4.3 Why are institutions and institutional development important for development?
From the discussion in the last section we can identify two reasons why institutions and institutional development are important for development.
Institutions are the sets of rules that structure development just as they structure any aspect of social interaction. They will govern, for example, who gets what, and how, from development. It is important to get the rules – i.e. the institutions – right. And it is also important to recognise that what is ‘right’ will be contested.
Both forms of institutional development are of significance for development:
- institutional development as intervention, as a process of consciously and deliberately seeking to establish rules that promote development; and
- institutional development as history, as a matter of the context in which interventions are designed, both making possible and constraining the scope of such interventions.
In recent years a number of more specific factors have combined to ensure that they are at the core of thinking about how to promote development.
Concern has been expressed about how specific institutions operate and the effects of their operations on development. The list of institutions thus criticised includes, but is not limited to, the following:
The state: The second half of the twentieth century witnessed a series of debates over the role of the state. More recently something of a consensus has emerged over the ‘facilitative state’. However, the idea – promoted by commentators on both the right and the left of the political spectrum – that the state might hinder development, that government might fail to promote the public interest, still has currency.
The market: Purely market-based solutions are now widely perceived not to have been the all-sufficing means of development they were assumed to be in the 1980s by, for example, the World Bank. There is a growing awareness that markets are themselves socially created and are part of a broader institutional infrastructure. The role of market forces is a focal point for debates about institutional development.
Civil society: The institutions of civil society – whether in the narrower form of non-governmental organisations (NGOs) or the broader form of organised social movements of diverse kinds – have come to play particular roles in development that some people find inappropriate and unacceptable. The most obvious example of this is their role as providers of services previously delivered by the state. Such institutions, and their role in development, have attracted a variety of criticisms, most seriously that they lack the accountability of state institutions and that, in accepting state money, they have at the same time accepted a much less radical role in society.
Multilateral institutions: The effectiveness and legitimacy of multilateral institutions which operate in development are under question. The World Bank and International Monetary Fund have been criticised by governments in the South, NGOs and others for being ‘top-down’ and inappropriately ideological in their pursuit of market reform, and for not understanding the importance of institutional infrastructure in economic change. The United Nations is frequently accused of being wasteful and ineffective by donor governments and observers. The prominence of these institutions means that questions about how they should operate and what their roles should be are significant questions for the field of development as whole.
In line with this questioning of institutional behaviour, there is a tendency to attribute many failures of development to a failure to develop appropriate institutions.
As one development manager commented:
Institutions have failed as effective development organisations but they still are the linch-pin around which development revolves. Ignore them at your peril.
This sense of institutional failure has been given a sharper edge as a result of the ‘terrorism’ that has assumed a more evidently global form in recent years. The institutions of intelligence, politics and diplomacy are perceived to have failed to comprehend and respond to terrorism adequately, while some would argue that the causes of terrorism lie in the failure of institutions to promote development. The obverse of this – and another factor behind the heightened interest in the impact of institutions – is that a process that might be described as the ‘institutionalisation of insecurity’ has emerged. Amongst the concerns associated with this is the sense that a range of legal and constitutional institutions are being developed – justified in terms of the need to counter terrorism – that have profound consequences for civil rights and for justice more widely. For some people, the ‘success’ of these institutions is no less worrying than the ‘failure’ of other institutions.
To draw your thoughts about institutions and institutional development together, listen to the audio clip linked below in which a number of development practitioners explain how they understand institutional development. The names and organisations of the people you hear speaking are given in the transcript
As you listen to the audio, make summary notes on some of the questions asked in the interviews:
What is the purpose of institutional development?
How do the interviewees see institutional development?
What activities do they think ‘doing’ institutional development involves?
What management skills do they think institutional development requires?
Click to listen to the extract (5 minutes).
Transcript: Audio 1
Click to listen to the extract (5 minutes).
Transcript: Audio 2
Click to listen to the extract (7 minutes).
Transcript: Audio 3
Click to listen to the extract (5 minutes).
Transcript: Audio 4
Now compare your notes to the summary discussion below.
The interviewees make two main points: firstly, that institutional development is about change and liberation; secondly, that its purpose is to develop the efficiency and effectiveness of partners and indigenous organisations.
Several of those interviewed talk about organisational issues – capacity-building, human resources, efficiency and so on. However, they also indicate that organisational development in itself is not the same thing as institutional development.
Many of these development managers talk about activities pertinent to the organisational level, such as the reorientation of an organisation's management style, from vertical, control systems to horizontal, participatory systems. For a number of those interviewed, the pursuit of institutional development lies in the arena of inter-organisational relationships, in the activities and purposes undertaken beyond the organisation itself.
As those interviewed indicate, the skills required in institutional development can be broad and demanding. It is not about managing projects or organisations as such, although many of the core skills required for this will be relevant to institutional development. What emerge from these development managers are skills of analysis, knowledge of ‘models’, theories and ideas which have been tried in other contexts, and an ability to appreciate different rationalities and to communicate ideas. Also implied are skills of facilitation and negotiation to help build commonality of views and shared objectives. In the final part of the clip, interviewees also talk about their views on the concept of institutional development, reflecting on institutional failures, and on influence and power in setting the institutional development agenda.
To summarise, as exemplified in the interviews in Activity 11, development practitioners use the terms ‘institution’ and ‘institutional development’ in different ways. Those in large, powerful agencies tend to think in terms of changes in broad societal norms and large-scale institutions designed to deliver development goals. Those in smaller agencies, such as many NGOs, often talk of institution building and organisational strengthening as ‘institutional development’. There is also a difference between those who see institutional development in terms of organisational performance, as in:
I find it very hard to separate institutional development from things like capacity-building. These are things that a lot of organisations do without necessarily calling them institutional development or saying that they are doing capacity-building. But people are seeking to improve the performance. So I think those key words like performance, efficiency, improving human resources, are all part of what we mean by institutional development.
and those who see institutional development in more political terms, as in:
I think the main point of institutional development is to create a sense of liberation whereby people think forward to changing their circumstances and situations.
It is not, of course, necessary to choose between different meanings. But it is important to recognise the differences, if we are to build up an appropriately complex and flexible understanding of institutional development.