Institutional development in the era of economic policy reform: Concerns, contradictions and illustrations from Malawi
| Date | 01 May 1993 |
| Published date | 01 May 1993 |
| Author | David Hirschmann |
| DOI | http://doi.org/10.1002/pad.4230130203 |
PUBLIC ADMINISTRATION
AND
DEVELOPMENT,
VOL.
13,113-128 (1993)
Institutional development in the era of economic policy
reform: concerns, contradictions and illustrations from
Malawi
DAVID HIRSCHMANN
The American University, Washington
DC
SUMMARY
The article argues that the essence of economic policy reform programmes-both their sub-
stance and their pace-runs counter to the central notions of sound institutional development.
Attention
is
first given to some fundamental concerns about the relationship between the
two processes,
in
particular focusing on questions of culture, speed of change and the political
environment. The article then provides some illustrations from Malawi, looking in turn
at
collateral institutional damage, the new generation of semiautonomous organizations, confus-
ing incentives systems in the areas
of
salaries, housing and training, and lack of serious concern
for the sustainability of the reforms. The conclusion calls for returning ‘part-ownership’ of
the reform programme to the local officials, and trying to reduce some of the institutional
unreality, which seems to adhere to the implementation of the reforms.
MANAGING
POLICY
REFORM
It was some years into the era of economic policy reform before the full complexity
of implementing the package began to be understood.
As
awareness slowly grew,
a small group of practitioners and scholars turned their attention to the challenges
of attempting to manage what amounted to a ‘redimensioning of the state’ (Nunberg
and Nellis, 1990, p.
1).
White, for example, pointed to some of the difficulties confronting the manager
of such
a
process. The set of policies recommended were complex and uncertain
and imposed significant political costs; their values were generally incompatible with
prevailing local political philosophies; they involved a significant alteration in roles
for key actors; they altered power relations within government; and they were identi-
fied with outsiders (1990, pp. 50-53). Callaghy concurred in calling for recognition
of ‘the complex inter-relationships between weak capability, task enormity, conditio-
nality, adjustment fatigue, absorptive capacity and sustainability’ (1989, p. 136).
Further, the
‘
anti-state nature of many of the reforms’ deepened the difficulty (Nelson,
1989, p. 9).
As
problematic (and this is a central theme of this article) was the
fact that the very people who were most threatened by these policy reforms were
the ones who were expected to carry them out; government agencies and personnel
were expected
to
co-operate in diminishing or dismantling their own power. And
Professor Hirschmann is
in
the
School
of
International Service at the American University, Washington
DC 20016, USA.
0271-2075/93/020
1
13-16$13.00
0
1993 by John Wiley
&
Sons, Ltd.
1
14
D.
Hirschmann
it soon became clear that western management expertise was ready with few answers
to these challenges.
The complexities confronting management of economic policy reform pale next
to those of institutional development. The problem to be explored in the article
is that the essence of the reform programme-both its substance and its pace-
runs counter to the central notions and common wisdom of institutional development.
The article will first give attention to some fundamental and generalized concerns
about institution building and economic policy reform. Then, in its main sections,
it will provide illustrations from Malawi, in which country the author had the oppor-
tunity to work recently as a member
of
a team of consultants responsible for institutio-
nal development. Since then,
I
have worked in Mozambique, and found a very similar
pattern of problems, even more severe in nature. The conclusion to the article suggests
an approach aimed at reducing in a modest way some of the institutional unreality
adhering to the implementation of economic policy reform.
INSTITUTIONAL DEVELOPMENT
‘The single most important point about institutional change, which must
be grasped if we are to begin to get
a
handle on the subject, is that
institutional change is overwhelmingly incremental’ (North, 1990, p. 89).
‘But even more fundamentally, this institutional evolution takes time’
(Brautigam, 1991, p.
9).
The first problem in the relationship between policy reform and institutional develop-
ment relates to the interconnection between institutions and culture.
‘Organizational capacity building cannot happen without the develop-
ment of linkages between the organization and indigenous institutions.
The more an organization is grounded in its cultural and poiitical setting
and integrated with local institutional practices, the more likely it is to
generate local participation in its programs. Institutional development
as the integration of indigenous practices into the capacity building aspects
of local organizations is at the center of the development process’ (Bryant,
1985, p.
26).
The
more sociological definitions
of
institutions render institutions inseparable from
culture.
For
Esman, an institution is a societally valued and sanctioned norm of
conduct or rule of the game that guides and constrains individual and group behav-
iour. Thus marriage, private property and kinship obligations would qualify as insti-
tutions (Esman, 1989, p.
2;
see also Hage and Finstersbuch, pp.
2-3).
In this sense,
it is not possible to think of developing institutions without attendant cultural
changes. One may lead and the other follow in uneven and lumpy sequences, but
the chord cannot be broken without the legitimacy of the institution being broken.
Thus
Esman advises ‘modern’ institutions to imitate familiar and accepted patterns
of responsibility (1989, p. 7), while Brinkerhoff (1987) suggests an interactive and
adaptive process in which the new patterns of activities and behaviours and the
indigenous norms are brought into a mutually supportive relationship. In many
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