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The principal purpose
of the Preliminary Report was to ensure that the Team did not leave Iraq
with grossly inaccurate impressions concerning the current situation or
the kinds of UNDP activities that could be considered in support of the
administrative reform. The fact that we received no serious adverse
response to our approach does not, of course, imply governmental
agreement with any specific proposals we may suggest, but does indicate
that our overall analytical framework is a reasonable one.
In this Final Report,
our main task is not to further analyze and describe the current
situation, because every Iraqi official must understand that in greater
depth and detail than could possibly be grasped by short-term visitors.
Instead, this report seeks to define as clearly as possible the type of
management problem the UNDP MDP and the regular program of the UNDP can
be most useful in dealing with, and to suggest specific courses of
action for utilizing available resources.
Consequently, this
Report deals only briefly with the elements of the administrative reform
already implemented and with the functions currently being performed by
the National Center for Planning and Management Development (NCPMD), and
concentrates primarily on defining program activities through which the
UNDP could assist the NCPMD to contribute more effectively to the reform
process. In taking this approach, we believe we are directly responsive
to the directives of the Minister of Planning.
II.
BACKGROUND
The Government and
people of Iraq have been involved in all-out war for nearly a decade.
Such a conflict by its nature demands the setting of priorities and the
imposition of systems of management that are inappropriate to peacetime
society.
Even before the
lasting cease-fire was agreed upon, the Government began a process of
administrative reform for the purpose of greatly increasing the
efficiency of the Government and the productivity of the economy as a
whole. Among the elements of the reform process are a reduction in size
of the public administration by nearly 20% in two years, the elimination
of an entire layer of bureaucratic control in the industrial sector, the
review and simplification of over 100 governmental procedures, the
privatization of non-strategic industries and state farms, and greater
use of market mechanisms in the agriculture sector.
These actions
constitute as difficult and drastic a reform process as any country has
undertaken in recent years, yet the process is far from over. Additional
elements of the process of which we are aware are the following:
·
The production and more widespread use of microcomputers in the
Government and other sectors;
·
The broader use of market mechanisms in the agricultural sector
and non-strategic industries; and
·
The development of unit assessment techniques to permit more
accurate evaluation of the contributions made by different governmental
units to national objectives.
The first two of these
elements, and the general direction of the administrative reform
process, are strongly endorsed by the Team, and the specific suggestions
for action contained in this Report are designed to strengthen their
implementation. Microcomputers and market mechanisms can both be viewed
as complex technologies with great potential value to Iraq. Their use in
other countries needs study and adaptation to the conditions of Iraq.
The development of
unit assessment techniques is a measure of more doubtful utility.
Although the objective of being able to measure the contribution of each
organizational unit to national goals is commendable, the cost of
developing and implementing reliable techniques for the purpose is
probably too high. The effort that will be devoted to making plausible
reports on units where outputs and inputs are not easily quantifiable
could, in our opinion, be used more productively in other ways.
III. FUTURE
ADMINISTRATIVE REFORM PRIORITIES
Having trimmed the
size of the bureaucracy, simplified procedures, sold enterprises to the
private sector, allowed farmers to decide what to produce, and decided
to introduce microcomputer technology more broadly, is it fair to say
that the administrative reform has already taken place?
We think the answer to
that question is, unfortunately, no. Certainly many of the preconditions
of vastly increased efficiency in the allocation and use of resources
have been met, but there remain several less tangible factors that need
to be dealt with before the potential gains in efficiency are likely to
be realized. We cited these factors in the Preliminary Report: manpower
utilization, information flows, and achievement orientation. These
factors involve attitudes, motivations, and the reward structures of the
entire society. They represent even greater challenges to efficiency
than the obstacles that have already been dealt with in the reform
program.
A. Manpower
Utilization
Every society finds in
one way or another that it does not have as many well-trained and highly
motivated people as it could use. Training new people to high levels is
a high priority for Iraq, as elsewhere. But training is costly and takes
a great deal of time. Other measures may offer an earlier return to the
nation, although they will not avoid the need to replenish the stock of
high-level manpower through training.
Efficient high-level
manpower utilization is largely a question of providing qualified people
with the incentives and the opportunities to make best use of their
talents. This will frequently involve designing mechanisms and markets
for the use of skills across institutional lines. Particularly as the
private sector attracts more of Iraq’s educated elite, it will be
important to find ways for Government to continue to tap critical skills
as needed. Research competitions, consulting arrangements and teaching
assignments are all methods of broadening the contribution of scarce
talents to more than one organization.
