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Report No. IDP - 157
SOUTH ASIA REGION
SPECIAL REPORT
IMPACT OF ECONOMIC AND SECTOR WORK IN SOUTH ASIA:
A CLIENT PERSPECTIVE
VINOD DUBEY
The World Bank                                   December 1995
The views presented here are those of the author and should not be interpreted as reflecting those of the World Bank.


SOUTH ASIA REGIONAL SERIES
Title                                    Author             Date            Originator
IDP1 11  How Composition of Public Expenditure
Affects Competitiveness: The Case of
Bangladesh                                K. Matin         March 1992       P. Mitra (80419)
IDP1 21  Labor Retrenchment and Redundancy
Compensation in State Owned Enterprises:
The Case of Sri Lanka                    A. Fiszbein        December 1992   G. Nankani (84641)
IDP1 26  Some Guidelines for the Appraisal of
Large Projects                           W. Jack           February 1993    A. Estache (81442)
IDP1 09  Reforming Higher Secondary Education in
in South Asia: The Case of Nepal         H. Abadzi         May 1993         H. Abadzi (80375)
IDP1 27  Some Lessons for South Asia from
Developing Country Experience with
Foreign Direct Investment                M. Fry            June 1993        A. Estache (81442)
IDP1 29  Quasi-Fiscal Deficits: Latin American
Lessons for South Asia                    C. A. Rodriguez  August 1993      A. Estache (81442)
IDP1 31  The Impact of Rural Infrastructure on
Rural Poverty: Lessons for South Asia    E. Goldstein      June 1993        G. Nankani (84641)
IDP134  Infrastructure and Industrial Policy in
South Asia: Achieving the Transition to
a New Regulatory Environment              P. Seabright     December 1993    A. Estache (81442)
IDP1 35  Taxation of Foreign Investment in South Asia  J. Mintz
T. Tsiopoulos     December 1993    A. Estache (81442)
IDP142   Regional Trading Arrangements and Beyond
Exploring Some Options for South Asia
Theory, Empirics and Policy              T. N. Srinivasan  July 1994        G. Nankani (84641)
IDP146   Participation in the South Asia Region's
Project Portfolio: Towards Defining
Conditions for Success                   B. Parker         August 1994      G. Nankani (84641)
IDP1 53  Pakistan: Public Expenditure in Agriculture  Yusuf Choudhry
Rashid Faruqee    June 1995        J. Wal (85045)
IDP154   Unemployment in Sri Lanka: Sources and
Solutions                                 Menahem Prywes   July 1995        J. Wall (85045)
IDP157  Impact of Economic and Sector Work in
South Asia: A Client Perspective         Vinod Dubey       December 1995    J. Wall (85045)


IMPACT OF ECONOMIC AND SECTOR WORK IN SOUTH ASIA:
A CLIENT PERSPECTIVE
A REPORT FOR THE SOUTH ASIA REGION
WORLD BANK
VINOD DUBEY
Alahabad, India



ACKNOWLEDGEMENTS
(a)   Messrs. J. Khalilzadeh Shirazi (India) Pierre Landell-Mills (Bangladesh) and
Philippe Nouvel for their support and hospitality in the field.
(b)   Messrs. M. K. Niazi (Pakistan), Syed Nizamuddin (Bangladesh) and F. Yagoi
(India) of the R.M. Staff for day to day liaison and support. Messrs. Niazi and
Nizamuddin participated in almost all meetings in their respective countries.
(c)   The Mission Support Unit of the R.M. in New Delhi for help in arranging the
meetings in India and for general logistical supports including mission travel.
(d)   Mr. P Suryaraachi of R.M. Nepal for organizing the meetings with SAARC in
Kathmandu.
(e)   Ms. Librada Penid-Lopez (Headquarters) for prompt response to my requests for
help with logistics.
(f)   Written comments on country annexes received from   Messrs. Niazi and
Eggerstedt (Pakistan) and Messrs. Landell-Mills and Arun Banerji (Bangladesh).
(g)   Comments from Messrs. Mark Baird, Suman Berry and Gobind Nankani on the
draft report and participants at a meeting chaired by Ms. Joanne Salop to discuss
the draft report (June 15, 1995). John Wall for support and help in the review and
the processing of the draft paper.
None of those mentioned have any share of blame for the shortcomings of the
report.



TABLE OF CONTENTS
Page Nos.
.    Summary and Recommendations                                 i
II.   Impact of Country Economic and Sector Work in
South Asia: Main Report                                   1
ANNEXES
Annex 1     Approach Paper                                         28
Annex 2     List of Persons Met in the Field                       33
Annex 3     Country Study: Bangladesh                              38
Annex 4     Country Study: India                                  70
Annex 5     Country Study: Pakistan                                96
Annex 6     The Agriculture Sector Study Pakistan: An Example of
Collaboration and Dissemination                       131



i
I.     SUMMARY AND RECOMMENDATIONS
1.    Focus and Coverage of CESW
There was general agreement among those interviewed that the CESW has
covered the most important areas and focused on the priority issues. A number of areas
where more work could be done were also identified. The work program was, however,
seen to be Bank driven, and excessively influenced by development "fashions". At the
same time this was seen as inevitable, since CESW must respond to the Bank's needs and
concerns and also those of donors. A few persons saw development "fashions" as
essentially a way in which international development experience was brought to bear on
the country.
Recommendations:
There was general satisfaction with the existing process of CESW and
Government interlocutors felt that they were adequately consulted. However, they were
for even more consultation. While the present process is already quite open and
consultative, it could be made even more so at little cost. Three suggestions for this are
(a) circulation of the 3 year rolling CESW program to the Government (and perhaps other
donors) for comments and suggestions; (b) circulation of issues papers on major CESW
tasks, if possible at the draft stage, to Government and; (c) ensuring that aide memoires
prepared by Bank missions (including those on sectors and special studies) in the field are
always copied to the Ministry of Finance, if this is not already the practice.
Greater involvement of the Government in the formulation and in the early stages
of the implementation of CESW is not seen likely to inhibit the study of "sensitive"
subjects and of strategic long term issues any more than at present..


