Adnan Q. Khan

Decentralization in Pakistan: Context, Content and Causes

This paper provides a description of the recent decentralization reforms in Pakistan under General Musharraf. In the process, we hope to not only highlight major aspects of this reform, but also to analyze the evolution of this reform in historical context in order to better understand the potential causes behind the current decentralization. Analyzing the evolution of local government reforms in Pakistan is interesting because each of the reform experiments has been instituted at the behest of a non-representative centre using a ‘top down’ approach. The Pakistani experience shows that each of the reform experiments is a complementary change to a wider constitutional reengineering strategy devised to further centralization of political power in the hands of the non-representative centre. We argue here that the design of the local government reforms in these contexts becomes endogenous to the centralization objectives of the non-representative centre. It is hoped that analyzing the Pakistani experience will help shed light on the positive political economy question of why non-representative regimes have been willing proponents of decentralization to the local level.

Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats Through Performance-Based Transfers

Postings are often used by bureaucracies, especially in emerging economies, in an attempt to reward or punish their staff. Yet we know little about whether, and how, this type of mechanism can help incentivize performance. Using postings to induce performance is challenging, as heterogeneity in preferences over which postings are desirable non-trivially impacts the effectiveness of such schemes. We propose and examine the properties of a mechanism, which we term a performance-ranked serial dictatorship, in which individuals sequentially choose their desired location, with their rank in the sequence based on their performance. We then evaluate the effectiveness of this mechanism using a two-year field experiment with over 500 property tax inspectors in Punjab, Pakistan. We first show that the mechanism is effective: being randomized into the performance-ranked serial dictatorship leads inspectors to increase the growth rate of tax revenue by between 44 and 80 percent. We then use our model, combined with preferences collected at baseline from all tax inspectors, to characterize which inspectors face the highest marginal incentives under the scheme. We find empirically that these inspectors do in fact increase performance more under this mechanism. We estimate the cost from disruption caused by transfers to be small, but show that applying the scheme too frequently can reduce performance. On net the results suggest that bureaucracies have tremendous potential to improve performance by periodically using postings as an incentive, particularly when preferences over locations have a substantial common component.