How (not) to build state capability in developing countries

The conventional way that donors and other development actors approach the challenge of economic and social development in low-income contexts is to advise governments in developing countries to adopt formal laws, regulations and policies that they have seen to have worked in Western countries. The advocacy of such laws, regulations and policies is based on the premise that donors have — which is, if these laws, regulations and policies have worked in the country contexts in which the donors are based (mostly rich Western democracies), why should they not work elsewhere?

In this presentation at Institut Barcelona D'estudis Internacionals (IBEI) Kunal Sen will argue that such an approach to state-building in countries with weak institutional context, which is to try and spread ‘best practice’, irrespective of organizational capability — or a realistic plan to build such capability — makes matters worse, not better. With low state capability and high levels of de jure regulation, one is in the paradoxical situation that any attempts to achieve legitimate public purpose by increasing regulatory stringency can lead to even less compliance — and less likelihood of creating a positive dynamic in improving the regulatory agencies’ capability. This suggests that building state capability in any endeavour needs to start from the political authorization to solve locally nominated problems, not from the vague idea that equates capability with rule compliance.

This presentation is based on the ESID Working Paper, Doing business in a deals world - The doubly false premise of rules reform.