ii
Areas for special focus in the future CESW include (a) more detailed, on the
ground, studies of the impact of the reform program on specific subsectors and groups; (b)
more attention to issues of administration, management, legal framework etc. which are
increasingly emerging as the critical bottlenecks as the major distortions and controls are
removed: (c) centre-state relations and state level issues (in India and Pakistan) and; (d)
issues of regional interest - to show the benefits of improved regional cooperation and
coordination in South Asia; (e) technology policy and research and development issues.
2.     Quality of CESW
There was near unanimity among interlocutors about the high quality of Bank
CESW, even among those who gave suggestions for improvement. The CESW was
praised for (a) comprehensive coverage and synthesis of the issues in the area under study;
(b) focus on key issues; (c) objective and professional analysis; (d) the systematic
presentation of data, not always easily available and; (e) the spelling out of the policy
implications. The criticisms were (a) a perceived tendency to use information selectively
to support the Bank's "orthodoxy", ignoring experience which contradicts it; (b)
inadequate acknowledgment of other work to give a misleading impression of "value
added"; (c) inadequate information on comparative country experience, particularly in
neighboring South Asian countries; (d) the need for a greater elaboration of the
mechanisms by which the policy recommendations would lead to the favorable predicted
results of adjustment programs and; (e) the need in sector reports to view the sector in the
context of intersectoral and macro-linkages and the inclusion in sector reports of the
lessons from Bank operations in the sector, in the country, as well as globally.
Recommendations:
It is suggested that formal reports should aim at presenting an objective picture.
Evidence and experience not supportive of the case being made should be explicitly
considered and the reasons why it is not decisive, indicated.  Similarly, adequate


iii
acknowledgment of other work which underlies the report should be made. More
comparative country experience should be included, including unfavorable evidence. The
net result of these steps may be to make the report's message more nuanced and
conditional than it is often at present. A more credible and balanced Bank report is a more
effective report for the relatively sophisticated South Asian audience.
The above suggestion may appear to go against the tendency within the Bank for
more precise and action oriented reports with specific and more or less elaborate policy
prescriptions. However, the often bulky formal reports are seldom if ever read by the
policy makers. Specific lines of action can be more effectively pursued through brief
informal reports. Further, a balanced report should not mean a sacrifice of selectivity and
focus.
Informal reports, sometimes based on formal reports, should play a greater role as
instruments of policy dialogue and for making a case for certain lines of action. These
reports can more sharply focus on very specific issues and questions under debate and be
more categorical and case making documents. They can be tailored to the particular need
of the moment and probably deal more candidly with sensitive issues.
It is also suggested that staff working on specific countries be more familiar with
the experience in neighboring countries, both economic and sectoral. Cross departmental
retreats of staff at headquarters (eg. on privatization in the 3 large countries) and periodic
workshops of RM staff in the region (eg. on agricultural sector issues) may be worth
considering.
3.    CESW and Operations
A close link is perceived between CESW and Bank operations. This is fairly
obvious in the case of sector work where often tasks are done in the context of preparing
and supervising operations and benefit from technical assistance and studies done under


iv
operations. However, the link also appears to exist in the case of economic and special
studies and adjustment operations. This perception is in contrast to the often stated view
within the Bank that CESW needs to be better integrated with operations. In the case of
Bangladesh and Pakistan a comparison of the 3 years policy matrix in the PFP with the
major CESW output bears out the existence of this linkage between CESW and
operations. Some interlocutors saw economic and sector reports as being primarily
geared to developing conditionality for Bank operations.
4.    Dissemination
Dissemination has improved over the past few years with (a) initiatives taken by
the RM and headquarters staff, (b) the higher profile of the Bank in the countries because
of its support for structural adjustment and; (c) changed, and more positive attitudes
towards dissemination in at least two of the three countries. The recent change in the
policy for releasing Bank reports should help dissemination. Seminars and workshops
have been used to good effect in all three countries not only for dissemination, but also to
get feed back and generate a discussion on a variety of policy issues. More contact with
the media is also being attempted.
Recommendation:
Greater priority should be given to dissemination of CESW among the general
public, including businesses and intellectuals. For this, more effective links with the media
are required, and also perhaps an effort at "educating" some economic journalists.
Suggestions that could be explored include (a) a program of visits in Headquarters of a
few young journalists for about two weeks of briefing and familiarization; (b) short term
(2-3 weeks) consultancies in the RM to journalists to review the CESW in a particular
area and prepare a brief paper; (c) more efforts by the RM staff to develop contact with
the local language press and the preparation of brief notes (releases) on specific issues in
local languages; (d) development of links with the Universities and academics in the cities
other than the major metropolises (particularly in India) e.g. by providing some Bank


V
publications to their libraries; (e) addresses and lectures by Bank and RM staff during
visits to the provinces.
5.    Collaboration
The use of local consultants to prepare papers which are used as inputs for CESW
reports is fairly wide spread in all three countries, particularly in sector work. The
advantages of using local collaborators are (a) economy; (b) deeper understanding of local
circumstances and institutions; (c) greater sense of local ownership in the final report; (d)
the development of analytical and policy potential in the country and (e); the possibility
that the consultant becomes a spokesman for the Bank's point of view, even after the
report is completed and forgotten. Its disadvantages are that local consultants may require
more management and supervisory inputs than if the study were done in house and that
there is some loss of "control" of the product.
There is a strong case, in countries of South Asia with well trained economists and
technicians to increase local collaborations with the object of using and raising the local
analytical and policy capabilities. In all three countries interlocutors believed that the
availability of CESW done by the Bank had the unintended effect of downgrading
capability for policy analysis within Government and even in the country. The erosion of
the Planning Commission's capabilities in all three countries was cited as a partial
reflection of this trend towards "crowding out" by Bank studies of local policy analyses.
Recommendation:
The currently used approach in some sector work (eg. in health and education in
India) is worth generalizing. The model used is to commission a number of studies by
consultants (financed sometimes under say, UNDP or other funds) with Bank staff
drafting or approving the T.O.R.S. and supporting and supervising the implementation of
the studies. Once the studies are done, the Bank staff (or consultants) pull them together


