programmatic political parties and public sector...

Preliminary Draft

Programmatic Political Parties and Public Sector Reform

Cesi Cruz University of California, San Diego

Philip Keefer The World Bank

[email protected]

August 2010

Abstract: A large literature on the political economy of public sector organization asks how and when the legislature delegates authority to the public administration. We contribute to this literature by investigating a new question: under what conditions do politicians prefer a well-performing public administration, with transparent and rule-bound financial and personnel management? We argue that programmatic political parties play a central role, by facilitating collective action by political actors. Such politicians can be more easily held accountable for the implementation of broad public policies, prompting them to be more sensitive to the quality of public sector management. In addition, such politicians are better able to act collectively to enforce high standards of public administration on a reluctant executive. We find robust support for this claim with novel evidence: ratings of 511 World Bank public sector reform loans in 109 countries are systematically higher in countries with programmatic political parties. Disclaimer: The opinions and findings here are those of the authors and do not represent the views of the World Bank or its directors.

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Political Parties and the Politics of Public Sector Reform

The literature on the political economy of public sector organization has focused on

how politicians address the problem of shirking by the public administration. It has

illuminated numerous puzzles surrounding bureaucratic discretion in well-functioning

democracies. However, it hasn‟t specifically addressed a central phenomenon in

development and public sector organization: in many countries, politicians appear to be

entirely indifferent to bureaucratic performance. They neither insist on standards of public

sector financial management that would allow them to track agency spending, nor on

standards of personnel management that would allow them to evaluate the number and

quality of staff responsible for public administration. The literature, however, has not

addressed the political economy of this phenomenon.

We offer and test an original explanation for the political decision to neglect the

basic plumbing of public sector organization. When politicians cannot act collectively – and

in particular, when they are not organized into programmatic political parties – they are less

likely to care about public policies that require delegation to the public sector. Moreover,

legislatures (in democracies) and ruling parties (in non-democracies) are less likely to be able

insist on institutions that allow them to supervise the executive-controlled public

administration. Finally, executives are more likely to personalize decision making in the

public sector. They have, therefore, less demand for the basic institutions of a well-

functioning civil service. Using new and unique data on public sector reform projects from

the World Bank, and data on programmatic parties from the Database of Political

Institutions, we find strong support for this explanation: reforms of basic areas of public

sector „plumbing‟ are more likely to succeed in countries with programmatic political parties.

Our research contributes to several latent themes in the literature. For example,

most of the literature in this area is organized around two major axes, though these are

sometimes conflated. One examines the degree to which politicians rely on complaints by

supporters („fire alarms‟) to oversee the public administration, or instead on politicians‟ own

efforts to regularly supervise bureaucratic activity („police patrols‟). Our argument is that in

countries in which politicians are not organized collectively and have little interest in the

provision of broad public services, their incentives to rely on fire alarms over police patrols

are strongest. Since well-developed personnel and financial management systems may not

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be necessary for politicians to satisfy constituent complaints, and may obstruct their efforts

to satisfy them, political enthusiasm to improve those systems should be anemic.

The second axis is the degree to which politicians grant discretion to bureaucracies,

or instead write statutes that specifically detail the actions they should take. The literature

predicts that politicians grant more discretion to the extent that the ex post supervision

(whether by fire alarm or by police patrols) is effective in revealing shirking, and that

politicians can credibly commit to agree to punish bureaucratic shirking. The natural

implication of this, though again not drawn out in the literature, is that in countries where

politicians do not trust each other, they delegate less and prefer ex ante prescriptions of what

bureaucracies should do. However, the literature, focused as it is on successful countries,

does not take into account that in many countries, where ex post supervision is weak, so also

are institutions to enforce ex ante prescriptions of what bureaucracy should do. For example,

judiciaries are often unreliable guarantors of the law, while political oversight of the judiciary

falters for the same reasons that oversight of the bureaucracy is weak. When both ex post

supervision and ex ante prescription are weak, politicians will prefer institutional

arrangements that allow individual politicians to privately monitor the public administration

(through fire alarms, for example) and to privately punish bureaucratic shirking. Political

interest in high standards of public sector financial and personnel management will be low.

Our analysis has a second implication that we do not test: where politicians prefer

personal control over the bureaucracy over institutionalized control, they are also more likely

to prefer particularistic policies over public good provision. Earlier research (e.g., Huber and

McCarthy 2004), predicts that dysfunctional public administration distorts politicians‟ policy

choices. The analysis here suggests that underlying political circumstances distort both

political decisions regarding the bureaucracy and public policies more generally.

The next section provides an extensive literature review that elaborates these links in

greater detail and foreshadows the theoretical discussion in the following section. A

significant contribution of the paper is to introduce a new approach to testing the politics of

public sector reform using World Bank lending data; these data are described in the next

section, and then results from the empirical analysis are discussed. Using these data, on the

success of public sector reforms from the records of 511 World Bank public sector loans, we

find that public sector reforms are much more likely to succeed in countries with more

programmatic political parties. That is, the more organized are politicians and the more they

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care about policies that require reasonable public sector institutions, the greater the political

support for public sector reforms.

Literature review

Most of the literature on the political economy of public administration focuses on

the degree to which legislatures control the bureaucracy, framing the issue as one of

preference divergence between the legislature and the executive. It abstracts from principal-

agent problems between the executive and the public administration. It has focused most on

successful countries with well-performing public administrations, particularly the United

States. Three key conclusions emerge from this work: legislators go to great lengths to

ensure that regulatory and other bureaucratic decisions reflect their policy preferences; they

take great care to ensure that bureaucratic decision making does not have politically adverse

repercussions for them, for example by ensuring that there are “fire alarms” built into the

system that allow them to correct bureaucratic decisions gone awry; and they are most likely

to delegate decisions to bureaucratic actors when they are confronted with high stakes

decisions that are highly complex. Our analysis shows that the presence of programmatic

political parties influences both the ability and incentives of the legislature to insist on more

systematic personnel and management reforms, but also the incentives of the executive to

rely on and carefully monitor the public administration.

A major contribution of early work in this literature was to show that bureaucratic

decision making, even in apparently independent agencies, tracks political preferences (e.g.,

Weingast and Moran 1983, on the decisions of the Federal Trade Commission, though see

Moe 1987 for a vigorous counter-argument that questions the robustness of the estimates

and offers evidence that changes in FTC performance were driven by agency heads

themselves, not by Congress). Subsequent work has asked whether key features of public

sector organization can be explained in terms of political efforts to ensure that the

preferences of current political actors are reflected in current and future bureaucratic

decision making. McCubbins and Schwartz (1984) argue that United States Congressmen

prefer to supervise administrative performance using decentralized systems of “fire alarms”

that allow supporters to alert politicians to adverse administrative decisions, giving politicians

an opportunity to take credit for redressing grievances. The alternative, “police patrols”,

requires Congressmen to oversee agency performance themselves (e.g., by convening regular

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hearings at which agency officials appear), with no assurance that identifying and correcting

agency misfeasance will benefit supporters.

