EMBARGO Not for publication or broadcast until 3 p.m. EDT (1900 GMT) Wednesday, June 25, 1997 Wf )1 FLjI:) I )fEVELO:PMENT R -EP( RT 1997 X. 34131 * -~~~~~~~~~~~~~t A ~ ~ VA . , r 4 4' */ ~~~~'P-~ I ., I U {M Rj SUMMAR_ - - - WORLD DEVELOPMENT REPORT 1 997 SUMMARY T H E S T AT E IN A C H A N G I N G W O R L D THE WORLD BANK WASHINGTON, D.C. (© 1997 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. Manufactured in the United States of America First printing June 1997 All rights reserved Interior design and typesetting by Barton Matheson Willse & Worthington This document summarizes World Development Report 1997, published by Oxford University Press for the World Bank. It is a product of the staff of the World Bank, and the judgments made herein do not neces- sarily reflect the views of its Board of Executive Directors or the coun- tries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. ISBN 0-8213-3778-5 Text printed on recycled paper that conforms to the American Standard for Permanence of Paper for Printed Library Material Z39.48-1984 C O N T E N WO R LD D E V E L OI r REPORT 1 997 OVERVI EW PART ONE RETHINK E-THE WORLD OVER 1 The Evolving R il 1 1, 2 Refocusing on tII it i.\ - d he State PART TWO MATCHIIs XPABILITY 3 Securing the Ec , 1undamentals 4 Fostering Mark, I ixI iri' ,iegulation, and Industrial Policy PART THREE REINV iTITUTIONAL CAPABILITY 5 Building Institu( 'nll, Iw 1 Public Sector 6 Restraining Arb iX 't 1 V U i, Iii !nd Corruption 7 Bringing the St l,t ( iI I'ol' 8 Facilitating Intc1i itiw,i.i ( I,L. i,. Action PART FOUR REMOVI S TO CHANGE 9 The Challenge | 1int u, iii,l >m .taining Reforms 10 The Agenda for( h n Technical Note Bibliographical Note Appendix: Selected Indicators oin Publiw I:i.iiae SELECTED WORLD C INDICATORS 1II A ROUND THE GLOBE, I F ,1 TA -E SPOT- of experience since then is rather different: that the state is A light. Far-reaching dev w)ici ith g obal eco- central to economic and social development, not as a nomy have us revisiting basic i, lo-1l . I ior ernment: direct provider of growth but as a partner, catalyst, and what its role should be, whal ai . i.m io do, and facilitator. how best to do it. What makes for an effective state differs enormously The last fifty years have sh, i cill , ' ri the benefits across countries at different stages of development. What and the limitations of state a (!' a l' irn the pro- works in the Netherlands or New Zealand, say, may not motion of development. G( w,_ iI v.LN hielped to work in Nepal. Even among countries at the same level of deliver substantial improvemi ii 1IOI a id health income, differences in size, ethnic makeup, culture, and and reductions in social ii It. lir i i ;o ernment political systems make every state unique. But this very actions have also led to som . , al oines. And diversity enriches this Report's inquiry into why and hou' even where governments have llwc. (. ir the past, some states do better than others at sustaining develop- many worry that they will i c1, i lapt to the ment, eradicating poverty, and responding to change. demands of a globalizing wor . o) R 1 The new worries and quc t i L liCt siate's role Rethinking the state-the world over are many and various, but foi rJ Cel k loj ments have The world is changing, and with it our ideas about the given them particular impetu state's role in economic and social development. Today's intense focus on the state's role is reminiscent of an earlier * The collapse of command-, I on i I )n mnties in the era, when the world was emerging from the ravages of former Soviet Union and ( iii al -) si rn Europe World War II, and much of the developing world was just * The fiscal crisis of the welfi at _ , st ,f he estab- gaining its independence. Then development seemed a lished industrial countries more easily surmountable-and largely technical-chal- * The important role of the a c i I 'it inrcle" eco- lenge. Good advisers and technical experts would formu- nomies of East Asia late good policies, which good governments would then * The collapse of states and xl iti hiimanitar- implement for the good of society. State-led intervention ian emergencies in several r o r id 1. emphasized market failures and accorded the state a cen- tral role in correcting them. But the institutional assump- This Report shows that th 1 .c i f.1 -tor behind tions implicit in this world view were, as we all realize these contrasting developmer rtI e tii, n ss of the today, too simplistic. Flexibility to implement the policies state. An effective state is vi -r i o- sion of the devised by technocrats was accorded pride of place. goods and services-and the IL al I it, ions-that Accountability through checks and balances was regarded allow markets to flourish ar ip opl, t leil healthier, as an encumbrance. happier lives. Without it, sus - ib o[ ment, both In a few countries things have indeed worked out more economic and social, is impc h \ i ai I much the or less as the technocrats expected. But in many countries same thing fifty years ago, bL I+, n t i n ed to mean outcomes were very different. Governments embarked on that development had to be ti pi 1, i . I hc message fanciful schemes. Private investors, lacking confidence in 2 SUMMARY public policies or in the steadfastness of leaders, held back. veloping world embraced state-dominated development Powerful rulers acted arbitrarily. Corruption became strategies. The result was a tremendous expansion in the endemic. Development faltered, and poverty endured. size and reach of government worldwide. State spending Over the last century the size and scope of government now constitutes almost half of total income in the estab- have expanded enormously, particularly in the industrial lished industrial countries, and around a quarter in devel- countries (Figure 1). The pre-World War II expansion was oping countries. But this very increase in the state's influ- driven by, among other factors, the need to address the ence has also shifted the emphasis from the quantitative to heavy toll on economic and social systems brought on by the qualitative, from the sheer size of the state and the the Great Depression. The postwar confidence in govern- scope of its interventions to its effectiveness in meeting ment bred demands for it to do more. Industrial eco- people's needs. nomies expanded the welfare state, and much of the de- As in the 1940s, today's renewed focus on the state's role has been inspired by dramatic events in the global economy, which have fundamentally changed the environ- Figure I The state has grown everywhere ment in which states operate. The global integration of economies and the spread of democracy have narrowed the Total government expenditure scope for arbitrary and capricious behavior. Taxes, invest- (percentage of GDP) ment rules, and economic policies must be ever more 50 responsive to the parameters of a globalized world econ- omy. Technological change has opened new opportunities 40 for unbundling services and allowing a larger role for mar- kets. These changes have meant new and different roles for 30 government-no longer as sole provider but as facilitator and regulator. States have come under pressure even where 20 governments have previously seemed to perform well. Many industrial countries find themselves grappling with a 10 * - - - - w elfawelfare state that has grown unwieldy, and having to make 10 - - - - -difficult choices about the services and benefits that people should expect government to provide. Markets-domestic 0 and global-and citizens vexed by state weaknesses have About 1913 1920 1937 1960 1980 1990 1995 . 