Public governance: The other deficit

Director, OECD Public Governance and Territorial Development Directorate

Rolf Alter

Frustrated citizens are asking their governments: “When will we see effective policies to support economic growth and generate jobs?” There is an endless debate in individual countries and at the international level, but policy responses to the crisis continue to appear fragmented, timid and sometimes incoherent. 

The seemingly endless crisis is exhausting policymakers, investors and voters. The debate over what to do lacks conviction because it pays too little attention to how to do it. Importantly, analysis of current economic and social challenges seems to overlook the issue of public governance: its manifest weaknesses and its under-exploited potential. This is surprising because, from budget discussions in the US to sovereign debt talks in the euro zone, lack of decision-making is obviously hindering effective policies.

The financial crisis revealed serious limitations in governance and regulatory structures. Weak regulation, regulatory capture and lobbying, coupled with deficiencies in oversight and financial disclosure, have been root causes of the financial turmoil. Three years later, despite much effort, there is little evidence that we are better prepared now than we were before the crisis. And the air of nervousness in capital markets confirms that our economies have not been immunised against further bouts of financial chaos.

Why has there been so little progress? There is no lack of understanding, of ideas or of political will. Rather, the way we take and implement decisions has not kept pace with the challenges we face. Instead of clear policies, we often get compromises; instead of swift, decisive action, we get hesitation. We need to act now to reduce a growing public governance deficit.

Ultimately, the state has responsibilities that cannot be delegated to anybody else. It is the steward of the public interest. It is the only guarantor of real accountability. And it is the only actor that can develop a vision that federates all parts of society. The state needs to be equipped for these responsibilities, and this means investing in its core capacities.

Governments face many new constraints. Resources to deliver the level of services that people expect are increasingly scarce. Economies and societies are exposed to more and more major disruptive events and new risks. Civil society organisations express demands for action and inclusion in ever more vocal ways. Internet and information and communications technologies offer opportunities for networked governance, yet also create many instant challenges.

Against this background, how can we rebuild strong government, quality decision-making and effective implementation?

When advancing reform agendas, leaders have to navigate through an increasingly complex system of players. They also have to deal with entrenched vested interests and with the massive use of social media which is changing the way groups interact. The priority should be to strengthen the dialogue between governments and citizens and make governments more responsive. This will help to repair the strained relations of trust and confidence on which democracies depend and which legitimise decisive and effective action by governments. Yet this is easier said than done. Our bureaucracies will need to become more agile, more innovative and more strategic. They will also need to demonstrate that governments can discharge their responsibilities with efficiency, honesty and creativity. They will need to show that they are competent stewards of the public interest. Today, increased budgetary pressures and highly diversified demands from citizens and service users have made innovation an imperative to maintain high quality public services. Innovative approaches and solutions are the only way to foster public sector performance and enable greater productivity at no additional cost.

Despite this increasing focus on innovation, knowledge of how countries have gone about promoting and implementing innovative policies and practices is fragmented. Few countries have defined comprehensive policies to foster innovation across the public sector. Even fewer seem to have developed business case methodologies to examine the impact of innovative practices on public organisation performance. A systemic approach to innovation, looking at the enabling factors as well as the barriers, will be necessary to help lead change processes in public policymaking.

Governments have been making progress in a number of areas. They have been reinforcing principles of budget management through enhanced fiscal institutions and greater budget transparency. Governments have also been promoting growth-enhancing regulatory frameworks including more efforts aiming at international regulatory standards. They have been implementing a new approach to regional policy able to support growth and competitiveness in all regions. Finally, they have been more actively tackling risk governance through enhanced risk assessment and more co-ordinated crisis management systems.

The OECD is working to analyse and monitor innovative practices, with a view to creating strong business case models that support decision-making. The OECD Observatory of Public Sector Innovation is expected to become a centre for sharing new ideas on how to make innovation work in practice (not only as an observatory, but also as a laboratory of innovation). Similarly, the new OECD High Level Risk Forum will offer a policy platform for the assessment, prevention, mitigation and governance of major risks.

There is progress at the international level too. The newly launched Open Government Partnership (OGP) recognises that people all around the world are calling for greater civic participation in public affairs and seeking ways to make their governments more transparent, responsive, accountable and effective. The OECD is committed to contribute its long-standing knowledge on public management to ensure that initiatives such as OGP have a real impact on the way governments function. An increasing governance deficit is constricting efforts to deal with the current crisis and limits the capacity of countries to invest for the future. An innovative public sector will be crucial to closing the gap.