Though their analysis does not discuss the issue, a congressional preference for fire

alarms could create a corresponding disinterest in the “plumbing” of the public

administration. Police patrols are effective only if basic sources of information on agency

performance, such as agency records and reports, are credible. Legislators who preferred

police patrols would therefore require reasonable public sector financial management and

other features of institutionalized public sectors. In the case of fire alarms, supporter

complaints themselves constitute the primary source of information that legislators need to

intervene in administrative decision making.

Police patrols are better suited to monitoring the public rather than the particularistic

impact of administrative actions. An implication of the argument in McCubbins and

Schwartz (1984), which we make explicit in the analysis below, is therefore that legislatures

only prefer police patrols when general public displeasure over an administrative outcome is

most likely to affect individual political careers. Eaton (2003), for example, argues that

legislators in Argentina made less use of fire alarms compared to their American

counterparts because their careers depended more on their relationship to party leaders than

on their relationship with local constituents and special interests. Eaton (2003) argues that

party leaders had less particularistic interests, leading to less concern with constructing

systems of fire alarms.

Calvert, McCubbins and Weingast (1989) argue that agency discretion is largely

determined at the “appointment” stage, when the legislature and the executive agree on the

goals and composition of the agency, including “the denomination of its powers and

jurisdiction, the specification of administrative procedures to be followed, and the type of

personnel with which the agency is to be staffed (lawyers, economists, engineers, generic

civil servants, etc.)” (p. 604). One could add to this list financial reports from the agency

detailing how it uses its budget. They conclude that politicians should almost always prefer

to rely on institutional rules that guide the public administration, which allow them to ensure

that agency staff are most likely to have preferences consistent with political objectives and

that allow for fire alarms in case they do not.

Epstein and O‟Halloryn (1994) expand on this argument, identifying a fundamental

tradeoff that legislators make in granting discretion to agencies: on the one hand, they risk

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„bureaucratic drift‟ away from legislative priorities, particularly (but not necessarily) if the

executive branch is controlled by a different party; on the other hand, restricting agency

discretion reduces the ability of agencies to use their expertise to respond to new

information. The evidence they compile from the United States is consistent with this:

Congress is more willing to limit discretion, sacrificing agile policy adjustments to new

information, when preference differences with the public administration are greatest (i.e.,

when the president is from a different party).

In our analysis we emphasize the tradeoff mentioned by Calvert, et al. (1989):

politicians are reluctant to specify and general rules governing the conduct of the public

administration when they cannot enforce them. Calvert, et al. (1989) point out that the

careful specification of administrative procedures is useful only to the extent that ex post

enforcement, especially through the judiciary, is effective. Ex post enforcement is weak in

many of the countries in which public sector reforms are undertaken, however.

Prior research also analyzes how the credibility of inter-politician agreements shapes

political oversight of the bureaucracy. Moe (1987) observes that legislatures delegate the

supervision of bureaucracies to legislative committees; when median legislators do not trust

that these committees will represent their interests, they are more reluctant to delegate

authority to the bureaucracy. Bawn (1997) examines this question in more detail. She argues

that legislators not on these committees prefer more statutory controls on agency actions

relative to legislators on the standing committees, who prefer ex post supervision,

implemented by the committees. Evidence from the United States Congress indicates that

legislators who are not on the standing committees with jurisdiction over an agency are more

likely to support statutory controls than committee members. Epstein and O‟Halloryn

(1999) extend these arguments significantly and again show with US data that principal-agent

problems within the legislature affects the extent of delegation to the bureaucracy.

Our analysis extends the argument further still. Similar to Cox and McCubbins

(1994), we observe that partisan organization inside a legislature can resolve transaction

costs, particularly the danger of opportunistic behavior by committee members. We identify

one institutional arrangement that facilitates inter-politician trust, programmatic political

parties, and demonstrate substantial effects of these parties on the structure of the public

administration.

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Like most of the literature, the foregoing research is concerned with the incentives of

legislatures to oversee the public administration. However, the public sector features that

concern us should also be of interest to the executive. Though the literature disputes how

much discretion the executive branch enjoys, no research claims that it has no discretion,

even in the United States. In other countries, executive branch discretion is indisputably

large. This might be because the political system is parliamentary, where conflicts of

interest between legislature and executive branch are muted; because, as we argue here,

political parties are weak and make it difficult for legislators to exercise oversight; because of

constitutional provisions that limit the authority of the legislature (e.g., over the budget); or

because the regime is simply non-democratic and the legislature, if it exists, is purely a

creature of the executive.

In the context of parliamentary democracies, Thies (2001), for example, finds

significant evidence for intra-coalition monitoring (e.g., junior ministers from one party

placed with senior ministers of another party) in Japan, Italy and the Netherlands. In Chile,

Siavelis (2003) argues that restrictions on congressional authority in the post-authoritarian

constitution reduced legislative control of the public administration relative to the pre-

authoritarian period.

But presidents and prime ministers who exercise discretion in their oversight of large

public sectors and a wide range of government activities should benefit from public sector

financial and personnel management systems. These give them reliable information about

how resources were being spent and reassured them that hiring and personnel decisions

would ensure that agencies could adequately pursue presidential objectives. Despite this

expectation, in many countries this is not the case.

In the context of autocracies, Gehlbach and Keefer (2010) offer one explanation of

this. Using post-Mao reforms in the Chinese public administration to motivate their

discussion, they argue that autocrats confront a tradeoff when they consider reforms such as

transparent and systematic personnel policies. On the one hand, these reforms allow the

autocrat to make credible commitments to reward public officials who undertake efforts that

contribute to regime goals. On the other hand, the commitments are credible because these

reforms also make it easier for bureaucrats to organize against the regime in case it reneges.

An implication of their analysis that we explore here is that regimes that place a lower value

on public sector performance are less likely to adopt such policies. In contrast, regimes that

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operate ruling parties that reward members for pursuing broad social and economic goals

that benefit the party are more likely to adopt such policies.

Theory

The argument we test below is that in political settings with programmatic political

parties, both legislators and executives have greater incentives to insist on institutionalized

public administrations, (e.g., exhibiting transparent and routinized personnel and financial

management). In the language of the literature, preference for these reforms rises the more

that politicians prefer police patrol oversight relative to fire alarms; and the more they prefer

to entrust tasks to the public administration – with either high or low levels of delegation –

rather than to circumvent the public administration entirely. Our argument proceeds in two

steps, showing that that programmatic political parties should be associated with greater

legislative demand and, then, with greater executive demand for these institutional

arrangements.