1870 come to insist, often through grassroots and other non- OECD countries governmental organizations, on transparency in the con- duct of government, and on other changes to strengthen Central government expenditure the ability of the state to meet its assigned objectives. (percentage of GDP) The clamor for greater government effectiveness has 50 reached crisis proportions in many developing countries where the state has failed to deliver even such fundamental 40 public goods as property rights, roads, and basic health and education. There a vicious circle has taken hold: people 30 and businesses respond to deteriorating public services by avoiding taxation, which leads to further deterioration in 20 - services. In the former Soviet Union and Central and East- ern Europe it was the state's long-term failure to deliver on 10 - its promises that led, finally, to its overthrow. But the col- lapse of central planning has created problems of its own. 160 In the resulting vacuum, citizens are sometimes deprived 1960 1965 1970 1975 1980 1985 1990 of basic public goods such as law and order. At the limit, as in Afghanistan, Liberia, and Somalia, the state has some- times crumbled entirely, leaving individuals and interna- tional agencies trying desperately to pick up the pieces. Note: Data for the OECD countries are for central and local government, including social security expenditures. See the A two-part strategy Technical Note for details. Source: Tanzi and Schuknecht 1995; OECD, various years; IMF, various years (b). How can we cut through the maze of questions and pres- sures now facing the world's states? No one-size-fits-all SUMMARY 3 recipe for an effective state is suggested here. The range of differences among states is too enormous, as are their start- Box 1 The pathway to a more effective state ing points. Rather this Report provides a broad framework for addressing the issue of the state's effectiveness world- A more capable state can be a more effective state, wide. It points to a number of ways to narrow the grow- but effectiveness and capability are not the same ing gap between the demands on states and their capabil- thing. Capability, as applied to states, is the ability ity to meet those demands. Getting societies to accept a to undertake and promote collective actions effi- redefinition of the state's responsibilities will be one part ciently-such as law and order, public health, and of the solution. This will include strategic selection of the basic infrastructure; effectiveness is a result of using collective actions that states will try to promote, coupled that capability to meet society's demand for those with greater efforts to take the burden off the state, by goods. A state may be capable but not very effective involving citizens and communities in the delivery of core if its capability is not used in society's interest. collective goods. The path to a more effective state, although not But reducing or diluting the state's role cannot be the linear, is likely to be a two-stage process. First, the end of the reform story. Even with more selectivity and state must focus what capability it has on those tasks greater reliance on the citizenry and on private firms, that it can and should undertake. As it does this, it meeting a broad range of collective needs more effectively can then focus on building additional capability. As will still mean making the state's central institutions work the figure illustrates, countries in Zone I pursue a better. For human welfare to be advanced, the state's broad range of activities in an unfocused manner capability-defined as the ability to undertake and promote despite little state capability, and their efforts prove collective actions efficzently-must be increased. ineffective. But countries cannot move to Zone III This basic message translates into a two-part strategy to overnight-building capability takes time. The path- make every state a more credible, effective partner in its way to greater effectiveness leads, first, to focusing on country's development: fundamental tasks and leveraging the state's limited capability through partnerships with the business * Matching the state s role to its capability is the first ele- community and civil society (Zone II). Countries ment in this strategy. Where state capability is weak, then can move gradually to Zone III by strengthen- how the state intervenes-and where-should be care- ing their capability over time. fully assessed. Many states try to do too much with few resources and little capability, and often do more harm than good. A sharper focus on the fundamentals would improve effectiveness (Box 1). But here it is a matter not just of choosing what to do and what not to do- More but of how to do it as well. effective * But capability is not destiny. Therefore the second ele- AL ment of the strategy is to raise state capability by rein- igo rating public institutions. This means designing effective rules and restraints, to check arbitrary state actions and combat entrenched corruption. It means subjecting state institutions to greater competition, to increase their efficiency. It means increasing the perfor- mance of state institutions, improving pay and incen- Less tives. And it means making the state more responsive to effective people's needs, bringing government closer to the peo- cuse ore ple through broader participation and decentralization. capable Thus, the Report not only directs attention to refocus- Unfocused Less capable ing the state's role, but also shows how countries might begin a process of rebuilding the state's capability. Matching role to capability do and what not to do is critical. But this also involves Matching role to capability is not a simple message of dis- choosing how to do things-how to deliver basic ser- mantling the state. In some areas much greater focus is vices, provide infrastructure, regulate the economy-and badly needed to improve effectiveness: choosing what to not just whether to do them at all. The choices here are 4 SUMMARY many and must be tailored to the circumstances of each graphic areas. Marginalized from public discussion and country. excluded from the broader economy and society, such groups are fertile ground for violence and instability, as Thefirst job of states: Getting thefundamentals right many parts of the world are increasingly learning. Five fundamental tasks lie at the core of every govern- Public policies and programs must aim not merely to ment's mission, without which sustainable, shared, deliver growth but to ensure that the benefits of market- poverty-reducing development is impossible: led growth are shared, particularly through investments in basic education and health. They must also ensure that * Establishing a foundation of law people are protected against material and personal insecu- * Maintaining a nondistortionary policy environment, rity. Where poverty and economic marginalization stem including macroeconomic stability from ethnic and social differences, policies must be care- * Investing in basic social services and infrastructure fully crafted to manage these differences, as Malaysia and * Protecting the vulnerable Mauritius have done. * Protecting the environment. Government regulation is not the only answer to pollu- tion. An expanding toolkit of innovative and flexible Although the importance of these fundamentals has long incentives is now available to get polluters to clean up their been widely accepted, some new insights are emerging as to act. Although there is no substitute for meaningful regula- the appropriate mix of market and government activities in tory frameworks and information about the environment, achieving them. Most important, we now see that markets these new tools, which rely on persuasion, social pressure, and governments are complementary: the state is essential and market forces to help push for improved environmen- for putting in place the appropriate institutional founda- tal performance, can often succeed where regulation can- tions for markets. And government's credibility-the pre- not. Countries are using some of these tools, with promis- dictability of its rules and policies and the consistency with ing results, in four areas: which they are applied-can be as important for attracting private investment as the content of those rules and policies. * Harnessing the power of public opinion A survey, specially commissioned for this Report, of * Making regulation more flexible domestic entrepreneurs (formal and informal) in sixty- * Applying self-regulatory mechanisms nine countries confirms what was already known anecdo- * Choosing effective market-based instruments. tally: that many countries lack the basic institutional foundations for market development (Box 2). High levels Going beyond the basics: The state need not be the of crime and personal violence and an unpredictable judi- sole pro vider ciary combine to produce what this Report defines as the There is a growing recognition that in many countries "lawlessness syndrome." Weak and arbitrary state institu- monopoly public providers of infrastructure, social services, tions often compound the problem