Are we getting the balance between autonomy and control right?

by Jurgen Blum, World Bank

Weberian principles limit autonomy…

1. Rules (“if x, do y”)

2. Hierarchy (“buck a decision up”)

3. Specialization

...

“Use your own best judgment at all times”

(Nordstrom)

Reason 1. It matters.Perhaps the central question in the Public Management debate

1998: Allan Schick: “Why Most

Developing Countries Should Not Try New Zealand’s Reforms”

New Public Management (NPM)Movement

Reason 2. We do not have much “hard” evidence.The debate has not been free of fashion

Sources: Harper‘s.1985. Militry Specifications Cookie Mix Dry, 271, p. 25 26, cited after Kehlman Steven, Unleashing Change, [publisher] 2005.

20 pages of specifications

A puzzle: Why did the American Military specialize in cookie recipies?

Reason 3. Controls tend to get out of control.Why?

Why do controls get out of control?

Sole remaining bidders specialize on government contracts

Commercial Firms stop bidding

Large firms reluctant to adjust production for government

Tightening of specifications

Bidders cut corners

Selection solely based on price

Low bid rule1. Reduced competition

2. Not so great cookies

Source: Authors based on Kelman, Steven. 2005. Unleashing change. Brookings Institution Press, Washington D.C.

The answer: The “low bid“ rule

Why do controls get out of control?More generally: Out of a focus of abuse

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Bad <- Agent behavior -> Good

Why are controls hard to get rid off?Politicians favor results – but may hesitate with autonomy

Source: Moynihan, Donald. 2006. „Managing for Results in State Government: Evaluating a Decade of Reform”. Public Administration Review 66(1): 78-90.

Example:Partial adoption of performance management doctrine adoption in US States

„Treatment“

Example A: A natural experiment with procurement rules in Italy (Coviello & Guglielmo)

Reason 4. IE help get the balance right.

300K

Low autonomy:Open auction

High autonomy:Restricted auction

Question: Do procurement officials perform better with more autonomy?

A quasi-experimental IE design

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200K

100K

400K

Source: Coviello, Decio , Andrea Guglielmo and Giancarlo Spagnolo. 2014. „The Effect of Discretion on Procurement Performance“, unpublished Working Paper.

„Control“

Findings

With high autonomy… Fewer bidders participate; Probability increases that same firm wins

repeatedly; Larger (incorporated) firms win more often; Works are delivered faster;

No significant difference in: Winning rebate (price); Cost overruns; Probability that the contract is awarded to

local firms.

Trattativa Privata> Invite 15 firms

> Invite 5 firms orDirect negotiation

First best rule:Capitation grants (high discretion)

Second best rule:Block grants (low discretion)

> 40%progressive

< 20%

$ $ $ $ $ $ $

Das, Jishnu. 2004. Equity in Educational Expenditures: Can Government Subsidies Help?, World Bank Policy Working Paper Nr. 3249. The World Bank, Washington D.C.

Reason 4. IE help get the balance right.

Example B: Accounting for implementation in school funding (Zambia)

Thank you!