The reforms that we examine empirically involve the installation of management

systems and rules that ensure that personnel and spending decisions in the public

administration are consistent with the overall policy objectives of agencies. They are

designed to impede decisions based on ad hoc criteria that are at odds with statutory

objectives (e.g., hiring based on cronyism, spending divorced from budget dictates). In the

absence of these rules, officials in the executive branch, either politicians or senior

bureaucrats, and legislators with good relations with those officials, have greater scope to

apply particularistic criteria to personnel and financial decisions in the public administration.

In the presence of these rules, their intervention is more transparent, facilitating organized

opposition to it, either by the legislature or by the public administration itself (for example,

as in Gehlbach and Keefer 2010). In addition, the intervention could be illegal and subject

to judicial review or prosecution. Even if the judiciary and prosecutor‟s office are corrupt,

their legal right to reverse a decision based on ad hoc criteria can potentially require further ad

hoc interventions in these agencies to defend the original intervention.

The tradeoffs for politicians in approving these management systems depends on

policies that they are intended to defend. Politicians frequently ask the public administration

to implement laws specifying that agencies direct benefits to particular groups or activities.

In this case, public sector financial management reforms make it more difficult for agencies,

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and individual politicians with influence at the agency, to deviate from these directions. The

law could, alternatively, grant discretion to the agency to develop criteria about how to direct

resources or about how to regulate. The personnel reforms considered below specify that

agencies should prefer individuals who are competent in the development of such criteria.

These reforms make it more difficult for ad hoc interventions that apply other criteria, such as

family connections or support for individual politicians.

The reforms examined below even create tradeoffs when legislation has as its sole

purpose the assignment of particularistic benefits to politicians. In these cases, financial

management reforms help to ensure that the assignment of particularistic benefits embedded

in the law is not subsequently changed by the ad hoc interventions of influential politicians or

by senior bureaucrats. Personnel and financial reforms of the public administration are

irrelevant only if the distribution of influence that governs the assignment of particularistic

benefits in the legislation is the same as the distribution of influence that guides agency

implementation of the legislation. This should rarely be the case. Bureaucrats can exploit

asymmetric information to exercise greater influence over spending than legislation;

politicians in the executive branch enjoy agenda-setting power in implementation that they

often do not have in legislation. The question, then, is when legislatures, on the one hand,

and executives, on the other, would prefer limits on ad hoc interventions that distort agency

implementation of the public policies embedded in legislation.

To the extent that legislation serves broad public purposes, or prescribes purely

technocratic or need-based criteria to assign more targeted benefits, it provides fewer

particularistic benefits to politicians. Politicians are therefore more likely to care about the

faithful implementation of the policy, and the public administration reforms that support

implementation, when their own political careers depend relatively less on particularism and

relatively more on more programmatic benefits. For example, political actors who stake

their political futures on improved education will pay careful attention to the standards used

to recruit teachers and to the systems in place for monitoring education spending.

The organization of politicians into programmatic parties makes this more likely. It

is well-known that parties can allow voters to hold politicians collectively accountable for

their actions, encouraging politicians to care less about the particularistic benefits they

deliver to voters and more about broadly distributed benefits (e.g., Aldrich 1995). Not all

parties serve this function. Programmatic parties, in contrast, apply litmus tests to members

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and, particularly, candidates, to ensure that they share common policy preferences. This

allows parties to make credible commitments to voters that they will pursue those policies.

This, in turn, allows voters to hold politicians from the party collectively responsible for

failure to pursue policies consonant with the party program (see, e.g., Snyder and Ting 2002).

Voters can also hold them collectively accountable for poor performance, independent of

their policy choices. So, for example, programmatic parties permit citizens to hold

politicians collectively accountable for the failure of the public administration to implement

policies well or to respond to shocks.

This logic applies both to executives and legislators. Executives who represent a

programmatic party are more likely to have made commitments to citizens to pursue broad

public policy goals. Even if the executives are unelected, they may use a strategy of

providing broad-based benefits to citizens as a strategy to deter insurgencies and coups.

They are also, consequently, more interested in ensuring a public administration that is less

permeable to ad hoc deviations from public policies.

The testable proposition that emerges from this discussion is straightforward.

Programmatic political parties should be associated with lower incentives of both legislators

and executives (elected or unelected) to provide particularistic goods and correspondingly

higher political incentives to strengthen public sector management with reforms that limit

the application of ad hoc criteria to personnel and financial management decisions. The

effect is unambiguously causal in the case of legislatures: precisely because they are

organized into programmatic political parties, they can be held collectively accountable,

shifting their political incentives away from the provision of particularistic goods. In the

case of unelected executives, the effect may not be causal: a leader who chooses to build

legitimacy by providing non-particularistic benefits to citizens is more likely both to establish

a programmatic ruling party and to adopt more rule-bound provisions for the public

administration. Even in the autocratic case, however, as the discussion below and in

Gehlbach and Keefer (2010) makes clear, a programmatic ruling party may be a necessary

condition for the ruler‟s public administration reforms to be effective. The party-public

administration reform connection is then once again causal.

Even if politicians prefer particularistic policies, they might still prefer a rule-bound

public administration to ensure that the particularistic objectives enshrined in legislation are

actually implemented. As the earlier survey of the literature makes clear, conflicts of interest

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between the legislature and executive are a significant force in shaping the public

administration. Legislators, for example, could have one set of particularistic objectives, and

the executive another. Despite a preference for particularism, therefore, legislators may still

value oversight of the public administration to ensure that the executive does not implement

a different distribution of policy benefits than those specified in legislation. The executive,

though, can either veto public administration reforms or undermine their enforcement, and

is more likely to do so in the absence of programmatic parties.

First, in the absence of programmatic parties, the legislature cannot easily punish a

veto or enforcement failures by the executive. The typical sanction is to vote against the

executive‟s priorities. Moe (1987) points out that one obstacle to such a sanction is the

potential difficulty of organizing collective action by the legislature to accomplish it.

However, in the absence of programmatic political parties, such collective action is more

difficult. In particular, it is straightforward for the executive to disrupt collective action by

making strategic offers to some legislators that give them incentives to opt out. Collectively

organized legislators can better resist this strategy, by making it more costly for legislators to

accept such offers (e.g., as in Cox and McCubbins 1994).

Second, public disapproval could raise the costs to the executive of slowing public

administration reform. Media exposure of corruption and civil society campaigns for greater

transparency in government share the underlying logic that citizens will reduce their support

for incumbents who do not restrain abuses by the public sector. However, like legislators,

citizens have limited incentives to condition their support for politicians on public goods

(like improved public administration) in an environment in which politicians can only

credibly commit to providing clientelist goods (as in Keefer and Vlaicu 2008). However, it is

precisely in settings where programmatic political parties are absent when politicians are least

likely to be able to credibly commit to the provision of public goods.