with unpredictable, and other goods and services are unlikely to do a good job. inconsistent behavior. Far from assisting the growth of At the same time, technological and organizational innova- markets, such actions squander the state's credibility and tions have created new opportunities for competitive, pri- hurt market development. vate providers in activities hitherto confined to the public To make development stable and sustainable, the state sector. To take advantage of these new opportunities-and has to keep its eye on the social fundamentals. Lawlessness better allocate scarce public capability-governments are is often related to a sense of marginalization: indeed, beginning to separate the financing of infrastructure and breaking the law can seem the only way for the marginal- services from its delivery, and to unbundle the competitive ized to get their voices heard. Public policies can ensure segments of utility markets from the monopoly segments. that growth is shared and that it contributes to reducing Reformers are also moving to separate programs of social poverty and inequality, but only if governments put the insurance, designed to address the problems of health and social fundamentals high on their list of priorities. employment insecurity for all, from programs of social Too often, policies and programs divert resources and assistance, intended to help only the poorest in society. services from the people who need them most. The polit- COPING WITH HOUSEHOLD INSECURITY. It is now well ical clout of the more affluent in society sometimes leads established that the state can help households cope with governments to spend many times more on rich and mid- certain risks to their economic security: it can insure against dle-class students in universities than on basic education destitution in old age through pensions, against devastating for the majority and scholarships for the less well off. In illness through health insurance, and against job loss many regions poverty and inequality are often biased through unemployment insurance. But the idea that the against ethnic minorities or women, or disfavored geo- state alone must carry this burden is changing. Even in SUMMARY 5 Box 2 Credibility, investment, and growth A survey of local entrepreneurs in sixty-nine countries reliability of the institutional framework (normalized shows that many states are performing their core func- here to the high-income OECD countries) as per- tions poorly: they are failing to ensure law and order, ceived by private entrepreneurs-we call it credibility. protect property, and apply rules and policies pre- The other two panels show that, once differences in in- dictably. Investors do not consider such states credible, come and education and policy distortions have been and growth and investment suffer as a consequence. controlled for, there is a strong correlation between Firms were asked to rank each of several indicators countries' credibility rating and their record of growth on a scale from one (extreme problem) to six (no prob- and investment. The credibility ratings are based on lem). Averaging the answers, as the left panel does for investors' perceptions. But it is these perceptions that each world region, yields an overall indicator of the determine investment behavior. Growth of GDP per capita (percent per year) Credibility Index 2.0 High-income OECD 1.0 1.5 1.0 0.5- 1.0 . -0.5- 0.8 _ -1.0 - -1.5 High Medium Low 0.6 _ * 5 . Level of credibility Gross investment (percentage of GDP) 18 0.4 16 - 14- 12- 0.2 10 8 6 0.0 P4 High- South Middle CEE Latin Sub- CIS 2 income and East and America Saharan OECD South- North and Africa 0 east Asia Africa Caribbean High Medium Low Level of credibility Note: The credibility index (left panel) is a summary indicator that combines the measures in Figure 2.3. Each bar in the two right panels is the average for a group of countries. The graphs are based on regressions for the period 1984-93 of GDP growth (thirty-two countries) and investment (thirtythree countries) on the index, controlling for income, education, and policy distortion. South and Southeast Asia and Middle East and North Africa are each represented by only three economies. Source: World Bank staff calculations using data from the private sector survey conducted for this Report and Brunetti, Kisunko, and Weder, background papers. many industrial countries the welfare state is being re- Innovative solutions that involve businesses, labor, house- formed. Emerging economies from Brazil to China will be holds, and community groups are needed to achieve greater unable to afford even pared-down versions of the European security at lower cost. This is especially important for those system, especially with their rapidly aging populations. developing countries not yet locked into costly solutions. 6 SUMMARY EFFECTIVE REGULATION. Well-designed regulatory sys- Experience has shown that the way privatization is tems can help societies influence market outcomes for managed is terribly important to the end result. The key public ends. Regulation can help protect consumers, work- factors are transparency of process, winning the acquies- ers, and the environment. It can foster competition and in- cence of employees, generating broad-based ownership, novation while constraining the abuse of monopoly power. and instituting the appropriate regulatory reform. Where Thanks to regulatory reforms initiated in the early 1980s, privatization has been managed carefully, it is already Chile's telecommunications industry has enjoyed sustained showing positive results: in Chile, for example, and the private investment, increasing service quality and com- Czech Republic. Its importance in the strategy to foster petition, and declining prices. By contrast, until some markets may vary, but for many developing countries recent reform initiatives, dysfunctional regulation led the seeking to scale back an overextended state, privatization Philippine telecommunications industry-long privately must be kept on the front burner. A carefully managed owned-to underinvest. The result was poor and often privatization process brings very positive economic and high-priced service, imposing a high cost on citizens and fiscal benefits. other firms. Making the best use of the new options emerg- ing for private provision of infrastructure and social ser- Knowing the state's limits vices will also rely, often, on a good regulatory framework. The key to predictable and consistent implementation of INDUSTRIAL POLIC . When markets are underdevel- policy is a good fit between the state's institutional capa- oped, the state can sometimes reduce coordination prob- bilities and its actions. In well-developed states, adminis- lems and gaps in information and encourage market devel- trative capability is normally strong, and institutionalized opment. Many of today's oldest industrial economies used checks and balances restrain arbitrary action, even as they various mechanisms to spur the growth of markets in their provide government organizations the flexibility to pursue early stages of development. More recently, Japan, the their mandates. By contrast, states with weaker institu- Republic of Korea, and other countries in East Asia used a tions may need to err on the side of less flexibility and variety of mechanisms for market enhancement, in addi- more restraint. This can be done in two ways: tion to securing the economic, social, and institutional fun- damentals. Sometimes these interventions were quite elab- * Through self-restricting rules, which precisely specify the orate: the highly strategic use of subsidies, for example. content of policy and lock it into mechanisms that are Other times they were less intrusive, taking the form of costly to reverse. Regional common-currency arrange- export promotion and special infrastructure incentives. But ments, such as the CFA currency zone in francophone the ability to choose wisely among these interventions and Africa or quasi currency boards as in Argentina, are use them effectively is critical; ill-considered trade, credit, examples of such mechanisms in the field of monetary and industrial policies can and have cost countries dearly. policy. "Take-or-pay" contracts with independent power Many developing countries pursued ill-thought-out activ- producers serve a similar function in utilities