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

GDP : +0.50%, Q4 2014
Employment rate: 65.7%, Q3 2014
Annual inflation : 0.51% Jan 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 7.045% Q4 2014
Recovery ahead? Composite leading indicators
Updated: 30 Mar 2015

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