IDB – OECD study calls for better governance, integrity in Latin America and Caribbean

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NEW YORK, USA – Latin America and the Caribbean (LAC) need to strengthen governance and integrity mechanisms to improve the quality and implementation of public policies, reduce corruption and increase public trust in government, according to the third edition of Government at a Glance: Latin America and the Caribbean 2020.

Governments in the region have so far failed to take advantage of the opportunities offered by the economic boom to ensure that growth becomes sustainable and truly inclusive, according to the study. Productivity has not significantly improved while inequality, despite economic progress, remains very high, whether measured in income or other well-being outcomes.

The study also points out that citizens are largely dissatisfied with public services and investments in infrastructure and education seem to be insufficient. Overall, access to and quality of public services varies widely and those who can afford it often opt out to private providers. In addition, there is a widespread perception in the region that politics and markets are rigged.

The study, published by the Inter-American Development Bank (IDB) and the Organization for Economic Co-operation and Development (OECD, provides reliable, internationally comparable data on government activities and their results.

The publication offers indicators on public finance and economics; public employment; budgeting practices and procedures; human resources management; regulatory government; open government data and public procurement. The latest edition of the publication has included, for the first time, special sections with key indicators measuring the quality of actions related to public integrity and data on outputs and outcomes on core government results.

“The indicators show that LAC continues to face challenges in designing and enforcing public policies that promote good governance and inclusive societies,” said Emilio Pineda, IDB Division Chief for Fiscal Municipal Management, institutions for development sector.“

In order to sustain inclusive growth, the region needs to continue pushing public sector reforms that promote fiscal stability and fairness for all. Improving public sector integrity and fighting corruption must be at the heart of such efforts,” added Pineda.

Institutional weaknesses in several dimensions of public governance may explain the vulnerability of many countries in the region to inefficiencies caused by waste, misuse and capture by interest groups as well as to exogenous economic shocks. An analysis of government spending in the region indeed reveals a widespread waste and inefficiencies that could be as large as 4.4 percent of the region’s GDP, the study said.

Inequalities in the region may have entrenched a vicious cycle of elites using their power to ensure that policy making continues to reflect their own vested interests and not the public interest, according to the study. Even when the right policies are introduced, their implementation often remains superficial and is not able to translate into practice and bring about change. Causes can be informal norms overriding formal institutions, vested interests pushing back against effective implementation, solutions copied from another country but not responding to the context, or a lack of adequately skilled workforce or leadership.

The study’s some findings include:

  • Public sector integrity: The publication shows that political finance is strongly regulated in the LAC region. In general, the de jure quality of political finance regulation has improved in Latin America; it is often even stronger than in OECD countries. Overall, however, existing regulations often fail to be effectively enforced. Moreover, according to the study, regulations on campaign spending by political parties or candidates are less widespread than in OECD countries, creating incentives for political campaigns to increasing spending and seek financing from dubious sources. Regarding regulation of lobbying activities, regulations are mostly emerging in the region, with Peru, Chile, Mexico and Argentina leading the way.
  • Transparency: In Latin America the de jure quality of right to information laws is on average stronger than in OECD countries. Yet, citizens in Latin America often do not trust or simply do not know how to engage and how to obtain relevant and credible information.
  • Social accountability: The region shows growing awareness in terms of open data policies with Colombia, Mexico, Brazil and Uruguay with the most advanced open data initiatives in the region. The study shows that all countries in the region have taken some steps to integrate stakeholder engagement in their rule-making process. For example, they have adopted formal requirements to conduct consultation when developing subordinate regulations. Countries also established, to varying degrees, methodologies to engage with stakeholders, including minimum periods and supporting documentation for consultation.
  • Public sector employment: LAC countries face the pressing challenge to deepen the professionalization of their civil service. Evidence portrayed in the publication shows that while the public sector in LAC countries tends to be comparatively small (12.3 percent of total employment in LAC compared to 21.2 percent in OECD countries), public employment in several LAC countries is not merit-based. In addition, public employment is usually comprised of low-skilled workers protected by strict contractual labor arrangements and managers appointed based on their political affinities. Many political leaders and parties in the region are using the public administration to build clientelist networks for electoral purposes. As a result, while there is wide agreement on the necessity to reform the civil service, there are political interests in maintaining the status quo.
  • Public procurement: Public procurement systems in the region have made significant progress towards enabling better accountability and mitigating corruption risks. Countries in Latin America have advanced in the implementation of e-procurement mechanisms that, amongst others, improves transparency and efficiency of public procurement. Yet the region still needs to advance in its efforts to streamline the public procurement into overall public financial management, budgeting and service delivery processes, which could lead to better utilization of public resources.
  • Government reforms: The region faces coordination weaknesses at the central of government, making it difficult the mainstreaming and effective implementation of integrity policies throughout its public entities.

The third edition of Government at a Glance for Latin America and the Caribbean 2020 , covers key government data for 26 countries in the region: Argentina, Bahamas, Brazil, Barbados, Belize, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Surinam, Trinidad and Tobago, Uruguay and Venezuela.

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