regulation. ist industrial policies, with poor results. Countries that * Through working in partnership with firms and citi- have pursued an activist industrial policy successfully could zens. In industrial policy, for example, states can foster not have done so without strong institutional capability. private-to-private collaboration. In financial regulation MANAGING PRIVATI7ATION. Carefully designed regula- they can give bankers an incentive to operate prudently. tions and other active government initiatives can enhance And in environmental regulation they can use the the growth of markets. But in many countries this can spread of information to encourage "bottom-up" citi- take time, as private initiative is held hostage to a legacy of zen initiatives. antagonistic state-market relations. And poorly perform- ing state enterprises are often a big drain on the state's Countries in transition face a special challenge: not finances. Privatization provides an obvious solution. In only are roles changing as a result of the adoption of general it is easier to sell off state assets once a supportive market-based systems; so are capabilities. Some transition environment for private sector development is in place. countries retain inherent capabilities in the form of quali- Economies such as China, Korea, and Taiwan (China) fied people and usable equipment, but they are not orga- have therefore opted not to give top priority to privatiza- nized to perform in their new roles. Sometimes islands of tion, but to allow the private sector to develop around the excellence are found in countries where overall effective- state sector. This option, however, may not be available ness has suffered. The task of improving effectiveness here where the fiscal burden is very high, and where the pres- is in some ways easier and in some ways more difficult: ence of poorly performing state enterprises impedes easier because capability does not start from a low base, much-needed overall restructuring of the economy. more difficult because rebuilding capability means chang- SUMMARY 7 ing attitudes. Reform is not a matter of simply assigning that distort incentives and ultimately lead to poor out- people new responsibilities. comes. Three basic incentive mechanisms can be used, in a variety of settings, to combat these deeper problems and Reinvigorating state institutions ipoecpblt Fgr ) Improve capability (Figure 2): Acknowledging the state's existing, possibly meager capa- bilities does not mean accepting them for all time. The * Effective rules and restraints second key task of state reform is to reinvigorate the state's * Greater competitive pressure institutional capability, by providing incentives for public * Increased citizen voice and partnership. officials to perforn better while keeping arbitrary action in check. Effective rniles and restraints Countries struggle to build the institutions for an Over the long term, building accountability generally calls effective public sector. One reason the task is so difficult for formal mechanisms of restraint, anchored in core state is political. Strong interests may develop, for example, to institutions. Power can be divided, whether among the maintain an inequitable and inefficient status quo, judicial, legislative, and executive branches of government whereas those who lose out from this arrangement may be or among central, provincial, and local authorities. The unable to exert effective pressure for change. broader the separation of powers, the greater the number But the problem of continued ineffectiveness, or of of veto points that can check arbitrary state action. But corruption, is not entirely political. Often politicians and multiple veto points are a double-edged sword: they can other public officials have strong incentives and a sincere make it as hard to change the harmful rules as the benefi- interest in improving public sector performance. But cial ones. managing a public bureaucracy is a complex business that In many developing countries legislative and judicial does not lend itself to clear, unambiguous solutions. In oversight of the executive is weak. The setting of goals and fact, building institutions for an effective public sector the links to the policies needed to achieve them are some- requires addressing a host of underlying behavioral factors times diffuse, legislatures suffer from limited information Figure 2 A range of mechanisms can enhance state capability _ ~~~~~~~~~Merit-ase_ / \ recruitryie AlL ancl / \ * -promoto ecentralizati 8 SUMMARY and capability, and judicial independence is compro- guarantees from international agencies, can serve as a mised. An independent judiciary is vital to ensure that the short-term substitute. legislative and executive authorities remain fully account- A major thrust of any effective strategy to reinvigorate able under the law, and to interpret and enforce the terms the public sector will be to reduce the opportunities for of a constitution. Writing laws is the easy part; they need corruption by cutting back on discretionary authority. to be enforced if a country is to enjoy the benefits of a Policies that lower controls on foreign trade, remove entry credible rule of law. These institutions of restraint take barriers for private industry, and privatize state firms in a time to establish themselves, but international commit- way that ensures competition-all of these will fight cor- ment mechanisms such as international adjudication, or ruption (Figure 3). Such reforms should not be half- Figure 3 Factors associated with corruption Index of corruption Index of corruption 5 5 4 4 3 3 2 2 1 1 Low Medium High Low Medium High Policy distortion index Predictability of judiciary index Index of corruption Index of corruption 5 5 4 4 3 3 2 2 Low Medium High Low Medium High Merit-based recruitment index Ratio of civil service wages to manufacturing wages Note: Each index score is the average for a group of countries. See the Technical Note for details and definitions of the indexes. Higher values of the corruption index mean more corruption, and similarly for the other variables. The top left panel is based on a simple correlation for thirty- nine industrial and developing countries during 1984-93 (for the policy distortion index) and 1996 (for the corruption index). The top right panel is based on a regression using data from fifty-nine industrial and developing countries during 1996. The bottom left panel is based on a regression using data for thirty-five developing countries during 1970-90. The bottom right panel is based on a simple correlation for twenty industrial and developing countries in the late 1980s to the early 1990s; wage data are means. Source: World Bank staff calculations. SUMMARY 9 hearted: reforms that open opportunities for private entry effectively and retain their competence even when all into closed sectors of the economy, but leave that entry to other institutions have declined. These agencies work well the discretion of public officials rather than establish open for all the reasons listed above. They are less subject to and competitive processes, also create enormous scope for political interference. They have limited but clear objec- corruption. Formal checks and balances can also help re- tives. They are given adequate resources and training. And duce official corruption, but they are seldom enough. their staff are usually better paid than their counterparts in Reforming the civil service, restraining political patron- other parts of government. age, and improving civil service pay have also been shown Cross-country evidence reveals that bureaucracies with to reduce corruption by giving public officials more more competitive, merit-based recruitment and promo- incentive to play by the rules. tion practices and better pay are more capable. In several Where corruption is deeply entrenched, more dramatic countries (Kenya, the Philippines) political appointments efforts will be needed to uproot it. These efforts should be run quite deep, whereas countries such as Korea have ben- focused on better monitoring of official action-both by efited from reliance on highly competitive recruitment formal institutions and by individual citizens-and pun- and a promotion system that explicitly rewards merit. ishment of wrongdoing in the courts. In Hong Kong Ongoing reforms in the Philippines are examining these (China, as of July 1, 1997), an independent commission issues in an effort to improve bureaucratic capability. By against corruption is one successful example of such an and large, countries in which broader checks and balances approach. Likewise, recent reforms in Uganda have incor- are weak need to rely more heavily on more transparent porated several elements of the anticorruption strategy and competitive systems. The experience of certain high- outlined here, with some encouraging results. The same performing East Asian economies also shows that meri- mechanisms could be applied around the globe: corrup- tocracy and long-term career rewards help build an esprit tion, despite claims to the contrary, is not culture specific. de corps, or a shared commitment to collective goals. This Reducing it will require a multipronged approach, which reduces the transactions costs of enforcing internal con- must include the private sector and civil society more straints and builds internal partnerships and loyalty. broadly. The briber has as much responsibility as the In many countries civil servants' wages have eroded as bribed; effective penalties on domestic and international a result of expanding public employment at lower skill business must be part of the solution. levels and fiscal constraints on the total wage bill (Figure 4). The result has been a significant compression of the Suibjecting the state to more competition salary structure and highly uncompetitive pay for senior Governments can improve their capability and effective- officials, making it difficult to recruit and retain capable ness by introducing much greater competition in a variety staff. Some countries, such as Uganda, are undertaking of areas: in hiring and promotion, in policymaking, and far-reaching reforms to reduce overstaffing dramatically, in the way services are delivered. increase average pay, and decompress the salary structure. BOOSlING COMPETITION WITHIN THE CIVII. SERVICE. But in many countries these problems have yet to be Whether making policy, delivering services, or adminis- addressed. tering contracts, a capable, motivated staff is the lifeblood MORE COMPETITION IN THE PROVISION OF PUBLIC of an effective state. Civil servants can be motivated to GOODS AND SERVICES. In many developing countries ser- perform effectively through a combination of mechanisms vices are delivered badly or not at all. Politicians often to encourage internal competition: intervene in the day-to-day operations of public agencies, and managers have limited flexibiliry. There is limited * A recruitment system based on merit, not favoritism accountability for results. And in many countries the pub- * A merit-based internal promotion system lic sector has assumed a monopoly in delivery, eliminating * Adequate compensation. pressures for better performance. Building an effective public sector in these circum- Starting in the nineteenth century, all of today's estab- stances will mean opening up core government institu- lished industrial countries used these principles to build tions, to improve incentives in areas that the public sector modern professional bureaucracies. More recently these has long monopolized. Dozens of countries through- principles have been applied in many countries in East out the Americas, Europe, and Asia have capitalized on Asia, which have transformed weak, corrupt, patronage- changes in technology and introduced competition in based bureaucracies into reasonably well functioning sys- telecommunications and electric power generation. This tems. But many developing countries do not even need to has resulted in lower unit costs and a rapid expansion of look overseas or to history for role models: they exist at service. Competition is also being enhanced by contract- home. Central banks, for example, often continue to work ing out services through competitive bids and auctions. 10 SUMMARY ing public managers more flexibility will merely increase Figure 4 Higher government employment arbitrariness and corruption with no commensurate im- often means lower govemment wages provement in performance. And writing and enforcing contracts, particularly for complex outputs, require special- Average annuali central government wages ized skills that are scarce In many developing countries. 12 a multipie of GDP per capita _______ These countries need first to strengthen rule-based compli- e ance and financial accountability (as Argentina and Bolivia have done) within the public sector, provide greater clarity 10 of purpose and task, and introduce performance measure- ment (as in Colombia, Mexico, and Uganda). As output 8 measurement and ex post controls on inputs are strength- \ @ ened, agencies can be provided more flexibility in exchange 00 @for their greater accountability for results. 6 \ Bringing the state closer to people 4 8\ e00 0 Governments are more effective when they listen to busi- v *~ *~ ve nesses and citizens and work in partnership with them in x deciding and implementing policy. Where governments 2 e * lack mechanisms to listen, they are not responsive to peo- 8 .* P * * * ple's interests, especially those of minorities and the poor, 0 , ^ ^ e who usually strain to get their voices heard in the corridors 1 2 3 4 of power. And even the best-intentioned government is 1 2 3 4 unlikely to meet collective needs efficiently if it does not Government employment as a share know what many of those needs are. of population (percent) GIVING PEOPLE A VOICE. Partnership involves bringing the voice of the poor and of marginalized groups into the Note: Data are for ninety-six industrial and developing countries during various years In the early 1990s. See the Technical very center of the policymaking process. In many countries, Note. Source: Schiavo-campo, de Tommaso, and Mukherjee, voice is distributed as unequally as income. Greater infor- background paper. mation and transparency are vital for informed public debate and for increasing popular trust and confidence in the state-whether in discussing expenditure priorities, This is a significant trend in industrial countries (the designing social assistance programs, or managing forests United Kingdom, Victoria State in Australia), but such and other resources. Client surveys (in India, Nicaragua, mechanisms are also being used to improve efficiency in and Tanzania) and citizen charters (in Malaysia) are pro- developing countries (for example, that of road mainte- viding new options for making voices heard. nance in Brazil). Faced with weak administrative capac- The best-established mechanism for giving citizens ity, some countries (Bolivia, Uganda) are also contracting voice is the ballot box. In 1974 only thirty-nine coun- out the delivery of social services to nongovernmental tries-one in every four worldwide-were independent organizations. democracies. Today, 117 countries-nearly two of every There is a growing trend to set up focused, perfor- three-use open elections to choose their leaders. But mance-based public agencies with more clarity of purpose periodic voting does not always mean the state is more and greater managerial accountability for outputs or out- responsive. Other mechanisms are needed to ensure that comes. New Zealand provides the most dramatic example the concerns of minorities and the poor are reflected in among the high-income countries. It broke up its con- public policies. Getting genuine intermediary organiza- glomerate ministries into focused business units, headed tions represented on policymaking councils is an impor- by chief executives on fixed-term, output-based contracts tant first step in articulating citizen interests in public with the authority to hire and fire and to bargain col- policymaking. Even more effective in local and provincial lectively. Singapore has long followed a broadly similar government, these organizations have recently become approach with its performance-based statutory boards. very active in developing countries-especially where the Other developing countries are following suit, with state has performed poorly and where such organizations Jamaica, for example, establishing executive agencies are not suppressed. along the lines of the British model. BROADENING PARTICIPATION. Evidence is mounting But countries with inadequate controls and weak capac- that government programs work better when they seek the ity need to