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The World Bank Approach to Public Sector Management 2011-2020:

The World Banks Approach to Public Sector Management Reform2011-2020

Better Results from Public Sector Institutions

29 November 2011

11. How did we develop the PSM Approach? Overview1. How did we develop the PSM Approach? 2. What is PSM reform and why does it matter?3. What are the Banks current strengths and weaknesses in supporting PSM reform?5. Which strategic directions should the Banks PSM Approach for 2011-2020 follow?6. How should we ensure progress?4. What are emerging challenges and opportunities for PSM reform?2. What is PSM reform and why does it matter?3. What are the Banks current strengths and weaknesses in supporting PSM reform?4. What are emerging challenges and opportunities for PSM reform?5. Which strategic directions should the Banks PSM Approach for 2011-2020 follow?6. How should we ensure progress?2A very intensive consultation processAn (external and internal) Advisory Group, including Academics and Government OfficialsAcademics and Practitioners via Public Blog discussionThe Public Sector Governance Board / Human Development Sector BoardsRegional Public Sector UnitsThe PSM Thematic Groups / Communities of PracticesKey partners including DfID, CIDA, UNDP and OECD Govnetno major consultation with client governments (budget constraints).BLOG: http://blogs.worldbank.org/governance/public-sector-managementWhat is PSM and why does it matter? Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressWith:How did we develop the PSM Approach?3and significant background workIssues PapersDefining the public sectorWhat can PSM reform achieve?How we learn about what works in PSM reformKnowledge, products and staffing for PSM reformExplaining successes and failuresWhat is the Banks mission in PSM reform?Challenges and opportunitiesWhat should the Bank do?

Econometric Review of the World Banks PSM Portfolio

Discussion PapersTowards a Theory of Change for PSM reformThe Diagnostic Protocol and Country Pilots

Staff Surveys on the PSM Approach

Input Papers Matt Andrews Change Space and PSM projectsGraham Scott PSM strategy review

What is PSM and why does it matter? Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressHow did we develop the PSM Approach?4The public sector delivers key results

How did we develop the PSM Approach?Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressWhat is PSM and why does it matter? See Paragraphs 7-9

5General Government Revenue and Outlay as a Percentage of GDPSource: IMF Government Finance Statistics and International Financial Statistics and represents a large part of the economyHow did we develop the PSM Approach?Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressWhat is PSM and why does it matter? See Paragraph 106

Copyright 2006 by Sidney Harris There are many conceptual challengesHow did we develop the PSM Approach?Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressWhat is PSM and why does it matter? 7

The PSM Approach defines PSM reforms

By their purpose: They seek to achieve sustainable improvements to the public sector results chain.

Not by assumptions about the right place to start.

which the Approach resolves by defining PSM as a problem-solving taskHow did we develop the PSM Approach?Strengths and WeaknessesChallenges and OpportunitiesStrategic DirectionsEnsuring ProgressWhat is PSM and why does it matter? See paragraphs 12-158Total Committed Amounts to Public Finance Management Projects by Donor (2005-2008, worldwide) Source: OECD Development Database on Aid Activities (Creditor Reporting System)How did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressThe Bank has a large PSM lending portfolioAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 239Source: PSM portfolio review, 2011but with a mixed track recordAverage Investment Lending Project success rates by Sector BoardHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 24

ARD Agriculture and Rural Development CIP Competitive Industries Practice CMP Capital Markets Practice EP Economic Policy ED Education EMT Energy and Mining ENV Environment FIP Financial Inclusion Practice FSY Financial Systems Practice FM Financial Management GE Gender and Development GIA Global Indicators and Analysis GIC Global Information and Communications Technology HE Health, Nutrition and Population ICP Investment Climate Practice IEP Innovation, Technology and Entrepreneurship Practice PO Poverty Reduction PR Procurement PFG Project Finance and Guarantees PS Public Sector Governance RM Resource Management SDV Social Development SP Social Protection TR Transport UD Urban Development WAT Water10Little explicit evidence about what matters most in improving PS performance

Significant uncertainty about the institutional forms that are suited

Changing the actual behavior of public agents deep inside the public sector is hard

Even if implemented, PSM reforms may not make the intended difference for development outcomes

Political economy factors may not be fully evident until the reform process plays outDespite significant advances in understanding,everyone faces problems with PSM reformsHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraphs 16-2111Lending engagement can be episodicEven when continuous, there are diverse areas of focus for lendingWhere lending dialogue is discontinuous, analytical work and TA often fill the gaps but not alwaysThe challenge is to ensure that the client experiences Bank engagement on PSM as a unified programbut the Bank faces some distinctive problemsHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesWe tend to downplay, not manage, riskThe Bank yet has to put best fit fully into practice persistent pressures towards best practiceDialogue with client governments on PSM reform is sometimes discontinuous, undermining trust-building and familiarity with client country context:See paragraph 2412Lending engagement can be episodic Source: World Bank Business Warehouse dataExample: Lending Engagement on PFM in ECA, selected countriesHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 5413Even when continuous, there are diverse areas of focus for lendingSource: World Bank Business Warehouse dataHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 5414Where lending is discontinuous,analytical work and TA may fill the gapsSource: World Bank Business Warehouse dataHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 5415but explicit research is lagging

Extensive tacit practitionerknowledge on PSM reformThe field has a weak knowledge baseSome promising work is emerging:How did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesDetailed and high quality case studies

Impact Evaluations on downstream PSM reform (e.g. school-based management)

Emerging work on the Political Economy of Public Sector Reforms

Some promising studies using comparative data on institutional strengthSee paragraph 2516but indicators of the strength of country systems are still lacking for key PSM areas:We have PEFACivil Service Tax Policy and AdministrationDecentralization / Governance across levels of government

Need to make more progress in country systemsHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and Weaknesses

Number of PEFA assessments conducted 2005-2010Source: Stocktaking of PEFA Assessments by the World Bank.See paragraph 2617Project ratings are an uncertain measure of reform success (success might reflect lack of ambition)

Project indicators are very idiosyncratic hard to aggregate

Research rarely built into project design

We do not reap the potential for learning from the Banks portfolio:=> Much project knowledge remains implicit / in the minds of project leadersNeed to learn more from our portfolioHow did we develop the PSM Approach?What is PSM and why does it matter? Challenges and OpportunitiesStrategic DirectionsEnsuring ProgressAs a development actorAs a knowledge generatorAs an integratorStrengths and WeaknessesSee paragraph 2718but that poses challenges for integration.PSM reforms are led by diverse specialistsHow did we