vi
for a synthetic report on sectoral issues and priorities and policies. The objective, over a
period of time, should be to develop local capabilities to an extent that the Bank's staff
involvement in CESW in countries like Bangladesh, India and Pakistan, is phased down.
The fear that locally produced reports (or reports with a major contribution by
local consultants) would not carry the same weight with the Government, the Bank and
the other donors are not well founded. The reports so produced would be ultimately,
Bank reports, vetted and reviewed before circulation. The issue is then, one of quality.
The presently used model in sector work referred to earlier has shown that quality can be
assured in that model perhaps to the same extent as in work directly undertaken by Bank
staff.
6.    Coordination Among Donors
Other donors with whom discussions were held were broadly satisfied with the
prevailing coordination in CESW and in operational matters, with one exception (in India,
see Annex 4 para 34). No cases of significant differences in views or duplication of
studies were identified. The mechanisms for coordination have progressed furthest in
Bangladesh - where a local consultative group meets on an approximately monthly basis,
and not merely before and after the consortium.
Recommendation:
However, the upgrading of coordination in CESW with a view to a more
systematic and planned division of labour between donors in economic and sector studies
needs to be pursued energetically. The Bank has a comparative advantage in its ability to
put together a comprehensive, systematic and integrated perspective of a sector or a
policy area as well as in bringing in a world wide cross country perspective. This is
reinforced by its being viewed by other donors as the authoritative source of their own
judgements and decisions and for information.   Such integrative studies should


vii
increasingly be based on narrower and more specific studies of particular aspects or
subsectors, often carried out by local consultants, but financed by various donors or the
Bank. Interaction and coordination at the time such specific studies are initiated would
ensure that they would generate the information and analysis most useful for the overall,
integrative exercise. This already happens some of the time (eg. the 26 studies under the
Flood Control Plan in Bangladesh). Steps that would promote such coordination include
(a) a sharing of the 3 year CESW program with donors, and circulating TORS of studies
among donors so that questions may be added on a particular orientation suggested at the
formulative stage; (b) the greater use of "piggy-back" - the provision of funds to studies
being mainly financed (and done) by others to add some specific questions of interest to
the Bank; (c) a more systematic sharing of studies, including those under TA and projects,
among donors; (d) circulation of a monthly newsletter among donors by field offices
giving information on CESW missions, and a list of draft reports prepared; (e) in certain
cases (eg. in Pakistan and Bangladesh) where public seminars on yellow and green cover
report have been held, these could be usefully shared with donors.
7.    Networking Among Research Institutions
Discussions indicated that (a) networking among research institutions is minimal;
(b) there is a great interest in strengthening networking and; (c) strong support for a Bank
role in promoting it.
Some initiatives for developing networking in South Asia have been supported by
the Ford Foundation and some German foundations. SAARC also aims to promote
"active collaboration" between member countries "in the economic, social, cultural,
technical and scientific fields". However, it has started slowly and is inhibited by tensions
between some member countries and the need for all decisions to be made consensually.
Academics in all three countries were generally opposed to the Bank pushing for a
SAARC role in networking because of the institution's bureaucratic and Government
dominated structure and process. Further, it was understood that a member of the
SAARC is opposed to that institution's "hob-knobbing" with donors (including the Bank).


viii
However, SAARC has been organizing several seminars on relevant issues (eg. higher
education) in SAARC countries apparently with some success.
Recommendation:
The mechanisms which may be considered for promoting networking, perhaps in
collaboration with private Foundations and other sources of funds, include (a) research
projects on subjects of regional interest, with studies subcontracted to consultants in each
country and their discussion at a workshop and eventual publication (on the lines of a
study of Governance issues in South Asia financed by Ford); (b) financing short term
scholarships or visiting fellowships to institutes in neighbouring countries; (c) sharing of
annual reports and work programs, among major research institutes (through the medium
of the RMs if necessary); (d) a periodic meeting of the heads of research institutions in
South Asia, along the lines of an ADB organized effort in 1989. The meetings should be
in the Region and coincide perhaps with the professional association meeting of the host
country; (e) facilitating exchange of documents among institutions, perhaps by building up
small collection of such material in the RMs. (A SAARC documentation centre for
facilitating access to information in SAARC countries among scholars, is supposed to start
functioning in New Delhi about this time).


IMPACT OF ECONOMIC AND SECTOR WORK IN SOUTH ASIA
A CLIENT PERSPECTIVE
L      INTRODUCTION
1.     The study aims to review the impact of Country Economic and Sector Work
(CESW) in three large South Asian Countries (Bangladesh, India and Pakistan) from the
point of view of the major clients in the countries. The object of the exercise is to identify
issues and best practice and the major shifts in orientation and implementation that would
improve the effectiveness of CESW in the judgment of these clients. An approach paper
laying out the objectives and methodology for the study was prepared and is given in
Annex 1.
2.     Interviews to collect client perceptions in the three countries were conducted from
August 27 to September 22 (Bangladesh and Pakistan) and November 14 to December 3
(India). The persons interviewed were selected with the assistance of the Resident
Missions in the three countries and staff members from the RMs joined the meetings in
two of them (Bangladesh and Pakistan). The list of people interviewed is given in Annex
2. It had been hoped when planning the study that the people interviewed for the study
would be from (a) Government; (b) research academia and institutes ; (c) the media; (d)
business and if possible; (e) politics (parliament). In the event the majority of those
interviewed were in Government and in research institutes and academia. In Bangladesh it
was possible to meet with some important business representatives, but not so in Pakistan
and India. Relatively few media persons were interviewed (one each in Bangladesh and
Pakistan and two in India). No meetings with parliamentarians were held, though one