proceed with caution. For these countries, giv- participation of potential users, and when they tap the SUMMARY 1 1 community's reservoir of social capital rather than work ment. The challenge is to find the right division of labor against it. The benefits show up in smoother implemen- between the center and the other tiers of government. tation, greater sustainability, and better feedback to gov- ernment agencies. Higher returns from water-borne sani- Strategic options for reform tation systems in Recife, Brazil; housing schemes for the Building a more responsive state requires working on poor in Port Elizabeth, South Africa; forest management mechanisms that increase openness and transparency, efforts in Gujarat State, India; and health care in Khar- increase incentives for participation in public affairs, and toum, Sudan, are all testament to the power of partner- where appropriate, lessen the distance between govern- ship-the participation of local people. This is in contrast ment and the citizens and communities it is intended to with top-down approaches, which often fail. serve. This yields four broad imperatives for policymakers: In successful countries policymaking has been embed- ded in consultative processes, which provide civil society, * Where appropriate, ensure broad-based public discus- labor unions, and private firms opportunities for input sion of key policy directions and priorities. At a mini- and oversight. In East Asia public-private deliberation mum this includes making available information in the councils-such as Korea's monthly export promotion public interest and establishing consultative mecha- meetings, Thailand's National Joint Public and Private nisms-such as deliberation councils and citizen com- Consultative Committee, and the Malaysian Business mittees-to gather the views and make known the pref- Council-have provided mechanisms for feedback, infor- erences of affected groups. mation sharing, and coordination. * Encourage, where feasible, the direct participation of DEVOLVING POWER, CAREFULLY. The typical developing users and other beneficiaries in the design, implementa- country has a more centralized government than the typical tion, and monitoring of local public goods and services. industrial country. But with some significant exceptions, * Where decentralization is considered desirable, adopt a the past thirty years have seen a small shift in public spend- carefully staged and/or sectoral approach in priority ing power in developing countries from the national to areas. Introduce strong monitoring mechanisms and lower levels. The industrial economies have seen an oppo- make sure sound intergovernmental rules are in place to site trend, with spending power moving to the center. Nei- restrain arbitrary action at the central and the local level. ther of these observations, of course, takes into account the * At the local level, focus on mechanisms-and hori- decentralization implicit in recent market reforms, which zontal incentives in government's relations with the have clearly reduced the direct power and resources of cen- rest of the community-that build accountability and tral government in a broad range of countries. competition. Decentralization is bringing many benefits in China, India, much of Latin America, and many other parts of Of course, a strategy of more openness and greater the world. It can improve the quality of government and decentralization has its dangers. The more numerous the the representation of local business and citizens' interests. opportunities for participation, the greater the demands And competition among provinces, cities, and localities that will be made on the state. This can increase the risk can spur the development of more-effective policies and of capture by vocal interest groups, or of gridlock. Bring- programs. But there are three big pitfalls to watch out for: ing government closer to some people must not result in taking it even further away from others. Equally, without * Rising inequiality. The gap between regions can widen- clear-cut rules to impose restraints on different tiers of an issue of considerable concern in China, Russia, and government, and incentives to encourage local account- Brazil. Labor mobility provides a partial solution, but it ability, the crisis of governance that afflicts many central- is seldom easy, especially in ethnically diverse countries ized governments will simply be passed down to lower where migrants are not always welcome. levels. But there are some safe ways to start the ball rolling, * Macroeconomic instability. Governments can lose con- including the use of communication and consensus build- trol of macroeconomic policy if local and regional fiscal ing to render reform intelligible to citizens and firms and indiscipline leads to frequent bailouts from the center, enhance its chances of success. as occurred in Brazil. * Risk of local captutre. A serious danger is that of local Beyond national borders: Facilitating global governments falling under the sway of special interests, collective action leading to misuse of resources and of the coercive Globalization is a threat to weak or capriciously governed power of the state. states. But it also opens the way for effective, disciplined states to foster development and economic well-being, These dangers show, once again, how central govern- and it sharpens the need for effective international coop- ment will always play a vital role in sustaining develop- eration in pursuit of global collective action. 12 SUMMARY Embracing external competition how state policies (and international assistance) help The state still defines the policies and rules for those manage nascent conflict is needed in designing eco- within its jurisdiction, but global events and international nomic and social policy. agreements are increasingly affecting its choices. People * Promoting global economic stability. Concern has been are now more mobile, more educated, and better in- growing about the potentially destabilizing effects of formed about conditions elsewhere. And involvement in large and rapid flows of portfolio capital, particularly the global economy tightens constraints on arbitrary state when a crisis in one country can spill over into other action, reduces the state's ability to tax capital, and brings markets. A variety of international mechanisms have much closer financial market scrutiny of monetary and been suggested to guard against such problems, and the fiscal policies. International Monetary Fund has recently created a "Globalization" is not yet truly global-it has yet to new facility to help members cope with sudden finan- touch a large chunk of the world economy. Roughly half cial crises. But prudent and responsive economic poli- of the developing world's people have been left out of the cies at home will be countries' best protection. Grow- much-discussed rise in the volume of international trade ing international labor mobility is also raising a host of and capital flows since the early 1980s. Governments' hes- issues requiring international collective action. itance to open up to the world economy is partly under- * Protecting the environment. Urgent global environmen- standable. Joining the global economy, like devolving tal issues include climate change, loss of biodiversity, power from the center, carries risks as well as opportuni- and protection of international waters. International ties. For example, it can make countries more vulnerable collective action can help through better coordination, to external price shocks or to large, destabilizing shifts in greater public awareness, more effective technological capital flows. This makes the state's role all the more crit- transfer, and better national and local practices. ical, both in handling such shocks and in helping people Progress has been slow, however, raising the worry that and firms grasp the opportunities of the global market- it will take a major environmental catastrophe to goad place. But the difficulties should not be exaggerated, par- countries into concerted action. ticularly when laid against the risks of being left out of the * Fostering basic research and the production of knowledge. globalization process altogether. Now being revitalized to meet renewed challenges in The cost of not opening up will be a widening gap in food production, the Consultative Group