Bureaucracy

In this VoxDevLit, we reviewed the literature on bureaucracy and development. The mainstream economics literature remains rooted in the study of principal-agent problems, with many studies looking at the importance of output measurement, incentives, selection and matching in affecting how bureaucrats behave. A key insight is that standard recommendations stressing the importance of incentives and selection are mostly confirmed in public sector settings. While bureaucrats, by virtue of their public tasks, are deemed more pro-social and mission-driven than private sector workers, there is limited evidence that financial incentives crowd-out or lead to the recruitment of less able workers. A growing body of work has also demonstrated that public servants are responsive to incentives in the public sector, both using explicit incentives and career concerns.  

As the literature on the personnel economics of the state has matured, the study of bureaucratic reforms has raised questions about how to leverage knowledge to increase external validity and scaling-up. As Wilson (1887) noted a century and a half ago: “civil service reform must ...  expand into efforts to improve, not the personnel only, but also the organisation and methods of our government offices.'' Studying the interdependence between different kinds of bureaucratic activity requires giving greater weight to the study of organisational issues such as how multiple departments and agencies interact; and how bureaucracy relates to and is influenced by the political system, as well as the private and non-profit sectors. 

We finish by flagging three areas where additional work is needed. The first is in the area of measurement since it is difficult to measure the output of bureaucrats and bureaucracies. Recent work has made some progress, but there is probably a great deal more that can be done -- for example using remote sensing data and economic censuses to proxy changes in GDP and other outcome variables of interest. There is also an increasing use of administrative data capturing the universe of bureaucrats in a region or country often linked to monitoring of their actions. So whether one is measuring economic growth or service delivery, moving to micro-data that captures concrete effects of the universe of bureaucrat actions is a challenge that new measurement technologies are bringing into the realm of possibility. 

Second, gathering this type of economy-wide micro-data will open possibilities to evaluate system-wide reforms of what bureaucrats do and how they affect these outcomes, which is often what governments are interested in. And it may be feasible to trace out the effects of different kinds of civil service reforms on outcomes that citizens care about. 

Finally, there are questions around whether bureaucrats can innovate and adapt to future challenges. The COVID-19 pandemic has uncovered large heterogeneity in the capacity of bureaucracies to respond. If we think about future challenges, such as climate change, it is clear that one needs to identify what characteristics of bureaucracies are needed to respond to these key challenges developing countries will face which may be different to the challenges faced in the last century. There seems to be a whole set of issues that surface around how innovative bureaucracies are in using up to date knowledge to face current and future challenges.

Reference

Wilson, W (1887), “The Study of Administration”, Political Science Quarterly, 2(2): 197-222.