2
former bureaucrat/academic interviewed (in Pakistan) has a distinguished political career.
In Pakistan representatives of a couple of NGO's were also interviewed. In all three
countries representatives of UNDP and ADB and in Pakistan and Bangladesh, of bilateral
donors were also interviewed. However, in all the countries I believe that a fairly
representative sample of persons who are most knowledgeable about the Bank's CESW
and who interact extensively with the Bank staff were interviewed.
3.    Client perceptions of CESW are presented in Annex 3 (Bangladesh), 4 (India) and
5 (Pakistan). The aim in the country annexes is to convey to the reader with very little
editing the clients' own perceptions on various aspects of CESW. Of course, I have
selected from these perceptions those which I believe to be important and need to be
addressed. My own comments on these perceptions have been reserved for the main
report. This approach is adopted for two reasons. First, to expose the reader to the client
perceptions with a minimum "filter". I believe that it is desirable in itself Secondly, the
comments would have been repetitive, since to a large extent similar perceptions prevailed
in the three countries, of course with distinct nuances and differences in emphasis. For
example, the criticism of the ideological bias of the Bank's analysis was strongest among
researchers in Bangladesh and weakest among academics and researchers in Pakistan.
Two additional caveats are required on these Annexes. First, the clients' perceptions of
CESW reported covered a wide spectrum from very positive to very negative, as did their
views on what needs to be done to increase the impact of CESW. This is to be expected,
and perhaps welcomed. The existence of a party line would have been not only boring but
also raised suspicious about the value of what was being said. The second caveat relates
to the fact that while in all interviews we categorically pointed out that the focus of the
study was on CESW and not Bank operations, inevitably the interlocutors, in different
degrees, strayed into discussions of operations. This indicated that their view of the Bank
was not neatly pigeon-holed under CESW, Operations, Research etc. - as would be
expected, particularly among Government officials who had greater interaction with the
Bank staff on operational matters than on economic and sector reports.


3
4.    The report is organized in 8 sections, broadly along the lines of the issues listed in
para 4 of the approach paper (See Annex 1), to which are added the questions of
encouraging networking among research institutes in South Asia, and that of improving
coordination and division of labour in CESW among aid donors. Section II discusses the
coverage of CESW - did it focus on the priority areas and issues and indicates some areas
which according to interlocutors, should receive greater attention in the future. Section
III presents views on the quality of CESW and perceived weaknesses which need to be
addressed to increase its effectiveness. Section IV discusses the interrelationship between
CESW and Bank operations and in particular the perceptions of the Structural Adjustment
Program. Section V focuses on the dissemination of CESW and how it could be
improved. Section VI presents the practice and perceptions on use of local consultants in
CESW. Section VII discusses the present status of coordination in CESW among donors
and suggestions for promoting division of labour among them. Section VIII explores the
present status of networking among research institutes in South Asia and prospects for
increasing it.
5.    The three large countries in this study are all characterized by low per capita
incomes ($220 to $280) and large populations (114.4 million to 883.6 million) which are
growing rapidly (2.1% to 3.1% per year in 1980-92). They have attained respectable
growth of GDP (4.2% to 6.1% per year over 1980-92) and are all implementing structural
adjustment programs with the support of the Bank and the Fund. They have an active
interaction with the Bank both in CESW and in operations. They account for a significant
share of the Bank's lending (Bangladesh, 2.0% of cumulative total lending, India 12.8%
and Pakistan 2.9% or 17.7% in total). In FY94, when there was a sharp decline in Bank
loans to India, the shares of these countries of total commitments (Bank/IDA) were
Bangladesh, 2.9%, India, 4.6%, and Pakistan, 3.6% or 11.1% in total.


4
II. FOCUS AND COVERAGE OF CESW
6.    In all three countries there was general agreement that the CESW had focused on
the most important areas and issues. This did not mean, as an interlocutor in India pointed
out, that every issue that had priority was studied, but that all that had been studied had
been of priority. Consequently in all three countries, interlocutors had suggestions about
areas where more work should be done in the future. For example, in Bangladesh, a
comprehensive look at Human Resource Development, on technology and R and D policy,
and on administrative and institutional reform were mentioned as areas requiring higher
priority than they had received. A comprehensive study of poverty in Bangladesh was also
missing. The Bank's 'Poverty Assessment" for Bangladesh were apparently not know to
interlocutors. There may be thus a case for the thrust in the CEM one year to be on
poverty amelioration. In Pakistan, some interlocutors felt that the Bank had shied away
from sensitive subjects like population, Centre State relations and regional inequalities. In
India, one interlocutor wanted the Bank to prepare a model power purchase agreement to
guide the states in their negotiations with private investors in power generation. Another
would like a comprehensive multi-sectoral view of the modalities and implications of
private sector finance of infrastructure projects in general. Another interlocutor wanted
the Bank to 'tpeak up" for effective social sector planning and study on the basis of
international experience the best way to deliver social services. Yet another suggested
that the Bank should do a comprehensive study of industrial restructuring and also of the
impact of the new policies on industrial structure. He also wanted more work on the
states and also a review of the planning process in India - how is sectoral perspective
planning done? How are plan funds allocated? What improvements are required?
7.    The CESW program, and its choice of areas and issues, was generally seen to be
'Bank-driven". It responded to (a) Bank's perceptions of the priorities for CESW on the
basis of understanding of the country's economy and its own operational and other needs
(including its evolving country assistance strategy) and; (b) the international development
fashions and pressures to which it had to respond. (e.g. gender, environment, etc.). The