If it happens that, perhaps because of external pressure, the executive signs

legislation that he would have preferred to have vetoed, the absence of programmatic parties

still inhibits legislative or citizen action to sanction executive failures to implement the

legislation. Third, however, judicial oversight of the public administration could encourage

enforcement. This, again, is unlikely. Even if the judiciary is immune to executive branch

pressure, which is unlikely when there are few political consequences for manipulating the

judiciary, it cannot usually act unless cases are brought to it. Those who bring cases would

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have to withstand the threat of retribution by the executive, an easier challenge for plaintiffs

who represent large, collectively organized groups (e.g., programmatic political parties) than

for individuals.

This logic suggests, then, a second testable hypothesis with the same observable

implications as the first: executives are less likely to veto and more likely to enforce public

administration reforms in the presence of programmatic political parties. In their absence,

vetoes and failures to enforce trigger few sanctions. Eaton‟s (2003) discussion of tax

administration in Argentina supports the general prediction that legislative oversight is more

vigorous when legislators are better organized. He concludes that strong party discipline in

Argentina enabled the legislature to exercise significant collective oversight of the tax

administration (in this case, while it is debatable whether the Peronist party – the party in

question – was programmatic, it less debatable that that voters could hold legislators from

the Peronist party collectively accountable for policy failure).1

The first argument above concludes that when parties are programmatic, executives

(elected or unelected) are likely to be prefer a more rule-bound public administration. The

second argument concludes that executives who have a particularistic agenda are better able

to resist pressure to implement public administration reforms in the absence of

programmatic parties. However, the two arguments still leave a puzzle. Even executives

who have a particularistic agenda might still value public administration reforms that allow

them to prevent shirking by the public administration on their objectives. In particular, if

there are no programmatic parties, such that legislative and citizen oversight of the executive

are in any case weak, why would the executive not implement reforms simply to guard

against shirking?

One reason is simply that the payoffs to using public jobs to pay off supporters

exceed the value of a well-run public administration. In that case, the executive concentrates

1 Siavelis (2000), in contrast, argues that congressional oversight of the public administration in Chile is weak. His evidence explains this primarily as a result of constitutional changes that weakened Congressional influence over the budget, giving legislators, no matter how well-organized, more limited influence over the executive. He also argues that the thick linkages between citizens and parties that, prior to the authoritarian period, had facilitated „fire alarms‟, had dissolved. This explains why fire alarms are not a common trigger for Congressional action. However, since parties are programmatic in Chile and voters care about candidate party affiliation, there are still significant political incentives, both for the executive and the legislature, to have financial and personnel policies that promote efficient public administration; Chile‟s policies in this regard are among the best in Latin America.

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key decision making within the office of the executive, circumventing the public

administration that is used, instead, for clientelist appointments. Keefer and Vlaicu (2008),

for example, describe the case of Joaquin Balaguer, long-time president of the Dominican

Republic, who was reported to personally direct more than half of the government budget.

Executives might also forego better public administration because the institutional

arrangements that allow for greater efficiency also permit the public administration to act

collectively and independently of the executive. Gehlbach and Keefer (2010), focusing on

unelected executives, show that institutional reforms that inform groups about how leaders

treat group members enables the groups to act collectively against the leader. When the

group is the officials of the public administration, they argue that reforms that increase the

transparency of personnel decisions also allow the leader to make credible commitments to

reward officials for high effort. The reforms facilitate collective action by officials against

the leader in the event that the leader reneges on the commitment.

Both arguments predict that when leader agendas are particularistic – when the

ruling party is not programmatic – leaders are less likely to support public administration

reforms that increase transparency in budgeting, spending and personnel decisions. In the

first case, rulers with a more programmatic agenda, as expressed by the presence of a

programmatic ruling party, place a relatively lower value on using the public administration

as a vehicle for rewarding supporters. According to this argument, programmatic parties are

an indication of the leaders‟ political strategy (to pursue a programmatic rather than

particularistic agenda), and the correspondingly higher demand of the leader for a well-

functioning public administration. In the second case, programmatic parties are an

indication that rulers value the ability to implement a programmatic agenda, even at the risk

of collective action by the public administration.

These last two arguments argue for an association rather than a causal relationship

between programmatic parties and executive support for public sector reform. However, a

conjecture that follows directly from the logic in Gehlbach and Keefer (2010) points to a

more causal effect. Leaders can credibly commit to a particular programmatic agenda if it is

easy to sanction leaders should they renege on that commitment. Programmatic parties

fulfill that role when two conditions are met: party members benefit when the party

succeeds in fulfilling its programmatic commitment; and party members can act collectively

to impose costs on leaders who undermine the party. Chinese evidence, from Gehlbach

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and Keefer (2010), indicates that Deng Xiaoping re-organized the Chinese Communist Party

to accommodate these two conditions as he set out to pursue a new growth agenda. He

implemented transparent, systematic standards of promotion for party cadres that both

explicitly linked their performance to these broader, party objectives, but that also made

arbitrary treatment of cadres by leaders more transparent, increasing the ability of cadres to

react collectively against such treatment and making the promotion standards more credible.

In sum, programmatic parties are, first, necessary for public sector reforms to

succeed: they give groups of politicians the incentive to implement public policies with

broad effects across the society; and they allow those politicians to act collectively to enforce

those reforms (e.g., against executive recalcitrance). Second, programmatic parties are an

indication that politicians view broad, programmatic achievements as having relatively high

political payoffs compared to a purely particularistic agenda. Such politicians are more likely

to support public sector reform. These arguments point to the hypothesis that is tested in

the remainder of this paper: public sector reform is more likely to succeed in the presence

of programmatic political parties.

Data on Public Sector Reform and Reform Success

To test this hypothesis, we ask whether public administration reforms are more likely

to succeed in countries with more programmatic parties. To do this, we use data from

World Bank loans to support public sector reform. Public sector reform in development

countries is a core activity of the World Bank. The Bank typically pursues this goal with

smaller project loans that finance the costs of public sector reform or with larger adjustment

loans for which progress on specific public sector reform initiatives is a condition for loan

disbursement. The Independent Evaluation Group of the World Bank evaluates the success

of World Bank loans and whether they have achieved their objectives. One such study

examined 467 public sector loans.2 We ask whether the success of these loans, as assessed

by the IEG, hinged on the presence of programmatic political parties.