In this connection, we
gained the impression that, despite the enormous reduction of staff in
the public service that has taken place, permission is still required
for highly trained people to leave the Government, and this permission
is often refused. We believe this policy to be mistaken. Trained people
should be permitted to leave Government employment, assuming they have
satisfied length of service requirements related to overseas training
paid for by Government, but links with them may be forged on a part-time
basis after they have left. Their motivation and morale will be much
higher if they are permitted to accept outside employment, and their
overall contributions to society should consequently be greater than if
they are forced to languish in positions not of their choosing.
At the same time,
conditions of Government service should be made more attractive, for
example by making salary adjustments for superior qualifications and
performance.
B. Information
flows
The Government
apparently recognizes that more abundant flows of information are
essential to efficient management. Its decision to greatly expand the
use of microcomputers would be pointless if this were not the case.
At the present time,
however, the most ordinary statistics, such as the national budget, the
national debt, and production figures for crops and industrial products,
are either considered confidential or are of doubtful accuracy. It is
very difficult to acquire a reliable understanding of the dimensions of
critical issues because the data are unavailable or fuzzy. It has
clearly become customary, not only acceptable but expected, for
officials to speak in broad generalities without a ready command of the
facts.
Modern management is,
of course, primarily an information revolution. Individuals at many
levels of organizations need vast amounts of data to perform their tasks
well. The ability to access and analyze data is essential to a good
manager. In order to realize the benefits of more widespread use of
microcomputers, new data banks will need to be compiled, information
flows established, and analyses published, on a wide variety of subjects
on which accurate information is not now available.
This will be a
tremendous challenge. The first part of the challenge, the mind-set of
open information flows, may be the most difficult of accomplishment.
Policy and attitude changes aren't enough, however, to make up for the
current lack of solid data about all aspects of society. Iraq needs an
intensive program of applied research to build up the stock of accurate
knowledge necessary to sound decision-making in a wide variety of
fields. The needed knowledge may be physical, concerning salinity
problems in agriculture for example, or economic and social.
It is our impression
that many of the greatest gaps in knowledge are in the economic and
social areas. The social sciences have been lumped with the humanities
in the universities of the country, and seriously neglected relative to
the physical sciences. This imbalance is clearly recognized by senior
educators, but it will take time and effort to correct.
C. Achievement
orientation
Perhaps the greatest
challenge of the administrative reform process is to find a way to
instill achievement orientation into the Government in place of fear of
making mistakes. Personal risks should be incurred through lack of
action and initiative, not through saying or doing too much.
On the other hand,
initiative and good performance should be rewarded in both material and
non-material ways. Promotions, bonuses, and official recognition should
flow from hard work and effectiveness, not from symbolic displays of
loyalty or avoidance of mistakes.
In summary, these
three intangible factors represent the shift in attitude and orientation
appropriate to a country making the transition from a wartime to a
peacetime situation. The military style of organization and command that
is so important for effective performance in wartime is, as virtually
every country has discovered, inappropriate and ineffective in
peacetime, in terms of managerial efficiency. A flourishing peacetime
economy requires people taking initiatives and risks at many levels of
society, and an atmosphere of openness rather than secrecy.
The transition from a
military management system to one encouraging innovation and risk-taking,
or from a command economy to a market-oriented economy, is very
difficult, but it is not without precedent. In many parts of the world,
socialist and non-socialist countries are experimenting with structural
reforms in search of greater efficiency and effectiveness within the
context of their national goals and values.
No country can import
and apply the experience of another without adaptation to local
conditions, but this does not mean that foreign experience is
irrelevant. A great deal has been learned in the last ten years, while
Iraq was fully engaged in its historic struggle, which could be usefully
studied and adapted by Iraqis to serve national goals.
IV. ROLE OF
THE NATIONAL CENTER FOR PLANNING AND
MANAGEMENT DEVELOPMENT
The NCPMD is well
suited to serve as the principal instrument for studying and adapting
foreign experience concerning the introduction of market mechanisms and
information technologies to the needs of Iraq. Its main assets for this
role are the quality and level of training of its staff, its location in
the Ministry of Planning, and its close relationship with the UNDP. The
UNDP can be a partner in this process, supplying funding and access to
foreign experience through its network of country representatives.
It must be recognized
that the NCPMD is not playing this role at the present time. Although
the Center served as the secretariat for the administrative reform
program that took place in the mid-1970s, it is not now central to the
important process of reform currently underway. Its functions have
become routinized, it no longer has direct access to those leaders who
are designing and managing the reform process, and its staff members are
not working up to their potential.