on Interna- living standards between those countries that have inte- tional Agricultural Research has shown how technology grated and those that remain outside. For lagging coun- can be developed and disseminated through interna- tries the route to higher incomes will lie in pursuing tional collective action. Similar consultative mecha- sound domestic policies and building the capability of the nisms need to be developed to tackle other pressing state. Integration gives powerful support to such poli- research problems in the domains of environmental cies-and increases the benefits from them-but it can- protection and health. not substitute for them. In that sense, globalization begins * Making international development assistance more effec- at home. But multilateral institutions such as the World tive. To become more effective, foreign aid needs to be Trade Organization have an important role to play in pro- tied more closely to the policies of the recipient coun- viding countries with the incentive to make the leap. tries. A high priority for aid agencies is to systemati- cally channel resources to poor countries with good Promoting global collective action policies and a strong commitment to institutional rein- Global integration also gives rise to demands for states to vigoration. cooperate to combat international threats such as global R warming. Economic, cultural, and other differences be- emoving obstacles to state reform tween countries can make such cooperation difficult- The history of state reform in today's established indus- even, at times, impossible. But stronger cooperation is trial countries offers hope-and gives pause-to today's clearly needed for at least five major concerns that tran- developing countries. Until the last century many of the scend national borders: problems that now appear to have reduced the effective- ness of the state in the developing world were in plain * Managing regional crises. The threat of nuclear war evidence in Europe, North America, and Japan. But the between the superpowers has given way to a mush- problems were addressed, and modern states with profes- rooming of smaller conflicts, entailing costly problems sional systems emerged. This gives us hope. But it also of refugee relief and rehabilitation. No solid interna- gives us pause, because institutional strengthening takes tional framework exists for managing these conflicts or time. The reforms of the Meiji restoration, which helping avoid them. A more integrated assessment of launched Japan onto the path of development, took al- SUMMARY 13 most twenty-five years to take root. A more capable state can be built, but the process will be slow and will require Figure 5 Countries with good economic immense political commitment. It is urgent to act now. policies and stronger institutional capability Over the past fifteen years many governments have grow faster responded to internal and external pressure by launching far-reaching reforms to improve their performance. Typi- Growth in GDP per capita (percent cally, changes in macroeconomic policy-dealing with per year) exchange rates, fiscal policy, and trade policy-have come fastest. These reforms have political implications but do 3.0 not require the overhaul of institutions. They can be 2.5 undertaken quickly. often through decree, by a small group of competent technocrats. All it takes is the politi- 2.0 cal decision to make the change. But other state reforms, dealing with regulation, social 1.5 services, finance, infrastructure, and public works, cannot 10 be accomplished so rapidly because they involve changing institutional structures established for different purposes, 0.5 to fit different rules of the game. This kind of institutional reform involves wrenching changes in the way govern- °\ ment agencies think and act, and often a complete over- High capability Low policy haul of long-established systems of patronage and corrup- Low capability High policy tion. But such change is absolutely essential if the distortion capability of the state is ever to improve. The two to- gether-good policies and more capable state institutions getherrgood policies andmorcapabeNote: Each growth rate is the average for a group of countries. to implement them-produce much faster economic Results are based on a regression using panel data from ninety- development (Figure 5). four industrial and developing countries for the period 1964-93, Comprehensive reform along these lines will take a controlling for education, income, and other variables. See the Technical Note for details. Source: Commander, Davoodi, and great deal of time and effort in many developing coun- Lee, background paper. tries, and the agenda varies considerably from region to region (Box 3). Reform will also encounter considerable political opposition. But reformers can make a good start by strengthening central agencies for strategic policy for- Neighbors, too, can be a powerful motivator for change. mulation, introducing more transparency and competi- There is a clear domino effect at work in the wave of tion, hiving off activities and agencies with easily specified reform sweeping East Asia, Latin America, and much of outputs, seeking more feedback from users about the Eastern Europe and the former Soviet Union. The threat delivery of services, and working with labor unions on of being left behind can goad countries to improve the programs that will enable workers to seek security in functioning of their bureaucracies. But research has yet to change rather than seek security against change. explain why some countries respond to crises and others do not. Why, for example, does popular tolerance of infla- When do reforms occuir? tion seem to be much lower in Asia than in parts of Latin Deep distributional conflicts and constraints embedded in America? And why can some countries endure a long state institutions are at the heart of the explanation for so period of economic decline before responding, while oth- many countries' failure to reform. But they are not im- ers take action much sooner? mutable. Ultimately, change comes when the incentives Often the analysis of winners and losers yields a predic- to throw out the old policies and old institutional arrange- tion of when-or at least whether-reforms will be ments become stronger than the incentives to keep them. undertaken. Reforms have little appeal if the winners can- An economic crisis or an external threat, or the arrival of not compensate the losers. Even when the potential gains a new government with fewer vested interests in the old are enough to allow for compensation, reform can be system, may provide the impetus for reform. But reform hard to achieve because the gains are spread over many can be delayed if those in power stick with outdated poli- people, whereas the losers, although smaller in number, are cies because it is in their (or their allies') interest to do so. powerful and articulate. A further problem is that the ben- And the delay can sometimes be painfully long, as in Haiti efits are often realized in the future, whereas the losses are under the Duvaliers, or Zaire today. immediate. Yet sometimes conditions have deteriorated so 14 SUMMARY Box 3 The regional agenda The key features and challenges of improving the effec- * The job of reorienting the state co% ard the task of tiveness of the state in the various developing regions "steering, not roming' is tar trom complete in Cu 1- are summarized below. These are of necessity broad tral and Eastern Europe. But most councries ha% e generalizations, and each region includes several coun- made progress and are on the way to impros ing tries whose experiences are very different. capabilin' and accouniabilin. * Lon% ..care capabiliny in many counirie- of the f,."