Open Government Partnership

See also: 

OECD Observatory of Public Sector Innovation

OECD High Level Risk Forum

©OECD Yearbook 2012




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Low interest rates here to stay for half a century, says OECD director Adrian Blundell-Wignall.
  • OECD speak on support it will offer to Greek
  • 3.4 bn people or 56% of the world's population live only just above the global poverty line, on US$2-10 a day. The global middle class is both smaller and poorer than thought. Read more about the results of this Pew Research Centre's new study on the Financial Times.
  • Resale of charity shop rejects has destroyed Kenya's local textile industry but a proposed ban on the importation of used garments risks putting thousands out of work. Read more about this economic dilemma on The Guardian.
  • Bill Gates visited the OECD on 26 June. He met with the Secretary-General Angel Gurría to discuss areas of collaboration with his foundation and participated at a briefing session on official development assistance modernisation with OECD experts.
  • "Countries that are home to high proportions of immigrants tend to have better integration outcomes”, according to the OECD Indicators of Immigrant Integration 2015, released on 2 July 2015. Read more on The Guardian.
  • The People’s Republic of China decided to enhance longstanding collaboration with the OECD and to join the OECD Development Centre, in a historic visit by Chinese Premier Li Keqiang on 1 July to the OECD in Paris.
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • One dollar in aid for trade generates eight dollars in extra trade for all developing countries and 20 dollars for low-income countries. Read OECD Secretary General's post on the newly released Aid for Trade at a glance 2015.
  • Catherine Mann, OECD Chief Economist, explains on Bloomberg why "too much bank lending can slow economic growth".
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Come va la vita in Italia? How's life in Italy? The OECD Better Life Index is an interactive online platform in seven languages that goes beyond GDP by offering important insights into measuring well-being and quality of life. Try it for yourself!
  • What does it mean to live on less than US$2 a day? Xavier Godinot, Delegate for International Affairs of ATD 4th World and René Locqueneux, a member of this NGO, gave an insightful presentation on the topic based on their field experience, at the 2015 OECD Forum.
  • How to jump-start slack investment to drive global growth and jobs dominated discussions at the annual OECD Ministerial Council Meeting, chaired by the Netherlands, which ended 4 June.
  • The IMF calls for a decisive energy subsidy reform in order to use the freed resources to meet critical public spending needs and to reduce pollution ahead of the Paris climate change summit.
  • More than 35 million young people, aged 16-29, across OECD countries are neither employed nor in education or training according to the newly released OECD Skills Outlook.
  • Have a look at these posters representing a world without fundamental rights at work – including child labour, forced labour and inequality. Read more about this ILO image competition here.
  • Rising inequality threatens social cohesion and growth. Income inequality has reached historical highs in most OECD countries and is still rising.
  • Time to vote! As the dust settles after the UK general election, let’s remember that voting at the ballot box is not an innate right enjoyed by everyone. Indeed, although the number of democracies across the world has spiked from 48 in 1989 up to 95 today, billions of people are still living in non-democratic, authoritarian regimes.
  • How can we achieve a zero-carbon future? A new World Bank report provides a few insights.
  • Today alcohol causes more deaths worldwide than HIV/AIDS, violence and tuberculosis combined. In order to reduce damages to health, the OECD recommends that regular drinkers reduce their consumption by one unit a week, that is, a small glass of wine for example. In addition, increasing prices, regulating advertising, effectively treating drinking problems together with stricter police enforcement would greatly contribute to reducing damages done to individuals and society.
  • video alcohol
  • Africa vs profit shifting African countries heavily rely on the income generated by multinationals’ taxation, which can represent as much as 88% of a country’s tax base. Little wonder Africa is involved in the OECD’s initiative to address tax base erosion caused by profit shifting, known as BEPS. The need to strengthen inter-governmental co-operation to curb cross-border tax losses was reaffirmed at the Africa Tax Administration Forum (ATAF) in Sandton on 21 April 2015.
  • Africa v. profit shifting
  • Rana Plaza
  • Wal-Mart, Other Retailers Sued over Bangladesh Factory Collapse Two years after the April 24, 2013, Bangladeshi factory collapse in the capital of Dhaka, the victims' families filed a lawsuit in U.S. federal court in Washington against Wal-Mart Stores Inc and other U.S.-based companies that sourced out their products from the Rana factory. Read more on Telesur's website.
  • #OECD360: Your country in figures.
  • How to ensure transparency in public procurement? Read Cobus de Swardt's article on OECD Insights.
  • After three decades of extraordinary economic development, China is shifting to a slower and more sustainable growth path, according to the OECD's latest Economic Survey of China.
  • In pursuit of the American Dream
  • Tim Harcourt Video
  • G20 and Australia: Bestselling economist Tim Harcourt speaks to the BBC about how Australia has gone from "Down Under to Down Wonder".

Most Popular Articles

Poll

What issue are you most concerned about in 2015?

Euro crisis
Unemployment
Global warming
International conflict
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2015