The IEG is an independent unit within the Bank, reporting to the Bank Board of

Executive Directors, not to Bank management. IEG evaluations are commissioned by the

Board or decided upon unilaterally by the IEG. Bank management makes a formal response

2 We use an updated version of this database with 511 projects.

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to IEG reports that is printed together with the report; it has no right, however, to require

any changes in the wording or conclusion of the IEG document itself.

The IEG selected 467 loans that began in 1987 or later and ended in 2006 or earlier.

World Bank loans often have multiple, cross-sectoral objectives. IEG therefore classified as

“public sector” (as opposed to education, infrastructure, health, etc.) those projects that met

two criteria. First, at least 25 percent of the loan amount had to be related to achieving PSR-

related themes or sectors. Second, because loans are generally disbursed when countries

demonstrate that they are meeting development goals established in the conditions of the

loan, the IEG required, in addition, at least three of these conditions to be in PSR focus

areas.

For projects active since December 2001, the Bank‟s management information

system classified projects according both to the sectors (public sector, economic policy,

health, education, energy and mining, etc.) and up to five sub-sector themes. Prior to

December 2001, only sectoral classifications are available; since December 2001, project

managers sometimes assigned only three or four rather than the possible five sub-sector

themes. The most frequently assigned sub-sector theme in this group of loans is public

expenditure and financial management, appearing in 307 themes (i.e., in 307 of the 467

projects). The next most commonly-assigned are administrative and civil service reform

(249); state enterprise reform (144); and tax policy and administration (120). A large number

of other themes appear, but none more than 90 times. Among these, the most important are

regulation and competition policy (90); debt management and fiscal sustainability (87) and

macroeconomic management (83).

Public sector reform in the World Bank is broadly defined (including

decentralization, anti-corruption, state enterprise reform, and judicial reform). Many of

these themes fit at best loosely with the arguments we make above, and (perhaps with the

exception of judicial reform) with the literature in general on the political economy of public

sector organization. In our base regressions we restrict the analysis only to those loans for

which at least one sub-sector theme was public expenditure and financial management;

administrative and civil service reform; or tax policy and administration.

The public expenditure and financial management theme is defined as budget

planning and execution (financial management information systems and medium-term

expenditure frameworks), procurement, auditing, and monitoring and evaluation.

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Administrative and civil service reform involves all aspects of the management and

organization of personnel. It includes programs to downsize the civil service and reforms to

the personnel information system (including civil service censuses), career paths, pay grades

(decompression), other aspects of the incentive system, and the organization of ministries.

Downsizing might seem to be unrelated to the earlier arguments; however, one consequence

of building a civil service based on patronage is both a large civil service and one that is

staffed inappropriately for achieving the statutory objectives of the public sector.

Downsizing is a potentially necessary policy response if there is political support for more

programmatic goals. Finally, tax administration is defined as including the key aspects of

revenue administration, particularly the institutional setting and development of operational

processes, including automation and interaction with taxpayers (World Bank 2008, 4-7).

While we are careful to match the types of loans to our specific arguments, results

are robust to alternative samples. Programmatic parties are significant determinants of

reform success using either the whole sample of loans (based on the argument that the

World Bank classifies all of these as public sector loans); or after excluding tax policy and

administration (since, although tax administration itself is entirely within the scope of our

analysis, loans to assist in the revision of the tax code itself are less so). In our regressions,

we control for the total size of the loan and for the importance of the PSR components

within the loan.

Having chosen the 467 (511 in the updated database used in this study) public sector

reform loans, the IEG subjected them to several evaluations, as it does to all loans that it

evaluates. Two are most appropriate for the analysis here. First, the IEG ratings evaluate

institutional development impact. This is the extent to which a project improves the ability

of a country or region to make more efficient, equitable and sustainable use of its human,

financial, and natural resources. For loans in most sectors, the main objectives of the

projects can be achieved with little attention to institutional development: dams can be built

successfully even if the ministry in charge of them remains a shambles; schools can be built

and teachers hired even if the administrative apparatus for managing education resources

remains weak. For these loans, institutional development might be secondary.

In the case of public sector reforms, however, institutional development is precisely

the point of the reforms. Moreover, in loans with mixed objectives, some public sector and

some not, the institutional development rating is likely to weight the public sector

16

components most highly. Among those loans that received an institutional development

rating, there was evidence of the difficulties with institutional development in developing

countries: 5 received a high rating; 136 a substantial rating; 172 a modest rating; and 44 the

lowest rating, negligible.

Second, IEG evaluated a loan‟s overall outcomes, ranging from highly satisfactory

(the program achieved at least acceptable progress toward all major relevant objectives and

had best practice development impact on one or more of them); to satisfactory (progress on

all relevant objectives, none best practice and no major shortcomings) to moderately

satisfactory (major progress on most objectives and no major shortcomings) to moderately

unsatisfactory (no progress on most major objectives or progress on all, but with a major

shortcoming, such as a violation of a safeguard (e.g., such as the improper resettlement of

communities in an area to be dammed); and unsatisfactory – did not make acceptable

progress on most objectives and produced a major shortcoming. In the sample, 10 received

the highest rating, 151 the second-highest; 95 the third highest; 26 the fourth; and 68 the

fifth and lowest.

The comprehensive evaluation could be a less precise measure of public sector

reform success, since its rating is presumably based on all sectors and themes of the loan,

public sector or not. Nevertheless, these outcome ratings formed the basis of the IEG‟s

own report on PSR loans and this attracted no dissent from Bank management and staff

(e.g., in the Bank management response to the IEG Evaluation). Moreover, the wording of

the scoring categories, combined with the criteria used to identify PSR loans, make it unlikely

that progress on PSR objectives would not be considered among the most important major

objectives of the loans.

A key issue in lending is the effort to ensure that projects and loan conditions are

well-designed at the outset, reflecting best practice and special country conditions. The IEG

rated quality of projects at entry. We use this variable to test for the robustness of the party

effect, to control for the “quality” of loan preparation. This is a difficult and conservative

test, since the quality of loan preparation is related not only to Bank inputs, but also to

country engagement with the lending process. Engagement, though, should be a function of

political incentives, so that quality at entry could also capture variation in loan success ratings

that is properly attributed to the party variable.

17

Once a loan is signed, Bank staff supervise country progress towards meeting loan

objectives. The IEG also rated the quality of Bank supervision. Of those that were rated, 23

received a highly satisfactory rating; 264 a satisfactory rating and 57 an unsatisfactory rating;

a handful of other projects received other intermediate ratings (moderately satisfactory, etc.).

The IEG also rated overall Bank performance, which takes into account both project design

and supervision; the distribution of responses is nearly identical to that for supervision. We

use these ratings to show that, although programmatic parties affect loan performance, a

product of country effort, they do not affect the Bank‟s own supervisory effort. This is

important, since if Bank evaluations were endogenous to the presence of programmatic

political parties, we would expect all IEG ratings to reflect the endogeneity bias. In fact,

they do not.