5
program being Bank driven was not seen as a problem, for it was recognized by most
interlocutors in all countries that the CESW had generally seized on the key issues for
study in a timely fashion. Further, one or two interlocutors, perceptively saw development
'fashions" as emerging from development experience in different countries. The adoption
by the Bank of the fashions as priority concerns was thus a way of internationalizing
development experience and anticipate emerging problems in their own country.
8.    While it was realized by the interlocutors that the CESW would always remain
Bank driven, albeit responsive to the country's needs, there was support for greater
consultation in the formulation, implementation and review of CESW tasks because (a) of
the greater sense of ownership that would result and; (b) the greater benefits to both sides
that would result from more interaction during the early stages. This should not be
interpreted to reflect any significant dissatisfaction with the current procedures for CESW.
In fact, both in the Ministry of Finance and in line Ministries Government interlocutors
expressed positive views about the current practice, where Bank CESW missions
generally apprise them of the objectives, the issues being studied, have discussions with a
wide range of people and prepare an aide memoire which is discussed at a wrap up
meeting. The Government has an opportunity of commenting on the draft report and
generally/usually their views are taken into account.  This process works most
systematically in the preparation of the annual CEM which is seen as the 'flagship" of
CESW. In the case of sector work, the view was expressed in India, that sometimes the
Ministry of Finance is not kept adequately in the picture by the Bank mission which
confines its interaction largely to the line Ministry concerned. One could react that this is
a problem between the line Ministry and the MOF, and not something for the Bank to
address. It is also probably a failure by overextended bureaucrats in the MOF to focus on
the presence of the sector mission, since information on all such mission is provided to the
concerned liaison person there.
9.     Three specific proposals on process issues may be considered; they are likely to be
resource neutral. First, the three year rolling CESW program may be shared with the


6
Government (if it is not already done, in the context of the CAS discussions) and they
should be invited to comment and make suggestions. These suggestions should be
explicitly considered in revising CESW programs every year. Second, the issues papers
on major CESW tasks should be shared with the Government. In some cases draft issues
papers may also be circulated with requests for comments by a specific date. The
Resident Mission staff may play a role in conveying any comments to headquarters (since
written comments are unlikely to be forthcoming, and may cause delays). Thirdly, the aide
memoires of all Bank CESW missions (including sector missions) may be sent to the
Ministry of Finance, if this is not already being done. Not too much should be expected
from these measures, though over time they should enhance the Government's perception
of being "consulted'. Once in a while significant comments on the focus of specific tasks
may emerge (these may not always be positive!).
10.   A number of specific suggestions on the priority areas for future CESW may also
be considered. These general ideas have of course to be evaluated in a specific country
context. First, there appears to be a need for detailed, on the ground studies for
evaluating the impact of the adjustment program in specific sectors and on specific groups.
These should not be general studies, but based on field visits and surveys. A large UNDP
financed survey in India (to be used as a bench mark) and a planned "monitoring" project
by ADB reported on in the Annex on India is an example of a study with this objective.
Other studies of this nature could be on the impact of the reform on specific industries,
e.g. electronics, textiles, etc..  These studies are important to counter, with hard
information, much uninformed criticism of the reform. They could also point to emerging
issues which may need to be addressed by the reform. Both of these factors indicate that
good empirical studies of the impact at ground level would be useful to sustain the
momentum for reform. A second general impression is that with the significant progress
in correcting major distortions and controls that has occurred (though, still much remains
to be done) issues of administration, management, the legal framework etc. are emerging
as critical bottlenecks. These need to be studied and addressed at a higher level of priority
than has happened so far. These, rather than the usual price related issues like tariffs may


7
need to move to centre stage for CESW in the future. A third area which is particularly
important in Pakistan and India, pertains to the relations between the Central Government
and the State Governments, and the shifts of Bank focus on to the state level problems and
issues which has already occurred to some degree in both the countries. A fourth
important area which has been neglected so far, but from which there might be significant
payoffs in the medium (and long) term, is that of regional cooperation and coordination.
There is a case that the Bank could play a more pro-active role in promoting such
cooperation by preparing or supporting studies which bring out the benefits for South Asia
of a regional perspective in policy and in projects. Such studies, subcontracted to
institutions in the countries, would also be supportive of networking among researchers.
However, some interlocutors feared that the Bank with its 'tountry focused" organization
and budgetary process is not well geared to find a home for such studies. Finally, the area
of technology policy and research and development is one where countries could benefit
from more Bank advice. A dialogue on these is ongoing in India, and perhaps in the other
countries. However, the priority being given to it may be re-examined.
11.   Concern had been expressed at the time of the initiation of this study that greater
"voice" to the Government through more consultation and early involvement in CESW
may result in shifting out studies of unpopular subjects (which while politically sensitive
may be of key significance). The Government may also sometimes be more interested in
immediate short term problems as against issues of long run strategic importance.
(Approach paper, para 5). The danger of such a distortion of priorities is at best marginal.
Governments are already adequately aware of the CESW tasks at the time they are
undertaken - the usual approach taken in CESW is to field a mission which discusses the
subject with a variety of individuals in the country. Further, missions normally leave aide-
memoires with the Government at the end, so the Government is rarely 'turprised" by the
subject or contents of a green cover report when it is reviewed with them. There may be
questions of tone and of emphasis and differences of view on specific issues, of course.
But it is good that they are out in the open and discussed. Studies of sensitive subjects
already face hurdles, e.g. of centre state relations in Pakistan. It is basically a question of