The essential
irrelevance of the NCPMD to the current administrative reform process is
not of its own choosing. The staff of the Center are busily producing
guidelines for the next five-year administrative plan based upon their
understanding of the elements of the administrative reform emanating
from the President’s Office. The Center is also increasing its course
offerings in cost accounting in response to demand from other
organizations, which are being urged to become more efficient and
accountable. Staff from the Center are also engaged in helping
ministries respond to the requirement for unit evaluations.
These are reasonable
responses to the signals they receive about the directions in which the
Government seeks to move, but in reality these activities will make a
very limited contribution to reform. The five-year administrative plans
may once have served some purpose, but they are now divorced from the
economic and social plans produced by the Ministry, and the result is
largely a compilation of textbook exercises which other ministries may,
or may not, use for guidance. Additional cost accounting and project
evaluation courses are useful but, as now offered, the Center’s staff
may be somewhat overqualified for the task of putting them on.
Although the
administrative revolution today originates at the highest levels of
Government and the role of the Center cannot be determined by its own
actions alone, we believe the NCPMD can position itself, with UNDP
assistance, to play a more useful part in the process. Specifically, it
can equip itself to be the mechanism for learning and adapting external
experience to domestic conditions in support of policies determined from
above.
In the mid-1970s, when
the National Center was more centrally involved in the administrative
reform program of the day, it was not structurally part of the Ministry
of Planning but instead reported directly to the National Planning Board
in the President’s Office. The Team considered recommending that an
organic link between the Center and the Presidency be reestablished,
but on balance decided that this could be a mistake.
We do believe that the
staff of the Center should be asked to study the likely impact of new
administrative policies before they are promulgated, and that the Center
should have responsibility for evaluating the impact of new policies,
but its effectiveness will in the long run depend upon the Center’s
achieving a service orientation rather than a control orientation.
Attachment to the Presidency could make the Center appear to other
ministries as a control mechanism rather than as a source of assistance
in meeting their objectives. This would affect the client-provider
relationship that we believe should be nurtured by the Center.
The attachment of the
Center to the Ministry of Planning is desirable for other reasons. Its
research functions, in particular, need to be closely associated with
the planning process. Policy-oriented economic research should take on
much more importance in the future, as the country considers various
means of stimulating the growth of the economy, than it has had in the
past.
The location of the
Center in the Planning Ministry is also conducive to providing
consultants to ministries having difficulty in implementing new
policies. The advantages of the Center’s attachment to the Planning
Ministry can be diminished, however, if its role is perceived, within
the Ministry and outside it, as being merely supportive of the
activities of that body. Its value to all ministries as an avenue to
external experience bearing upon their missions should be made explicit.
V. PROGRAM
RECOMMENDATIONS
A. Training
and Consultation
In the Preliminary
Report, we suggested that the NCPMD should become more problem, client, and quality
oriented, and indicated an intention to use the introduction of
microcomputers and the increasing reliance on market mechanisms in
agriculture as illustrative of challenges to which the Center could
appropriately respond. In responding to such challenges, the Center
should undertake a four-step process as follows:
1. Agree on the
definition of the problem with the client agency. To take the
specific case of using microcomputers in understanding agricultural
pricing, which narrows and combines the examples chosen, the NCPMD would
seek agreement of the Ministry of Agriculture, and the agricultural
pricing section of the Ministry of Planning, as to the types of capacity
in this area the Ministry needs to develop and the ways in which NCPMD
can assist in the acquisition of that capacity.
2. Identify the
best external sources of expertise for acquiring experience and
assistance in the problem area. The UNDP Office of the Resident
Representative can be helpful in this regard, either from the personal
experience of UN staff based in Baghdad, or through tapping external
sources through UNDP in New York.
In this case,
high-quality external expertise on the applications of microcomputers to
agricultural pricing policy is known to exist in at least three
institutions: the Economic Development Institute of the World Bank
(EDI), the Food Research Institute at Stanford University (FRI), and the
Harvard Institute for International Development (HIID). Each of these
organizations offers courses of four to six weeks that would be
appropriate to the needs of Iraq at this point.
3. Send out a team
to examine external sources of expertise and explore potential
relationships. At least two persons, one from NCPMD and one from a
client organization, should reconnoiter the potential sources of
external expertise in order to form opinions as to the quality of the
courses offered, the basis of the organization’s experience and its
relevance to Iraq, the interest of individuals in the institution in
cooperating with Iraq in adapting courses and expertise to Iraq’s
needs, and the potential for further institutional cooperation. The team
would also be able to collect reading lists and course materials helpful
for preparing future course participants.
