The missing factor

- Ram Prasad Mainali

Jul 4, 2018-

Proper formulation of public policies have received scant attention in developing countries. As a result, they are left far behind from achieving potential development objectives.  Lack of attention in causality analysis is believed to be the major problem associated with poor public policy management in this region.  This may be due to any one of these two reasons: either policy managers lack the knowledge of causality analysis or they have simply undermined its significance in achieving development goals. Development partners and policy makers, at present, are highlighting the importance of making policy decisions informed by rigorously established evidence which is termed as “Evidence-based Policy Making (EPM)”. However, policy managers have not yet adequately realised that EPM’s potential cannot be fully achieved in the absence of causality analysis.

Evidence-based policy making

EPM is not a new concept. Adrian Smith, Statistician at Queen Mary University, introduced this idea while addressing Royal Statistical Society in 1996. This idea was further incorporated in policy management   in the United Kingdom at the time of Blair government. Blair’s white paper titled Modernising government  describes that government “must produce policies that really deal with problems that are forward-looking and shaped by evidence”. This implies EPM as managing public policies by incorporating established evidences.

EPM is taking momentum in public policy debates. But formulating it wont be that easy. Unbiased evidence can only be derived from scientific researches that includes various mathematical logics, reliable data and appropriate econometric models. Moreover, human resource that is capable enough to carry out such scientific studies is crucial in the absence of which “Evidence-based Policy making” cannot be implemented. Human resource should be able to analyse common characteristics of the scientific analysis i.e. testing a theory to ensure its effectiveness and impact, carrying out counterfactual analysis to show what would have happened if there were no policy interventions. Additionally, human resource should also be able to examine the direct and indirect effect of a particular policy, addressing uncertainties and control for other influences in the policy outcome.

Econometric models are widely used methodologies in analysing causality. However, models vary largely depending on the nature of analysis that particular study demands for.

Let us take an example of learning outcome differential between the private and public sector educational establishments in Nepal in order to understand coefficient and endowment difference in Oaxaca decomposition model. Suppose, eighty percent of students from private and sixty percent of students from public schools passed with a first division in Secondary Education Examination which leads to a twenty percentage point of learning outcome differentials between the two types of schools. Out of this twenty percent, if fifteen percent is caused by difference in resources associated with two establishments and remaining five percent difference is coming from the difference in the efficient use of resources, these are known as endowment and coefficient effects, respectively. Both effects sum up to twenty percent which is the gross learning outcome differential between two types of educational establishments.

Descriptions in preceding paragraphs show that adapting causality analysis in public policy management is a great challenge, at least for a country like Nepal where research culture is almost negligible. Additionally, there is significant lack of human resources to carry out scientific studies. This applies not only in the public sector which plays a dominating role in public policy management but also in the private sector,  academics and in the research institutions. Despite these, Nepal cannot disregard the idea of adapting causality analysis in order to persuade EPM.

Two-phased approach

Considering these various constraints, Nepal can pursue a two-phased strategy in order to implement EPM. In the first phase, research related to Nepal, but carried out by various academic organisations across the world should be assembled. Relevant conclusions derived by such studies should be incorporated in public policy management. This phase should not last more than three years and our own human resource development strategic plan should be carried out simultaneously. Moreover, an institutional setup, Public Policy Research Network, is probably required in the national planning commission in order to carry out tasks such as assembling Nepal-related researches, scrutinising findings applicable to public policy management and developing own human resources for future researches.

The second phase represents the situation when our own human resources for scientific researches would have already been developed.  The institution arranged in the first phase should be expanded in this phase in order to fit all researchers into the organisation. This organisation should finally be transformed into a public policy think tank (PPTT) for the better policy management. Certain managerial instrumental tools need to be applied in order to retain such manpower in PPTT and optimise the evidence-based feedback on public policy management. Financial incentives followed by the assurance of future career path can be helpful in order to retain researchers in PPTT. Political commitment to ensure that leading positions related to economic development such as vice chair and members of national planning commission, vice president of poverty alleviation fund, chief executive officer in public enterprises etc. to be appointed from the pool of such researchers will be a further advantage to retain such manpower in PPTT.

Incorporating causality analysis in public policy management in order to establish evidence-based policy making is a great challenge for a country like Nepal for various reasons. However, as long as it adheres to the two-phased strategic approach as described above, Nepal can abstain from improvised approach in public policy management and ultimately move forward to achieve its development goals by persuading EPM.

Mainali holds a PhD in development Economics from City University London

Published: 04-07-2018 07:48

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