8
persuading counterparts that, however, sensitive a particular issue is, an "ostrich" like
policy of ignoring it is self defeating and counter productive. Even in the existing process
of CESW, the Bank does not do studies by subterfuge, and rightly so. Secondly, there is a
wide range of flexible approaches to the study of sensitive subjects - from desk studies to
sketch out the issues and the information gaps, to producing informal reports which need
not be processed into formal shape, to supporting and assisting informally the
Governments own studies of the subject (e.g. sector work in education in India as
reported in Annex 4, para 17). Further, it should be recognized that seldom is the
Government position a monolith - there may be variety of views about the need to study
and deal with a particular issues and what is required is to identify and support those who
are for the analysis the Bank staff believes is important and timely. Similarly, the concern
expressed that the Government officials are likely to influence the CESW away from a
focus on long run strategic issues towards short run matters was not born out in the
discussions. In fact both in Pakistan and Bangladesh, it was Government interlocutors
who felt that some of the Bank CESW has been excessively oriented towards a short term
perspective because of the close link to structural adjustment operations and the
importance given to the review of the annual development program from a narrow
budgetary/micro perspective.
II. QUALITY OF CESW
12.   There was near unanimity among interlocutors about the high quality of Bank
economic and sector reports, even among those who then proceeded to talk about aspects
needing improvement. The reports were complimented for (a) their comprehensive
coverage and synthesis of the development issues they deal with; (b) their focus on the key
issues rather than on peripheral questions; (c) their objective and professional analysis,
bringing to bear the latest economic and technical knowledge on the subject; (d) the
systematic presentation of data, from authoritative sources not always easily available; (e)
the spelling out of policy implications of the analysis though usually in general terms,
which enabled the reports to be a useful instrument for policy dialogue. Different


9
interlocutors  stressed  different  positive  features  of  Bank  reports.  Their
comprehensiveness, timeliness and usefulness as sources of information, which could
underpin policy dialogue were the characteristics most widely valued. One or two
interlocutors who had a very critical view of Bank reports gave examples of analytical
shortcomings of one or two studies in Pakistan and the weak empirical basis of Bank
studies (reliance on assertions rather than analysis) in Bangladesh. These critics were in a
small minority, and in one case the critic was known for his 'hllergy " to the Bank's
CESW reports. There were also examples presented where the analysis in a Bank report
was defective or inadequate. These cases were, however, relatively few.
13.   However, despite the fulsome praise of the quality and usefulness of the reports,
there were many comments on how the Bank's reports could be improved. The short
comings most often pointed out were the following: First, the presence of an ideological
bias and a tendency to use information selectively to support the Bank's 'brthodoxy"
Experience which goes contrary to the case being made tends to be ignored. Secondly,
inadequate acknowledgment of the work of others (including those in the Bank) on which
the CESW studies were often built. Thirdly, not enough information on comparative
country experience and information, and the selection of only those comparative country
experiences which were favourable to the Bank's case. Within this general complaint,
particular interest in more reporting of South Asian experience was expressed in both
Bangladesh and Pakistan and by some in India. (The Indian interlocutors expressed
stronger interest in country experience that was relevant to their situation, wherever it was
derived from). Fourthly, in the context of structural adjustment programs supported by
the Bank, the greater elaboration of the mechanisms by which the measures being
proposed are expected to lead to the favourable results that are being predicted. The
failure of predicted economic up turns (in Pakistan and Bangladesh, particularly) is blamed
by the Bank on the imperfect implementation of the programs. This does not have
credibility if the links between the measures and the results are not adequately specified.
Further, this issue throws up questions relating to institutions administration, and the legal
framework as the central problems preventing expected outcomes,, as well as those


10
relating to expectations, credibility of reform, and uncertainty which are difficult to deal
with analytically. In short, these are large questions which show up the limitations of
CESW as well as the limits of economic analysis. Finally, in sector work more explicit
consideration of intersectoral linkages and their consequences for sector policies as well as
the inclusion in sector reports of a summary of the lessons from the Bank's operational
experience in the sector, were suggested for strengthening the usefulness of sector reports.
Obviously the above listed comments apply to different degrees to different reports. For
example, there is an apparent contradiction in the comprehensiveness for which Bank
reports were praised and the selective use of evidence with which they were charged. But
the contradiction is more apparent than real. As an interlocutors in India pointed out, the
comprehensive Bank's reports themselves provided the information which critics could
use to question the Bank's line of argument. However, there may be examples where a
selective presentation of the favourable evidence may have been made e.g. in citing only
country cases where certain policies being espoused had worked, while ignoring cases
where they had not.
14.   Some suggestions for strengthening the credibility of CESW  reports with the
critics are made here for consideration. Most of these do not require additional resources,
though in some cases they may imply some reorientation of the use of resources. One or
two suggestions may even be resource saving. In general, formal CESW reports should
aim at being objective analytical studies.  This implies that evidence and relevant
information not supportive of the case being made should be included and the reasons why
it was not decisive indicated. In these sophisticated countries (and perhaps in all) the
clients are often aware of the cons as well as the pros of particular lines of argument, even
if they are fundamentally in agreement with the case being made in a specific report.
Similarly those reports which are relying to a significant degree on the work of others
should not hesitate to give references. (This does not mean that they need to adopt a
citation policy fully in line with traditions in academic research). In particular if there has
been a Government committee review of the same area, its report and its major
recommendations should be at least acknowledged. Similarly, earlier Bank studies of the


11
subject should be referred to and suggested departures from earlier positions should be
explicitly pointed out and justified. Among other things this may increase the awareness
of the history of Bank staff itself It may also mean less need to rephrase and rewrite
earlier messages just to be different. Sector reports should also briefly but explicitly
discuss the lessons of operational experience, including relevant OED findings. In all
cases a policy of judicial quotation rather than fresh drafting and redrafting should be
followed. More comparative country experience should be presented. However, in
presenting comparative country experience (e.g. in privatization), it would be useful to
give examples of failures, with some explanations or lessons about pit falls to be avoided.
If in some areas where there is an absence of a clear understanding (e.g. the persistent
stagnation of investment in many countries undertaking structural adjustment), the report
should acknowledge it. A more credible and balanced report is a more effective report for
a relatively sophisticated audience. None of these suggestions represent radical departures
from current practice. Examples of existing reports having one or more of these features
could be brought up. However, guidelines on them, may be useful to make such examples
the more general case.
15.   It might be argued that the general effect of the above suggestions would be to
dilute and perhaps distort the basic policy messages of particular reports. This result does
not necessarily follow, in my view, though it is difficult to demonstrate this in the abstract.
First, the theoretical basis of the argument for certain measures (usually in neoclassical
terms) would remain unaffected. It is the empirical evidence (either from within the
country or from other) which would be seen to be more mixed, and the reasons for this
(e.g. other factors) would have to be brought out. In other words, the conditions required
for the predicted results from the measures to emerge, will find more space. The reports'
message may thus have to be more nuanced and conditional than is normally the case of
present. But the 'nessage" would most probably still be the same. Secondly, policy
changes undertaken on the basis of simplistic and exaggerated expectations of result (as
the client in Bangladesh and Pakistan complained) result in reduced credibility and