Our approach differs from the usual empirical strategy for examining the political

economy of reform. This strategy generally posits a particular condition that should prompt

reform and then, comparing reforming and non-reforming countries (or countries before

and after reform), ask whether this condition was present in reforming, but not in non-

reforming countries. This approach limits analysis to certain categories of reform for which

cross-country data exists; these data are often broad and subjective and have no clear link to

any specific political decisions within countries.

World Bank loans offer a useful alternative. The nature of the reform (the loan

objectives) is much more narrowly defined than is the case for other reform data. More

importantly, the political starting point for reform is homogeneous across countries. In the

vast majority of cases, legal authority to sign loan agreements with the World Bank rests with

the executive branch and, within the executive, with the responsible sectoral minister and the

finance minister. In the case of a health loan, for example, the minister of health and the

minister of finance are the usual Bank counter-parties. The analysis is interesting, and World

Bank loans are properly regarded as reform attempts, because these two individuals, alone,

cannot usually implement the reform agenda to which the loan documents commit the

country. The successful implementation of the loan depends on a range of other actors,

including the legislature, and other members of the executive branch (including the president

or prime minister). Very often, the tenure of the officials who sign the loans is considerably

shorter than the duration of the loans and their successors are responsible for

implementation.

18

Other Data

Our main correlate of interest, the fraction of parties in a country that are

programmatic, is constructed from variables in the Database of Political Institutions (DPI, Beck

et al. 2001). They identify whether each of the largest three government parties and the

largest opposition party are right, left or center in their orientation or whether, on the

contrary, their orientation is either not discernible in the sources employed or unrelated to

economic policy. Our key variable is the share of these parties that is programmatic (can be

coded as right, left or center). Across all the loans in our sample, only half of parties were

programmatic, on average. This programmatic party variable is measured from the project

start year.3

IEG ratings could be based on assessments of bureaucratic capacity, which in turn is

often linked to income and education: poorer countries with less educated citizens are less

able to accumulate the human capital needed to run an efficient public sector and to

implement public sector reforms successfully. All regressions therefore control for the log

of per capita income and the rate of progression to secondary school, both from the World

Development Indicators. Log of per capita income is averaged over the duration of the loan, and

rate of progression to secondary school is a country average.4

The size of the loan potentially relates to the resources that are applied to public

sector reform, the sectoral diversity of the loan (larger loans are more likely to include non-

public sector elements), and potentially the strictness and accuracy of IEG ratings (larger

loans attract greater attention). All regressions therefore control for the loan amount and

the percentage of the loan amount that is allocated for public sector components. They also

control for the duration of the loan. Longer duration loans could imply a more

conscientious effort by countries to pursue loan objectives (consistent with the frequently-

voiced argument that institutional reform takes longer). However, within the World Bank,

slow loan disbursements are also a red flag, indicating difficulties with implementation. In

either case, duration is a rigorous control variable: we would expect the absence of

3 Results are also robust to using 3 and 5 year backward averages.

4 The main results hold even when all variables that are averaged over the project period are measured using project start year values instead. Country averages for progression to secondary school are used because of limited data availability. Results are robust to using similar education variables, such as primary completion rate.

19

programmatic political parties to make implementation more difficult and disbursement

slower; and the presence of programmatic parties to lead to more conscientious

implementation (but then, longer loan duration).

All regressions control for population and land area, from World Development Indicators.

Larger countries may be more difficult to administer; on the other hand, there may be

economies of scale in administering more populous countries (holding area constant). There

is, in fact, some evidence that public sector reform is more likely to succeed in countries with

more people. All regressions also control for region dummies, using the UN standard

regions.

We test the robustness of our results to many alternative specifications. Countries‟

initial level of bureaucratic quality may influence their ability to earn a successful rating from

the IEG. Moreover, the specific characteristics of public sector reforms may depend on

initial bureaucratic quality. We show that the results are robust to controlling for the

beginning-of-period evaluation of bureaucratic quality found in Political Risk Services‟

International Country Risk Guide. Results are robust, as well, to controls for IEG‟s rating of

quality at entry, described previously.

A large literature argues that formal political and electoral institutions influence

political incentives to pursue particularistic versus public goods. Though nearly all of that

literature assumes that political parties are able to credibly promise public goods, and

therefore programmatic, results are robust to controlling for whether a system is presidential

or parliamentary, whether the electoral system is proportional or plurality, and for average

district magnitude. These variables are taken from the Database of Political Institutions.

Most discussions of public sector organization and conflicts of interest between

executive and legislature emphasize information asymmetries. We use newspaper

circulation in countries, taken from World Development Indicators, to account for this effect.

Gehlbach and Keefer (2010) argue that leader willingness to allow for collective action (by a

ruling party or by a bureaucracy) is attenuated when natural resource rents are high. Knack

(2008) shows that natural resource exports (and, ironically, foreign aid) weaken government

incentives to design efficient tax systems. We therefore control for natural resources as a

percent of exports, from WDI.

20

Table 1: Summary Statistics

Variable Obs. Mean Std. Dev. Min Max

Programmatic Parties (Full Sample) 415 0.5171888 0.3828382 0 1 Programmatic Parties (Democracies) 214 0.651947 0.3531845 0 1 Programmatic Parties (Non-democracies) 164 0.3974594 0.3534068 0 1 Log GDP per capita 418 1.271757 1.659389 0.0825486 9.024541 Log Population 418 16.59085 1.469631 12.9496 20.94271 Log Land Area 426 12.63474 1.644888 5.828946 16.61196 Progression to Secondary School (%) 380 75.74639 21.62246 25.98069 99.80688 Funding Amount 439 99.25689 198.3292 0.4933589 2525.25 Project Duration 439 3.776765 2.533845 1 12 Loan % Allocated to PSR 439 44.64237 21.00635 11 100 IEG Quality at Entry 305 4.213115 1.420188 1 6 Initial ICRG Bureaucratic Quality 354 2.512307 1.134971 0 6 PR 401 0.535469 0.4824109 0 1 Political System 423 0.3904903 0.742379 0 2 Mean District Magnitude 397 31.6449 107.382 0.7 888 Democracy (ACLP) 423 0.5462203 0.4815177 0 1 Newspaper Circulation 321 34.54603 42.17872 0.09 200.1508 Natural Resource Exports (% GDP) 365 2.691767 5.38174 0 49.19149

Our base regressions pool all countries, more and less democratic, since our

hypotheses apply equally to both. Results are robust, however, to controlling for whether

countries exhibit competitive elections and have had at least one democratic change of

government; the definition follows, and the data are taken from, ACLP (Alvarez et. al. 1996,

Cheibub et. al. 2009).

