research, the conference brought together many members of the nutrition community in Bangladesh, including the Minister and Secretary of the Ministry of Health and Family Welfare.  What became clear in this meeting is that the government and many of the nutrition champions are trying to take a holistic approach to addressing nutrition that fails to prioritize interventions.   Unfortunately, the implementation record is generally poor.

I view the logic of the cost benefit analysis as appropriate for nutrition in Bangladesh in two ways.  First, as mentioned, a more focused approach on a few priority steps is needed.  The combination of a laundry list of actions and poor implementation rationally points to the need for prioritization.  Second, the types of interventions that emerge from the exercise tend to fit the limited implementation capacity of governments such as in Bangladesh.  While nutrition education in schools would be wonderful, the quality of primary education is quite poor; I don’t see how this can be implemented effectively in this context.  Similarly, I’m unclear how poorly trained and often absent health workers can implement complex behavioral change such as breastfeeding practices.  But providing iron folate supplements to pregnant women seems a more feasible task.

Of course, all of this must be negotiated with the local political context.  If performance is a measure, nutrition has not been a consistently high priority for the Government of Bangladesh.  But the current approach of demanding 100 different nutrition actions, forming high level nutrition committees that never seem to meet, and fighting between ministries regarding the lead for nutrition is not proving productive.

That said, I would highlight four limitations to a cost benefit analysis: the difficulty in standardizing assumptions, sensitivity to small estimate changes, and the lack of focus on distributional and other concerns, and the reality of implementation.  On the first, the analyses should use similar assumptions and approaches for calculating the costs and benefits to be comparable, but this is nearly impossible to do in a context with scarce data.  As such, a variety of approaches were used in the Copenhagen Consensus exercise.  For example, my papers used international estimates of the costs based on the input prices, and not on existing programs in Bangladesh; other programs had such information.  This point was highlighted in the Economist article.

Second, the estimates are highly sensitive to small changes, meaning that we should not have too much confidence in the results.  For example, the analyses often multiply three approximations to find a benefit, then divide by an approximation of the cost.  Something like the use of an exchange rate from different years can yield large changes in the final ratio.

Third, cost benefit analyses take a neutral position regarding social values, such as the distributional effects of the interventions.  An intervention achieves the same value whether it increases the wealth of a rich person by $5 or a poor person by $5.  As such, programs focused on the ultra poor, which generally do not yield huge financial outcomes, do not end up on top.  Similarly, the financial value of a program does not necessarily include a social value, such as preventing the exploitation of women through child marriage.  While an analysis could attempt to provide for such a valuation, it would further amplify the approximations, putting an estimated social value on such factors.

Fourth, it is difficult to know how accurately the analyses would reflect the costs and benefits of large-scale programs in Bangladesh, given the numerous implementation concerns. Prime amongst these is that institutions vary dramatically in their capabilities, which would influence both the benefits and the costs.  Programs may face rampant corruption.   Or their staff may lack the skills to implement complex interventions.  As such, I didn’t hope to provide an accurate representation of the likely costs and benefits if the Government of Bangladesh allocated further funds.  Instead, my hope was to use the analysis to show the likely costs and benefits based on a decent implementation of nutrition programs, i.e. if the government would get their act together to organize an effective nutrition service delivery system.  Unfortunately, it might be interpreted as the need to allocate further resources to nutrition, when the government only spends a fraction of the currently allocated resources. 

One final note relates to advocacy for research.  The project was very smart in hiring local staff with excellent connections, and inviting many of the right people to attend meetings.  However, many conversations have only just begun; to be truly effective, these must be ongoing, where a local institution continues to engage government and other stakeholders. 

p.s. My two papers covered interventions that were selected among the top priorities for Bangladesh. They can be seen here:
https://drive.google.com/folderview?id=0B8ly6oGPuGCRdldIODZraE9oYTQ&usp=sharing