12
therefore impact within a short period. A more open and frank consideration of the pros
and cons is always to be preferred in the long run Bank client relationship.
16.   This may also be an appropriate place to consider the issue of formal vs. informal
reports and their relative roles in the Bank country relationship. As pointed by Michael
Bruno, writing about his experience as a policy adviser in Israel - 'bne cannot over
emphasize the importance of packaging - the simplicity and salability of the ideas and the
need to pursue those in clear and non technical language" (See Annex 1, para 7). Formal
reports, comprehensive and informative as they are, presenting a synthetic perspective of
an issues or an area and making broad policy recommendations are very useful in pulling
together scattered information and providing systematic analysis and thus improving
awareness and understanding of important issues and problems. However, they often are
too bulky and broad based, and by necessity periodic, to be the ideal or most important
instrument for policy dialogue and as an underpinning for policy action.  As was
mentioned by some clients (in Pakistan and Bangladesh) very few senior people read these
reports, and they quickly end up on shelves for occasional reference and for use by middle
and lower level bureaucrats to prepare briefs on particular issues for senior level
politicians and bureaucrats. And, all too soon the information in them gets out of date.
Further, in the context of specific policy actions the discussion usually, needs to be
focused on one or two specific questions rather than the whole spectrum. Informal
reports resting on the formal reports, can thus play a very useful role in carrying on the
policy dialogue and in persuasion for policy reform. An informal report can be tailored to
the particular need. It can zero in on the specific questions or doubts raised by the policy
makers, present up to date information and can be much more pleading or case making
documents than formal reports. Further, informal reports can also deal more candidly with
sensitive issues. (Normally focused formal reports e.g. on a subsector and formal reports
which are not processed to gray cover to some extent can also meet some of these
objectives). Informal reports and advice have proven very useful at a time when a
Government is contemplating a wide range of reforms, as is characteristic of all the three
countries being studied. One interlocutor, a senior Bank staff who was in Pakistan to help


13
Mr. Qureshi's Government, was very complimentary about the dozen or more briefs that
were prepared at short notice by the RMP on a range of issues where policy action was
being contemplated. In India also the usefulness of getting a Bank 'input" into the internal
policy making process through brief studies was mentioned. , with the caveat that it had to
be provided in time (two weeks, not six months) to be useful. Present day information
technology enables informal reports to be prepared even by Headquarters staff, taking
advantage of consulting the Bank's wide range of expertise and experience, within short
elapsed time. However, the greater use of informal reports to support dialogue and
reform needs a strong staff presence in the RM as well. To a significant extent, as the
Pakistan example perhaps shows, such presence exists already. In some situations
informal reports (desk studies) may precede the preparation of formal reports to flush out
the issues and initiate a discussion (within the Bank and with the country). More normally
they should be seen as the vehicle for carrying on the dialogue and 'push" for policy and
institutional changes started by a formal report. In many cases operations also play this
role, and informal reports can be viewed as an integral part of the project cycle.
17.   Informal reports, since they are by their very nature, less amenable to advance
planning and programming and are less visible tend to receive less attention in the Bank's
management process and have less career enhancement possibilities from staff Therefore,
there seem to be a priori reasons to expect the balance between formal CESW and
informal reports to be in favour of the former. This balance needs to be reviewed and if
necessary corrected.
18.   Another suggestion which is only peripherally concerned with the quality of CESW
in the narrow sense relate to the strong interest expressed in Bangladesh and Pakistan (and
by some in India) for more information on the other South Asian country experience, and
the concern expressed about the Bank's own country 'blinkers" There seems to be ease
for more reference to such experience in CESW reports. There appears to be also a case
for better awareness on the part of Bank staff working in one country of experience in
other neighbouring countries. With the reduction of the CDs in the region to two (from


14
three) there is likely to be greater awareness of more than one country among economic
and project staff However, there may be come advantage in having a periodic retreat to
discuss operational and economic question and experience (e.g. agricultural operations)
between staff of the two departments. Further, the idea of an annual seminar or workshop
of staff from the resident missions (the location rotating between the three countries) again
focusing on such experience and issues may be worth exploring for broadening the
regional perspective of Bank staff, to the benefit of the Bank's work in each country. This
would have some resource implications but I believe would have significant benefits. A
cheaper alternative may be the stocking of recent Bank reports on the neighboring
countries in the RM library. However, already overburdened staff may not find time to
consult these and even if they do may not find the answer to their specific interests or
questions.
IV. CESW, LENDING AND STRUCTURAL ADJUSTMENT
19.   In all the three countries clients were almost unanimous in perceiving a strong and
close link between the Bank's CESW and its lending operations, and at the same time
complaining about the 'tigid" and 'lbsolute" attitude of the Bank on conditionality. One
interlocutor (in India) complained that the problem was that the Bank 'Viewed itself as a
reformer of the.....sector and not just as a provider of loans" (There were some, however,
who pointed out that once an operation was negotiated, the staff were quite flexible and
generous in their review to determine adherence to conditionality in order to ensure
continued disbursements). The close relationship in the minds of clients between CESW
and operations was shown by the fact that even after being told the mission was about
CESW the interlocutors kept discussing operational experience. This was only partly due
to the fact that many interlocutors had more interaction with the Bank in the context of
operations, since even those very familiar with CESW (e.g. in MOF) exhibited this
tendency. In structural adjustment operations as well, a close relationship was seen with
the broad outlines of the reforms supported and the recommendations in the CESW. In
Bangladesh and Pakistan where PFP's were prepared, a review of the policy matrices