We have a two-fold strategy for addressing endogeneity. First, to show that World

Bank evaluations are not endogenous to the presence of programmatic political parties, we

re-ran our models on ratings of Bank supervision and overall performance. Unlike the

ratings of project institutional development impact and overall outcome, these ratings are

given based on the quality of the Bank‟s project design and supervisory effort. According to

our theory, programmatic parties should have no effect on these ratings. However, if Bank

evaluations are indeed endogenous to programmatic parties, then we would expect that all of

the ratings are subject to this bias.

A second issue is the possibility that programmatic parties are endogenous. This is

based on the rationale that programmatic parties may have been established in accordance

with the preference of voters for specific policy outcomes. In other words, voters that

21

prefer public sector reforms may have a strong preference for supporting programmatic

political parties as well. To address this issue, we demonstrate that our results are robust

even when instrumenting for programmatic parties in an instrumental variables probit

specification.5

Specification

We use a logistic specification to estimate the following,

iii partiesicprogrammatIEG 210 )( . The variable IEGi is the IEG rating of

either institutional development or overall loan success. The original scales were used to

create indicators of project success. The institutional development indicator variable takes

the value of 1 when the institutional development impact of the project is “substantial” or

higher; 0 otherwise. The overall outcome indicator variable takes the value of 1 when the

outcome of the project is “satisfactory” or higher; 0 otherwise. All of the ratings indicator

variables follow the standards used by the IEG and World Bank for determining project

success. The main results are robust to alternative thresholds for project success.

Furthermore, the main results are robust to ordered logit regressions using the full ratings

scales, for all specifications that meet the proportional odds assumption.

Since the evaluation is categorical and we cannot be sure that differences between

categories are constant across categories, the logistic specification is appropriate. Each

observation i is a loan; we estimate only clustered standard errors, assuming that errors are

distributed independently across countries, not across loans within countries. The

programmatic party variable was described earlier. Xi is a vector of covariates; εi is an error

term; and β0, β1, and β2, are (vectors of) parameters to be estimated.

Results

The results indicate that programmatic political parties are significant determinants

of the success of World Bank public sector reform projects, both in terms of the project‟s

long term institutional development impact and overall outcome. Table 2 below reports the

results of logistic regression for the baseline and full models. The baseline control variables

5 Reverse causality is another possibility: World Bank evaluators observe that a country has programmatic parties and, for that reason, assigns higher ratings to the public sector reform projects. There is no evidence that this is the case – no project or other Bank document that we reviewed, including the IEG Report (2008), even mentioned political parties.

22

include country characteristics (GDP per capita, population, land area, progression to

secondary school) and project characteristics (project duration, funding amount, loan

percentage allocated to public sector reform), and the full model adds IEG quality at entry

and initial bureaucratic quality to the base model. All tables report odds ratios, the ratio of

the odds that a project earns a successful rating to the odds that it earns an unsuccessful

rating, adjusted for the simultaneous effect of the other explanatory variables.6 Odds ratios

greater than one imply that increases in the independent variable increase the probability of

success; less than one, reduce it.

The odds ratios for programmatic politics in the base model are 4.02 for institutional

development impact and 2.92 for overall project outcome. This implies that a one unit

change in the proportion of programmatic parties increases the odds of a project earning a

successful institutional development impact rating by a factor of 4.02, and a successful

overall outcome rating by a factor of 2.92. When controlling for initial bureaucratic quality

and the quality of the project design in the full model, the odds ratios are slightly larger: 5.89

for institutional development impact and 3.5 for overall project outcome. In terms of

probabilities, holding all other variables at the mean, increasing the proportion of

programmatic political parties from 0 to 1 increases the probability of institutional

development impact success from .240 to .560 in the base model and from .197 to .591 in

the full model. For overall project outcome ratings, the probability of earning a successful

rating increases from .275 to .525 in the base model and from .188 to .449 in the full model.

The only baseline control variable significant across both models is funding amount,

but the result is counter-intuitive: larger loans are associated with a lower probability of loan

success. This is not due to a dilution effect – that public sector reforms play a smaller role in

larger loans – because we control for the percent of the loan that the Bank attributes to the

PSR component. Out of the two additional variables in the full model, the IEG rating for

quality at entry is significant and positive for both ratings. On the other hand, initial

bureaucratic quality is associated with a decrease in the probability of a project earning a

successful outcome rating. We make no prediction about this coefficient, but the estimated

effect is consistent with at least three possibilities: that reform is more difficult in more

6 For all countries in the sample, the odds of success relative to the odds of failure is .653 for institutional development impact and .797 for overall outcome. The corresponding probability that a project will earn a successful rating is .395 for institutional development impact and .445 for overall outcome.

23

advanced bureaucracies; that the Bank may hold countries with lower quality bureaucracies

to more lax standards; and that public officials in more institutionalized bureaucratic settings

may have greater ability to resist reform.

Table 3 shows that the main results hold even when controlling for newspaper

circulation and natural resource exports, and for the inclusion of political controls (whether

the electoral system is proportional representation; whether the political system is

presidential, semi-presidential or parliamentary; mean district magnitude; and democracy, as

determined by ACLP). The main results are also robust to restricting the sample to

countries rated as democratic by ACLP (Table 4). Within democracies and controlling for

IEG quality at entry rating and initial bureaucratic quality, a unit increase in the proportion

of programmatic parties is associated with an increase in the odds of successful institutional

development impact rating by a factor of 10.32 and an increase in the odds of successful

overall outcome rating by a factor of 11.69.

The evidence in Table 5 supports our claim that the earlier results are not the

spurious product of endogeneity. If they were, the omitted variable would likely affect all

loan ratings given by IEG. However, the Table 5 results show that programmatic parties are

not significant determinants of IEG ratings of World Bank supervision and overall

performance. The fact that the programmatic party variable is not related to ratings that it is

not expected to determine lessens the concern that the relationship between programmatic

parties and project success is driven by some unobserved factor or IEG bias that should

influence all ratings.

Table 6 presents results of an instrumental variables probit specification that are

further evidence against endogeneity bias. The programmatic parties result holds in both

models, with odds ratios of 8.725 and 4.322 for institutional development impact and overall

outcome, respectively. At the same time, the Wald statistic for the test of exogeneity is

insignificant indicating that there is insufficient information in the sample to reject the null

hypothesis that programmatic parties are exogenous. This supports the claim that the initial

logistic regressions are already appropriate, and that instrumenting for programmatic parties

leads to a loss of efficiency with no corresponding increase in consistency.

