| ANDREW N. VORKINK | The World Bank Turkey Country Director |
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The Challenge And Promise Of Public Sector Reforms In Turkey |
For many years, economists viewed the challenge of economic development purely in technical terms as requiring the accumulation of scarce factors of production, such as capital, later expanded to include human capital. Later, in the 1980s, it was recognized that economic policies were also critical for development, that incentives mattered, and that bad economic policies would overwhelm and render useless efforts at capital accumulation.
Over the past decade, the importance of capable institutions for growth and development, has also been acknowledged. In particular, the establishment of capable public sector institutions that are responsive to local needs and accountable for performance is now seen as a key principal challenge for growth and the development process.
Consequently, I would like to focus my remarks on some key public sector "macro" institutions and then talk about the public sector "micro" institutions that will affect the effectiveness of the state.
On the macro front, the experience of repeated fiscal crises over the past decade and the associated loss of income and employment was a consequence, principally, of weak fiscal institutions and unstable political conditions.
Until recently, the budget was a fragmented and inadequate tool for fiscal management and policy formulation and it was no accident that large fiscal imbalances and contingent liabilities emerged as a result. Improvement in fiscal institutions has been an immediate objective of the Government.
Passage of the PFMC law has already initiated a number of key actions – including the adoption of a comprehensive fiscal framework and transparency in fiscal reporting using international standards. These key principles will strengthen fiscal management which will be reinforced by the fiscal rules that EU membership requires.
Beginning in 2005, the government will initiate the medium term fiscal strategy to guide budget preparation and ensure consistency of overall policy commitments with available resources. In effect, this reform will require the political leadership to identify the priorities to be funded within the fiscal limits given by the resources that are realistically expected to be available. This will be a difficult process that will require both political and technical judgment on the trade-offs but the importance of building institutional processes to do this well cannot be overstated.
These two key reforms of fiscal management will have macroeconomic benefits to both the public and the private sector.
Strengthening aggregate fiscal management and allocating resources to priorities represent a necessary condition for the next and more complex, challenge of improving performance in government: the topic of this conference and the workshop to follow. Turkey has initiated reforms whose purpose is to make government more responsive and results oriented – a challenge taken up throughout the EU, but only by a few middle-income countries.
The essential idea guiding these reforms is based on the notion that public sector officials need to be provided with clear and realistic performance objectives and an enabling environment with the appropriate incentives and arrangements for accountability to perform their functions effectively.
Hence, Turkey has correctly chosen to shift from its traditional central control framework to one that provides ministries and departments with greater authority but also with more clearly defined accountability for both inputs and outputs.
These are conceptually sound ideas. The challenge is in their implementation. Two formal tools have been given high priority in Turkey in trying to make the move towards more results-based public management. They are at the center of discussion in this workshop.
First, performance budgeting is a tool which has been used by many countries to re-focus ministries and agencies away from an exclusive pre-occupation with compliance with formal procedures and more on clarifying what are the public policy objectives they are expected to achieve. The presentations you will hear from our colleagues from France will give you a sense of how powerful this tool can be.
Strategic planning can be a powerful complement to performance budgeting – if it is used not simply in a formalistic manner, but as a means of clarifying what internal capacities, and internal organizational arrangements ministries and agencies need to achieve their public policy objectives.
As our colleagues from Sweden and South Africa will highlight, key to the effectiveness of this tool is that, within organizations, the strategic planning process needs to be a participative process.
But there is, of course, much more to effective organizational change than changing formal systems.
As both the French and Swedish examples will illustrate, changes in the formal systems of budgeting and planning are simply one aspect of a much broader systemic-change. The goal is to effect a far-reaching change in the incentives of public servants -- shifting the mind-set away from one of compliance, and towards one which focuses on achieving results.
This takes leadership, from the top levels of government all the way to the leaders of organizational units.
Effective organizational leaders transform the operating culture of their organizations. In many countries, the prevailing culture within public organizations is hierarchical; people may have ideas as to how to do their work better, but they are discouraged from sharing them – and lose motivation. Strong leaders can and should empower their staff, raise morale – and generate far-reaching improvements in performance as a result. Naturally, the role of citizens also is key. The expectations of citizens and public servants can be mutually reinforcing. The combination of demotivated public servants and citizens who have learned not to expect much (if anything) from the public sector is certain to produce poor performance.
Changes in formal systems is a useful ‘supply-side’ way to try and break this vicious cycle. But active efforts to engage citizens, to get them to raise their expectations of public officials – and be willing to communicate their concerns publicly – can be a powerful ‘demand-side’ complement to the ‘supply-side’ efforts.
Let me raise some issues I think are relevant for designing public sector reforms in Turkey. First, performance reforms take time. And any long term reform requires a strategy to manage expectations, to demonstrate progress and to manage the change process.
Second, because they involve many parts of government, the coordination demands of such reform are heavy. Traditional processes do not meet the extra-ordinary requirement for strategic coordination of such reform without which there are high risks of incoherence and bureaucratic discouragement.
Third, there are important questions of sequencing that need to be addressed. Should reforms commence from the center and then be implemented in sub-national government? Given the proposed reassignment of responsibilities to provincial and local governments, how should performance reforms be sequenced?
Fourth, as I have described earlier, there is a key distinction between changes in organizational systems, and changes in organizational culture.
In the final analysis, it is not new blueprints, nor new performance criteria, that lead to better performance – but rather changes in the way the people in the organization behave. A key question to consider as this conference proceeds is whether Turkey’s reforms are giving adequate emphasis to these facets of the reform process?
Finally, it is important that the reforms not be over-complex for then they could be abandoned. There must be sufficient scope for pragmatic adaptation as unexpected events and circumstances reveal themselves and make original plans ineffective. Let me conclude by saying that there are good reasons to feel confident that these reforms, although likely to be difficult and take time, will succeed.
The government program has identified improved performance as a key objective of reform and this offers clarity of purpose which can be widely understood. The reforms are consistent with the goal of EU accession which provides an external anchor.
But most persuasive is the fact that the focus on service delivery to the people, if realistically managed, will reinforce popular support for such reforms. We believe these reforms will benefit from the involvement of civil society organizations which have an inherent interest in improving government performance and in monitoring and providing objective feedback that is essential to any self-correcting system.
The World Bank stands ready to support these reforms with knowledge and financial assistance, as required. We would be pleased to react positively to any government request for technical and financial assistance.