- * Many countries in Sub-Saharan Africa are suffering monwealth of Independent Straei. i' a serious and from a crisis of statehood-a crisis of capability. Ani mounting obhtacke to further progre> in most area, urgent priority is to rebuild state effectiveness of economic and social policy. Reorientation ot [he through an overhaul of public institutions, reasser- state is still at an earlY stage. and a host otf se%ere tion of the rule of law, and credible checks on abuse problems have emerged from a general lack of ac- of state power. Where the links between the state, countahilirn and traniparency. the private sector, and civil society are fragile and * In Latin America, decentralization of powter and of underdeveloped, improving the delivery of public spending, coupled s%IEh democrarization. has dra- and collective services will require closer partner- maticallytranor rm,d the local Political landscape, in ships with the private sector and civil society. what some have called a "quiet revolution. A ne%% * The capabzlir- of the state in most EastAsian coun- model of go% ernmen: is emerging in the region. But tries cannot be considered a problem. But states' greater emphas is 5 aho needed on reform of the legal ability to change in response to the new challenges s'%stem. thc civil ser ice. and social policies. facing the region will play a critical role in their con- U In tht lIhdd1le Ea'r.i.ndA'orll.4fi,ln, WlCemplozyn1enti, tinued economic success. bv tar the greatest economic and social problem and * The mri3 issue in South Asia is overregulation, both makes go% ernment dovs nsizing epeciall) difficult. Be- a catue and an effect of bloated public employment cause the political and social ditficLil.tes ot retcorm are and the surest route to corruption. Regulatorn sim- considerable. although not insurmouLtrable. a promis- plification and public enterprise reform, and the ing approach night be to begin decentralizing elected resulting contraction of the role of the state, will be services, and focus on reforming state enterpri'es. complex and politically difficult. while preparing the ground for ws'ider-ranging reforms. far that the winners far outnumber the losers. Then reform fected by reform (which may not always be the poorest in can produce immediate economic and political gains. society) can help secure their support. Although compen- sation may be costly in the short run, it will pay off in the How can reforms be sustained? long run. Deep-seated differences and mutual suspicions Reform-oriented political leaders and elites can speed re- among groups can also delay reform. There are no quick form by making decisions that widen people's options, fixes for removing age-old enmities, but social pacts, such articulate the benefits clearly, and ensure that policies as Spain's Moncloa Pacts and Benin's National Economic are more inclusive. In recent years farsighted political Conference, can help. leaders have transformed the options for their people International agencies can encourage and help sustain through decisive reform. They were successful because reform in four ways. First, they can provide important they made the benefits of change clear to all, and built technical advice on what to do and what not to do. This coalitions that gave greater voice to often-silent beneficia- assistance is often invaluable, especially for smaller states ries. They also succeeded-and this is crucial-because that lack the resources to handle all the technical issues they spelled out a longer-term vision for their society, internally. But it must be complemented by local ex- allowing people to see beyond the immediate pain of pertise, to adapt reforms to local conditions and institu- adjustment. Effective leaders give their people a sense of tions. The World Trade Organization plays a major role owning the reforms-a sense that reform is not something in trade reform, the World Health Organization on health imposed from without. issues, and the International Labour Organisation on Reforming the state requires cooperation from all labor legislation and employment policy. Second, interna- groups in society. Compensation of groups adversely af- tional agencies can provide a wealth of cross-country SUMMARY 15 experience on a wide range of issues. Often staffed by peo- Instances of state collapse are both extreme and ple from all over the world, they can bring in experts from unique, but they are growing. As the Report elaborates, different backgrounds. Third, the financial assistance no simple generalizations about their causes or effects can these agencies provide can help countries endure the early, be made, nor, for that matter, are there any easy solutions painful period of reform until the benefits kick in. Fourth, to their reconstruction; each case brings its own challenges they can provide a mechanism for countries to make for countries, their neighbors, and the international sys- external commitments, making it more difficult to back- tem. The consequences, however, are almost uniformly track on reforms. If the history of development assistance borne by ordinary people, illustrating once again how teaches anything, however, it is that external support can fundamental an effective, responsive state is to the long- achieve little where the domestic will to reform is lacking. term health and wealth of society. The quest for a more effective state even in the estab- Good government is not a luxury-it is a vital lished industrial countries suggests that the returns to in- cremental improvements are high. This is especially true The approach of the twenty-first century brings great in countries where the effectiveness of the state is low. promise of change and reason for hope. In a world of Over time, even the smallest increases in the capability of dizzying changes in markets, civil societies, and global the state have been shown to make a vast difference to forces, the state is under pressure to become more effec- the quality of people's lives, not least because reforms tive, but it is not yet adapting rapidly enough to keep tend to produce their own virtuous circle. Small improve- pace. Not surprisingly, there is no unique model for ments in the state's effectiveness lead to higher standards change, and reforms will often come slowly because they of living, in turn paving the way for more reforms and fur- involve a fundamental rethinking of the roles of institu- ther development. tions and the interactions between citizens and govern- A tour of the world's economies in 1997 would turn ment. But the issues raised in this Report are now an inte- up countless examples of these virtuous circles in action. gral part of the rethinking of the state in many parts of the But it would provide equally plentiful evidence of the world and are on the agenda of the international organi- reverse: countries and regions caught in vicious cycles of zations that assist them. poverty and underdevelopment set in train by the chronic People living with ineffective states have long suffered ineffectiveness of the state. Such cycles can all too easily the consequences in terms of postponed growth and social lead to social violence, crime, corruption, and instability, development. But an even bigger cost may now threaten all of which undermine the state's capacity to support states that postpone reforms: political and social unrest development-or even to function at all. The crucial chal- and, in some cases, disintegration, exacting a tremendous lenge facing states is to take those steps, both small and toll on stability, productive capacity, and human life. large, toward better government that set economies on the The enormous cost of state collapse has naturally turned upward path, using the two-part framework suggested in attention to prevention as a preferable and potentially this Report. Reform of state institutions is long, difficult, less costly course of action-but there are no shortcuts. and politically sensitive. But if we now have a better sense Once the spiral into collapse has occurred, there are no of the size of the reform challenge, we are also much more quick fixes. aware of the costs of leaving things as they are. Order Form CUSTOMERS IN THE UNITED STATES CUSTOMERS OUTSIDE THE UNITED STATES Complete this coupon and return to: Contact your local Bank publications distributor The World Bank for information on prices in local currency and P.O. Box 7247-8619 payment terms. (A complete list of distributors fol- Philadelphia, PA 19170-8619 lows this coupon.) If no distributor is listed for USA. your country, use this order form and return it to To have your order shipped faster, charge by credit the U.S. address. Orders that are sent to the U.S. Tcave byo ordeng70 r shippedfaser, chargesby crmtedi address from countries with distributors will be card by calling (703) 661-1580 or send this competed returned to the customer. order coupon by facsimile by dialing (703) 661-1501. 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