1. How to Bring About Policy Reform
Francis Fukuyama
Leadership Academy for Development
Center on Democracy, Development, and the Rule of Law

2. The Leadership Academy for Development
Case-based mid-career program on policy reform for private sector development
Delivered 16 programs in Costa Rica, South Africa, Kenya, Myanmar, Singapore, Thailand, Georgia, and Peru

3. Why Use Case Studies?
Well-written cases focus on a single decision-maker and a single decision
They are set in a particular local context which students must quickly absorb
In a good case, there isn’t an obvious “right” answer to the decision
Purpose is not to extract best practices, but to understand how reform leaders interact with their environments
And think strategically

4. Clientelism and Reform in America
“Gifford Pinchot and Sustainable Forest Development”

5. Democracy and Clientelism
John Quincy Adams
Andrew Jackson

6. The Long Tradition of Populism in America

7. The Pendleton Act and the Progressive Era
George Pendleton
Theodore Roosevelt
Gifford Pinchot

9. Gifford Pinchot Time Line
1861: Congress passes the Morrill Act and establishes USDA
1886: Bernard Fernow heads USDA’s Forestry Division
1890: Gifford Pinchot returns from Europe to manage Vanderbilt forests
1898: Pinchot replaces Fernow as Chief Forester
1905: Showdown with Joe Cannon over moving the GLO
1908: Showdown over Richard Ballinger, and Taft’s dismissal of Pinchot

10. The Governance Agenda
Recognition that “institutions matter” in wake of Washington Consensus
Governance and Development, 1992
Wolfenson’s “Cancer of Corruption” speech, 1996
The State in a Changing World, 1997
Shift to “good governance” agenda in the 2000s
Almost 40% of Bank lending

11. PSR today Generally poor results from PSR Why?
Eg, IEG 2008 report
Why?
Policy analysis important, but failures are rooted in implementation
The technocratic approach
Bad policies are the result of ignorance
Need to import the right model
“Getting to Denmark”

12. Bringing About Policy Change
The political approach
Bad policies exist because they serve vested interests
Change requires us to think politically
Therefore, successful reform begins with politics
Creating coalitions in favor of change
Neutralizing opponents of change
Winning over the indifferent
Outsiders (e.g., intl donors) usually not capable of doing any of this
So we must train indigenous leaders

13. Conducting a Stakeholder Analysis
Identify the policy and range of options to be considered
Identity all “actors” who have any interest in the policy outcome
Gather information on the interests and preferences of those actors

14. Stakeholder analysis can be used to analyze the power and influence of multiple actors over policymaking…
Source: Kammi Schmeer, Stakeholder Analysis Guidelines, p

15. Stakeholder analysis can be displayed to display multiple dimensions for each stakeholder

17. …including how power relationships play out in terms of potential coalitions of support and opposition
Source: Kammi Schmeer, Stakeholder Analysis Guidelines, p

19. …and show evolution of patterns over time

20. Stakeholder analysis for multiple policy options—with quantification used to simplify complex patterns

21. In a democratic political system, four basic strategic options to build coalitions
Managing perceptions
Managing payoffs
Managing procedures
Managing participants

22. Manage perceptions to convince opponents/neutrals
Reframe a proposal to appeal to their interests without actually changing payoffs
Highlight long-term impacts that they may have overlooked
Highlight the importance of “public interest”

23. Manage payoffs and penalties
Give more rewards to supporters
Disperse losses broadly so they aren’t notices
Delay onset of losses so that they become less visible or salient
Compensate losers to lower their opposition

24. Manage procedures Venue-shopping and venue control Agenda limitation
E.g., shift from legislature to courts or vice versa
Agenda limitation
Those who control agendas control outcomes
Use control over veto points to block proposals you oppose

25. Manage participants Increase the engagement of groups that support you
Mobilize new supporters who have not been previously active on the issue
Neutralize or marginalize existing participants

26. In autocracies, governments have a greater range of options for influencing stakeholders, e.g.:
Controlling the media
Concealing negative consequences
Bribing or co-opting opponents
Manipulating policymaking procedures
Using lawsuits to harass opponents
Repressing opposition groups
Intimidating opponents with violence

27. We don’t recommend doing any of this…
We don’t train authoritarian leaders to use these kinds of skills
But it underlines the fact that policy change is about getting and using power
Which, if combined with democratic legitimacy, becomes authority

28. The Normative Approach
Human beings are not simply homo economicus
Are social animals as well
Motivated by pride, self-respect, group solidarity, other norms
Importance of “social capital”
Cooperation based on shared informal norms

29. Policy Change Requires Normative Change
Most PSR has focused on changing incentives
Under a principal-agent framework
But principal-agent has big limitations
Multiple principals
Principals want contradictory things
You can’t incentivize what you can’t measure
Norms can be thought of as internalized incentives
Where agents monitor and sanction themselves

30. A Third Type of Capital Physical Capital Human Capital Social Capital
6/2/2019

31. Networks of Trust
6/2/2019

32. A Corporate Culture
6/2/2019

33. Where does social capital come from?
In traditional societies:
Kinship, shared culture, repeated interaction
In modern societies
Education, particularly professional education
Shared goals and standards
Leadership!

34. Lessons I
States have a responsibility to create a positive environment for PSD
They can do this by doing more, less, or doing things better
Govts need to scale their ambitions to their capacity and honestly assess the latter
The errors of liberalization were tied primarily to the financial sector and not the real economy

35. Lessons II: Focus on Concrete Problems
Policy reform must begin with a concrete problem
Guarantees that there will be pro-reform stakeholders
No one gets policy right the first time
Therefore, all solutions must be iterative
Based on constant experimentation
Need evaluation, but fast
Matt Andrews’ PDIA (Problem-drive iterative analysis)

36. Lessons III Include implementation strategies into policy design
Including strategies for changing behavior
Think strategically about building state capacity
Human capital
Sense of mission within organizations (soc capital)
Control of corruption

37. Leadership Academy for Development
Lessons IV
Perform a stakeholder analysis for policy options you are considering:
Divide stakeholders into supporters, opponents, and those in between
Use that analysis to develop strategies to:
build coalitions,
neutralize opponents (convince or incentivize out-vote,
win over the indifferent
Leadership Academy for Development

38. Lessons V: Changing the Normative Environment
Changing incentives is of course important
But incentives do not control all behavior
Particularly within organizations, norms are critical
Norms are rooted not in reason, but in the emotions
Pride, shame, anger
Norms trickle up from the bottom, but also down from the top

39. Leadership Academy for Development
Leadership requires thinking beyond technical analysis, and developing ability to:
Communicate
Negotiate
Inspire
Leadership Academy for Development