One of the most valuable frameworks for understanding public policy is the distinction that Lant Pritchett makes between two forms of accountability - accounting and account-based.
The former refers to the traditional top-down log-frame supervision and monitoring, where performance is defined in terms of certain metrics and official accountability is assessed by tracking those metrics. The latter refers to an organic internalisation and ownership of the collective mission and objectives of the organisation, an account, and a commitment borne thereon that drives their efforts. The former is about externally driven engagement, whereas the latter is about intrinsic motivation built around an account about organisational goals.
Pritchett used this distinction in the context of school education, where the organisational structures and institutional incentives were aligned towards accounting based accountability. The teachers and school managers did not have, much less internalise, a common account about their shared purpose.
This is an excellent description of the comparison between India and Vietnam, which achieved enromous success with student learning,
After pushing our Vietnam team to say, “What was the answer? Why did Vietnam do so well?” in the end, one of our researchers, who I have a lot of respect for, he said, “Look, it’s just—they wanted to. They wanted to, and because they wanted to, they found a way to do it.” So you’re pressing for proximate determinant causes that aren’t the ultimate causal driver of this. If you want to know why Vietnam has really high learning performance among the students, it’s because they consistently, coherently wanted to. If you don’t want to, knowledge of the type of this program versus that program, it’s just not necessarily going to work as designed when you implement it. Because it’s not going to get implemented, or it’s not going to be implemented as well...
Yes, you got to want to, and if you don’t want to—and I think what India got wrong is India, as a society, as a government, was never really (and still to this day isn’t truly) committed to the belief that every child can and should achieve a relatively high level of learning performance. They’ve never really committed to it, still aren’t. There’s still the belief that education is a process of choosing the elite few who are good at it and devil take the hindermost, even inside Indian classrooms today. I think India is in the process of coming around to the “you got to want to” stage where there is generating a lot more social concern over this. But until India gets there, as we saw with SSA [Sarva Shiksha Abiyaan] was this massive, massive investment. During that whole period, as best the evidence can tell, overall learning per year of schooling of children was on a stagnant at best, but probably declining trend during that whole period.
The missing ingredient was the ‘want’, captured in the form of a collectively internalised ‘account’!
The same framework can be applied to diagnose the Ease of Doing Business (EoDB) movement. The movement was part of the efforts to liberalise, simplify, and workflow automate the processes faced by businesses to access to statutory services and permissions from government authorities. The World Bank formulated a set of parameters covering the number of procedures, time and cost of registering business, getting statutory permissions and utility services, accessing credit, paying taxes, investment protection, enforcing contracts etc., and ranked countries based on a composite EoDB score.
Given the need to quantify parameters and rank countries, the EoDB rankings naturally confined itself to measurable (read procedural) indicators and avoided any assessment of the quality of service delivery. For other issues with such procedure-focused perception surveys read this.
We need introspect whether nearly two decades of EoDB rankings has led to bureaucrats and institutions in countries like India imbibing the spirit of easing the business improvement. Have they internalised the “want” to make India a truly desired investment destination? For sure the forms of ease of doing business have improved, even dramatically in some areas, but I’m not sure we can say the same about the substance and spirit of ease of doing business.
Have there been significant changes in the manner the building inspector or tax agency official or municipal authority or police inspector or higher level regulatory or adjudicating official engages with businesses and citizens? Has there been a mindset change in the way the bureaucracy and the government views businesses?
I’m afraid that a honest answer to both have to be in the negative. In the absence of a collective commitment and personal conviction in EoDB campaign, the bureaucracy reduced it to a purely notional box-ticking exercise.
Consider the example of something as simple as a utility service. Yes, we can do accounting of the time taken to issue the connection or pay the bill, and even workflow automate the process. But what about maintenance, services, and other routine continuing engagement for the business with the same utility officials? Can we do effective accounting of those?
Or, we can lower taxes, simplify tax registration, and ease payment processes, and have all of them monitored using an accounting framework. But how do we monitor the repeat game involving assessments, issuing demand, adjudication, appeals, and so on. No accounting-based accountability system can ensure these are all done well. The recurrent examples of outrageous tax demands by taxation officials are a reflection of their failure to imbibe the spirit of ease of doing business. As also are the constant inter-departmental/unit struggles at both central, state, and local government levels to improve the business environment.
From hindsight, it can be argued that the EoDB enthusiasts made at least three cardinal mistakes. One, while focusing on the details of the ease of doing business activities, they overlooked the account. The did not realise that the the accounting of the EoDB had to arise from a shared account among the implementers of the EoDB movement. The system had to internalise the culture of ease of doing business.
Two, they made the mistake of believing that it was possible to create oases of a simplified and easy transacting environment for businesses that co-exist with the struggles faced by common citizens in their engagement with the government. They overlooked that EoDB has to go with the ease of living (EoL) for citizens, with the former originating in the latter. Perhaps the campaign should have focused on EoL, with business being just one of the constituents.
Three, related to the distinction between EoDB and EoL, I’m inclined to argue that the EoDB movement has been almost completely focused on large domestic and especially foreign investments. The more important requirement of creating the right business environment for the local small businesses that create most of the jobs, has been a marginal concern. This bias has been an important factor behind the EoDB movement’s failure to not only achieve the shared account but also create a domestic political constituency for itself.
Having said all this, we should be careful not to underplay the significant achievements of the EoDB movement. It has doubtless elevated ease of doing business to an important public policy priority, galvanised the system to work on EoDB, and improved the business environment, albeit from a low baseline. It has helped a bad system move to the average.
But to move further upwards, there must be a collective want. The account must be internalised.
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