An alternative to a
reconnaissance mission of this sort would be a visit to Baghdad by an
expert supplied by UNDP. This would not normally be as useful, in our
opinion, as a site visit abroad, because the Iraqi staff know their
needs and possibilities better than a visitor, and they have the
educational backgrounds and experience to be intelligent shoppers for
services.
4. Plan a course of
action. Based on the problem definition arrived at locally, and the
tour of external sources of expertise, the NCPMD would then be in a
position to map out a detailed course of action, possibly extending over
more than a year, for building local capacity to deal with the problem.
In this case, it might be decided to send two or three staff from the
Center and the Ministry of Agriculture and Irrigation to attend a summer
course at one of the institutes in order to develop staff expertise. The
course could be followed by consulting assistance from the source
institute in order to mount a similar course, modified as appropriate to
relate to local conditions, at the NCPMD.
Other elements of the
training and consultation program could include PhD training for staff
of the NCPMD or the Ministry, joint consultations on particular
problems, etc. The amount to be invested in dealing with each problem
area should be determined taking into account the seriousness of the
problem, the quality of assistance available, and the availability of
funds.
Other aspects of
public management in which computer application courses and
consultancies are readily available include the following:
·
Public budgeting and financial management, including cost/benefit
analysis, performance indicators, alternative approaches to budgeting,
resource allocation, links between development and recurrent budgets,
public enterprise budgeting, user charges, and multi—year budgets.
·
Investment appraisal and management, including modern methods of
conducting financial, economic and social evaluations of projects,
techniques for project planning and implementation, and using
microcomputers to make financial and management decisions.
·
Banking and monetary policy, including patterns of regulation of
financial institutions, alternative instruments of monetary policy in a
de-controlled monetary system, implications of deregulation for bank
policies, incentives for state-owned or mixed banking systems,
innovations in financial instruments, customer services, and information
systems; and techniques for managing risk and maintaining solvency in
unstable financial environments.
·
Public enterprise management, including their use as an
instrument of national development policy, organizational development
and conflict management, marketing and communications strategies,
strategic planning, pricing and financing policies, project appraisal,
performance evaluation, and privatization.
Programs like these
are available in summer workshops at HIID, EDI, the Asian Institute of
Management, and other places.
B. Research
Of the three functions
of the NCPMD, research currently makes the least contribution to
national goals. This may reflect wartime attitudes towards information
and openness, rather than the priorities or capacities of the Center.
Indeed, many of the staff of the Center have earned strong research
degrees.
If the analysis put
forward in this Report is accepted by the Government, particularly the
finding that solid data on many vital aspect of the society do not
exist, then the Government will need to be prepared to invest resources
in building research capacity in a variety of fields. UNDP funds should
be used only for external requirements: the identification of
organizational models, training, publications, and consultation.
The importance of
research capacity building is now so widely recognized that there are a
number of excellent models to consider in developing countries, and a
number of international research facilities capable of providing
assistance. Building research capacity is, however, a long-term and
costly endeavor.
To return to the
example of agricultural market mechanisms, the need for research is
obvious. Iraq no longer has an extension corps in direct contact with
its farmers. At a time when the farmers are expected to make their own
decisions on what crops to plant, there is no direct link with them to
either guide their decisions or understand the basis for the decisions
they make. Field research is needed to understand the factors that
affect the choices farmers make and the outcomes they achieve, the
absorption of labor by agriculture and off-farm employment
opportunities, agricultural credit and marketing problems, the
availability of inputs, and land management and conservation practices.
Field research could
be conducted by the Ministry of Agriculture and Irrigation, or by the
university faculties of agriculture or economics, or by all of them. The
organization of research programs that would engage the qualified people
in the universities and other institutions in useful applied research is
probably beyond the capacity of the Ministry of Agriculture and
Irrigation at this time. The NCPMD could equip itself to be able to
assist the Ministry to mount a research competition that would produce
the desired results. This is a management function that does not fit
well with the current talents of the Center’s staff, but arises from
the importance of the problems of generating reliable information.
Other research
relating to market mechanisms in the agricultural field should be
conducted within the NCPMD as part of its planning research program. The
interaction of agricultural policies with macro-economic adjustment
measures, domestic and international markets for Iraqi agricultural
products, food processing and export possibilities, and rural-urban
migration patterns all require careful study by qualified economists in
a research institute setting.