24

Conclusion

This paper develops a new argument that relates public sector organization to the

presence of programmatic parties. First, a large literature argues that relatively high levels of

institutionalization are required for political parties to make credible programmatic

commitments to citizens. We argue that the more organized are politicians, the more likely

are voters to hold them accountable for public sector failures and the better able are

politicians to enforce rules governing public sector performance. Second, politicians from

parties with programmatic agendas are more likely to value public policy outcomes that

depend on the efficiency of public sector organizations.

New evidence on World Bank public sector loans allows us to conduct an exact test

of the proposition that programmatic parties promote more efficient public sector

organization. These data provide evidence on the success of World Bank programs aimed at

improving two sets of rules that are universally associated with more efficient public sectors:

transparent, regularized personnel and financial management decisions. Using data on

programmatic parties from the Database of Political Institutions, we find strong and robust

evidence for the proposition.

These results mark the beginning rather than culmination of research on this issue.

With respect to public sector reform, we focus on personnel and financial management

variables that permit both executive and legislative oversight of the public administration.

Earlier literature has focused on the degree to which the legislature delegates to the executive

branch. Our argument, new to that literature, suggests that the presence of programmatic

parties should influence that delegation; our results here suggest that this is an important

issue for future research. We also seek to explore these issues with additional measures of

political parties. No other data are available with the same temporal and country coverage as

the DPI data. At the same time, theory calls for multi-dimensional measures, capturing

whether parties make programmatic claims, but also the nature of their internal organization

and the capacity they give party members to act collectively (e.g., to replace the party leader).

These are not available in DPI, but other data projects (e.g., the Duke University Project on

Citizen-Politician Linkages) help to fill these gaps (in the case of Duke, for 80 countries,

though only one year).

Our results also have significant implications for public sector reform. In discussing

the timing of reform and of donor collaboration with client countries, practitioners and

25

donors emphasize that one should take advantage of windows of opportunity. Those

windows are usually considered open when influential politicians demonstrate enthusiasm

for reform. The analysis here presumably holds enthusiasm constant: all loans generated

enough enthusiasm to persuade a few top ministers, including the one in charge of the

relevant sector, to approve the loan. The individual commitment of a few turns out to be

insufficient, however. In addition, and critically, reform succeeds when a larger group of

politicians benefits collectively from it – that is, when politicians are gathered under the

umbrella of a programmatic political party.

26

Table 2. Logistic Regression: Programmatic Parties and Project Ratings for Public Sector Reform

Inst. Dev. Impact Rating Overall Outcome Rating Base Model Full Model Base Model Full Model

Programmatic Parties 4.019** (0.002)

5.893** (0.003)

2.915** (0.006)

3.504* (0.029)

Log GDP per capita 1.196 (0.303)

1.108 (0.531)

1.088 (0.483)

1.079 (0.585)

Log Population 1.623+ (0.086)

1.763 (0.196)

1.249 (0.216)

1.386 (0.211)

Log Land Area 0.840 (0.397)

0.804 (0.429)

0.915 (0.552)

0.879 (0.565)

Progression to Secondary School (%) 0.976 (0.144)

0.974 (0.156)

0.993 (0.610)

0.996 (0.816)

Funding Amount 0.998+ (0.083)

0.998* (0.049)

0.998* (0.032)

0.998* (0.011)

Project Duration 0.981 (0.780)

1.059 (0.440)

0.887+ (0.086)

1.018 (0.799)

Loan % Allocated to PSR 1.006 (0.367)

1.008 (0.334)

1.009 (0.199)

1.014 (0.129)

IEG Quality at Entry

1.925*** (0.000)

3.603*** (0.000)

Initial ICRG Bureaucratic Quality

0.790 (0.336)

0.612* (0.050)

Region Dummies Yes Yes Yes Yes

Observations 255 214 259 218 Pseudo R2 0.174 0.289 0.083 0.300 Odds ratios reported; p-values in parentheses + p < 0.10, * p < 0.05, ** p < .01, *** p < .001 GDP per capita and population are averaged over the project period; progression to secondary school is a country average; programmatic parties and ICRG bureaucratic quality are measured at the project start year

27

Table 3. Logistic Regression: Programmatic Parties and Project Ratings for Public Sector Reform--Additional Controls

Inst. Dev. Impact Rating Overall Outcome Rating Media and

Resources Political Controls

Media and Resources

Political Controls

Programmatic Parties 7.237*** (0.000)

2.632* (0.038)

3.486** (0.005)

2.862* (0.017)

Newspaper circulation 0.996 (0.475)

1.001 (0.845)

Natural Resource Exports (% GDP) 1.056 (0.227)

0.946 (0.368)

PR

1.143 (0.767)

1.687 (0.244)

Political System

1.384 (0.217)

1.191 (0.392)

Mean District Magnitude

0.994 (0.482)

1.005 (0.480)

Democracy (ACLP)

1.552 (0.450)

0.856 (0.662)

Baseline controls Yes Yes Yes Yes Region Dummies Yes Yes Yes Yes

Observations 185 230 188 234 Pseudo R2 0.246 0.182 0.129 0.100 Odds ratios reported; p-values in parentheses + p < 0.10, * p < 0.05, ** p < .01, *** p < .001 Programmatic parties and ICRG bureaucratic quality are measured at the project start year; all other variables are averaged over the project period

Table 4: Logistic Regression: Programmatic Parties and Project Ratings, Democracy Subsample

Inst. Dev. Impact Rating Overall Outcome Rating

Programmatic Parties 7.362* (0.012)

10.32* (0.016)

6.334** (0.003)

11.69* (0.012)


2.181*** (0.000)

3.397** (0.003)


0.981 (0.935)

0.418** (0.009)



28

Table 5. Logistic Regression: Programmatic Parties and Bank Supervision and Performance for Public Sector Reform Projects

Bank Supervision Rating Bank Performance Rating Base Model Full Model Base Model Full Model

Programmatic Parties 0.760 (0.542)

0.631 (0.458)

0.758 (0.632)

0.572 (0.575)


2.018*** (0.001)

5.069*** (0.000)


0.962 (0.883)

1.505 (0.132)



Table 6. Instrumental Variables Probit Regression: Programmatic Parties and Project Ratings for Public Sector Reform

Inst. Dev. Impact Rating Overall Outcome Rating

Programmatic Parties 8.725** (0.001)

4.322+ (0.072)

Baseline controls Yes Yes Region Dummies Yes Yes

First Stage: Programmatic Parties

Latitude 1.017*** (0.000)

1.018*** (0.000)

Baseline controls Yes Yes Region Dummies Yes Yes

Observations 250 254 R2 Pseudo R2 Odds ratios reported; p-values in parentheses + p < 0.10, * p < 0.05, ** p < .01, *** p < .001 GDP per capita and population are averaged over the project period; progression to secondary school is a country average; programmatic parties and ICRG bureaucratic quality are measured at the project start year

29

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