The NCPMD could also
contribute to a third type of agricultural research capacity building,
the strengthening of the national agricultural research system. In this
case, access to the international research community through the UNDP
would enable the Center to help its client, the Ministry of Agriculture
and Irrigation, to meet its needs. The International Service for
National Agricultural Research (ISNAR), based in The Hague, Netherlands,
is one of 13 Centers supported by the Consultative Group on
International Agricultural Research (CGIAR), dedicated to assisting
developing countries. ISNAR specializes in helping to strengthen the
institutional basis for national agricultural systems, recognizing that
strong and productive systems require:
·
a coherent research policy designed to meet national development
goals;
·
an organization compatible with the objectives and functions the
government assigns to research;
·
an integrated set of management processes allowing the system to
effectively mobilize and use the required resources; and
·
the ability to communicate effectively with its clientele, its
partners in the scientific community, and the country’s policy makers.
The NCPMD, through
UNDP, could request a visit by ISNAR staff to determine the conditions
and prospects for collaboration, diagnose constraints and possible
solutions, and plan a system-building strategy. In addition, ISNAR could
be an avenue to other international agricultural research centers, such
as the International Irrigation Research Center, for assistance on
problems such as salinity.
To perform these three
roles well in support of what might be called an information revolution,
helping clients organize research programs, conducting policy—oriented
research, and mobilizing external expertise in research management, the
NCPMD will need to actively strengthen its own abilities in this area.
For example, the Center will need to become acquainted with various
methods of organizing research programs, develop skills in research
proposal development, acquire familiarity with a wide range of research
methodologies, and establish links with sources of research expertise
abroad.
The UNDP program can
assist the Center in all of these activities. The CGIAR network is
readily accessed because it was set up specifically for the purpose of
assisting developing countries. Other external sources of experience
include the following:
1. For-research
management techniques:
a.
The National Science Foundation, Washington, DC. NSF
manages a wide range of research programs, domestically and
internationally. Research topics are defined by NSF and researchers from
other institutions apply for funding. Peer review procedures, funding
mechanisms, and monitoring techniques could be reviewed there.
b.
National Institutes of Health, Bethesda, Maryland. NIH
conducts research in its own laboratories, and also manages research
competitions for researchers in other institutions.
c.
HIID conducts research on development issues, collaborates
with researchers in developing countries, and manages research capacity
building projects in developing countries.
2. For
conducting policy-oriented research programs:
a.
The Korean Development Institute, Seoul. KDI is an
autonomous policy-oriented research organization founded in 1971 by the
Korean Government to meet the need for a rigorous academic perspective
on various economic policy issues that arose during the country’s
rapid period of growth in the 1960s. KDI is now called upon to provide
expert analysis and advice on aspects of government policies in areas of
domestic economic policy and international economic cooperation.
Currently, research is conducted in five major fields:
·
macroeconomic management;
·
financial markets and public finance;
·
industrial policy;
·
international trade and cooperation; and
·
social development.
b.
The Thailand Development Research Institute, Bangkok. TDRI
was established in 1984 to conduct policy-related research on
long—term development problems, to assess constraints and
opportunities facing Thailand, and to assess alternative development
strategies. It was set up by the Government as an independent foundation
and it has enjoyed financial support from the Canadian International
Development Research Center in Ottawa. It conducts research on the
following broad topics:
·
agriculture and rural development;
·
industry, trade and international economic relations;
·
macroeconomic policy;
·
natural resources and the environment;
·
human resources and social development;
·
science and technology development;
·
and energy, infrastructure and urban development.
c.
Malaysian Institute of Economic Research, Kuala Lumpur.
MIER is an independent, non-profit research center founded in 1985 to
undertake high-quality problem-oriented research on economic and
financial issues facing the country, and to provide advice on
macro-economic management, development and future economic perspectives.
It serves as a bridge between the private and public sectors, undertakes
research projects commissioned by public and private sector clients,
collaborates with other domestic and foreign research institutes,
publishes and disseminates the results of its research, and occasionally
provides training for public and private sector participants. It is
currently planning or undertaking research in the following areas:
·
poverty, inequality, restructuring and development;
·
standard of living and the quality of life;
·
agriculture and rural development;
·
industrial development;
·
the State and development;
·
urbanization, regional imbalances and regional development;
·
management of the economy —
development planning, implementation, and policy-making;
·
human resources development, labor markets and education;
·
politics, government and nation-building.
As in the case of
training and consultation, the NCPMD should first clearly define its
objectives, identify possible external sources of experience and
support, visit the most promising locations, and construct a plan of
action.
Costing:
For the first example,
the reconnaissance trip would cost approximately $8,000 for two persons
for two weeks, and participation in a four- to six-week course would
cost around $10,000 or $12,000 each. A two-week consultancy from one of
the source institutes would cost approximately $10,000. The total
foreign exchange cost of the activity would therefore be in the $40,000
to $50,000 range.
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