15
showed the links of the proposed three year program on recent economic and sector
reports. There are two caveats to this. First, the specific targets in the program (e.g. the
level of maximum tariffs over the 3 year period) were usually a product of the loan
negotiations and were not derived from the background CESW report. Secondly, in some
cases there was no formal CESW report underpinning the SAL, the required analytical
work being done in the course of loan preparation, e.g. the ISAC in Bangladesh. In India
where the ongoing adjustment program is broadly on the line of the recommendations in
recent CESW, the program was perceived by most Government interlocutors as
indigenous in contrast with the view of comparable interlocutors in Bangladesh and
Pakistan about their structural adjustment programs which were seen as Bank-Fund
inspired. However, even in India, those who considered the CESW to have been marginal
in influencing the reform credit it with (a) helping raise the awareness of certain issues; (b)
helping convert the skeptics and the opponents within the Government to the reform; (c)
providing information and analysis, including on other country experience, which was
useful in internal discussions. In my view, the contribution of CESW to the Indian reform
should not be underestimated.
Thus, judged by the operational relevance and contribution to economic reform
CESW would receive high marks. As pointed out above, a greater use of informal reports
would strengthen this contribution.
20.    The client's perception of a close relationship between CESW  and Bank
operations is in contrast with a view often found within the Bank that the integration
between the two needs to be strengthened. This may be partly a hangover from earlier
days - before adjustment lending. It may also partly reflect the relatively low emphasis
given to informal reports, which can often function as a link between policy analysis and
policy action.


16
V.     DISSEMINATION
21.    There has been a significant improvement in recent years in the dissemination of
the messages of economic and sector reports in all three countries. This reflects three
factors the importance of which varies among countries. First, greater attention to
dissemination is given by staff, particularly in the RMs. Secondly, the undertaking of
structural adjustment operations (and preparation of PFPs and Annual Development
Program reviews in two countries) has raised the profile of the Bank and generated
interest in what it says. Thirdly, and perhaps, related to the above mentioned factor, the
attitude of Governments towards greater dissemination and public discussion of the
Bank's analytical work has become more supportive. The change is most marked in India
where, earlier the Government used to have an almost paranoiac view about the 'leakage"
of Bank reports and about seminars and research organized by the Bank. However, even
in Bangladesh there are those in Government who favour discussion of draft Bank reports
(green cover) in public so as to (a) generate a feedback to the Bank about the reactions
and criticisms and perhaps strengthen the hands of the Government in its discussions of
the report and, (b) to familiarize people with the rationale of certain elements of the
reform which are most misunderstood. Finally, the recently adopted policy on the release
of Bank reports is obviously conducive to better dissemination. It was refreshing to find
that the older, restrictive policy on release of Bank reports had been selectively and
informally breached in all the three RMs.
22.   While several interesting initiatives have been taken in all three countries (for
details see the Country Annexes) there are several suggestions for improving
dissemination which are worth further consideration. The use of seminars to discuss
major economic and sector reports has been found useful. However, it is important to
have a clear idea of the objective - is it primarily dissemination (getting across the report's
analysis and message), or is it to initiate a dialogue on the issues with a generous give and
take? The objective has an important bearing on the organization and invited audience of
the seminar, as well as the agenda and the manner in which the proceedings are conducted.


17
The role of Government invitees to the seminars also needs careful thought, to get the
maximum desired impact. Again the question is are they invited primarily to be informed
or for moral support or to listen to others?  Further, there is a question about
documentation for the seminar:  should the report (or its executive summary) be
considered adequate, or should investment be made in brief notes in layman language of
particular aspects being discussed in order to promote audience interest and absorption.
Few persons have the inclination or the time to go through a Bank report. In Bangladesh
the IMf organized two successful seminars for which brief documentation was prepared.
This was seen as one reason for their success. The experience of the recent Agriculture
Sector Study in Pakistan is also one example of successful involvement of local policy
makers from the initial stages and effective dissemination. A summary of this experience
in collaboration and dissemination is presented in Annex 6.
23.    In general there is a case for the Bank to give greater priority in dissemination to
the general public as distinguished from dissemination within Government and among
academics and experts (which perhaps is more easily handled through seminars). For this
a stronger public relations effort and cultivation of the media is required. The economic
journalist profession is very little developed in Bangladesh and Pakistan, while in India it
has undergone a revolution and rapid expansion in recent years. A number of suggestions
to build on this for raising public awareness of the Bank and disseminating its messages
may be considered. First, a program of brief visits to headquarters, after (say) a week's
orientation at the RM, for a few young journalists from Pakistan and Bangladesh may have
large pay off over a period of time. At Headquarters the visitor should get an intensive
review about development issues generally and about the Bank, perhaps on the lines of the
sessions organized in EDI for UN diplomats. After their return these journalists may be
kept in touch with the RM by periodic briefing sessions. A second associated idea is to
give short (two-three weeks) consultancies to a few journalists to review in the RM, with
the support of a staff member, issues in a particular area on the basis of existing CESW
reports and to prepare a short paper. This would educate the journalist, who seldom have
time to devote 2 weeks to one subject, and the output may be useful for dissemination. A


18
third suggestion is for the RMs to increase their contacts with the local language press,
since its reach is much greater than the English language media. A beginning was made in
Bangladesh, where the executive summary of the CEM was translated and given to the
language newspapers. It might be useful to prepare short notes of particular issues based
on Bank reports in the local language and circulate them to journalists periodically. (Not
necessarily to coincide with the release of a Bank report, best perhaps when the issue is
under discussion in the country.) Preparation of short press releases giving the major
findings of a report at the time of its release in gray may also be considered, if it is not
already being done. A small consultant budget in the RMs for use in dissemination as well
for preparing informal reports would be important to make these suggestions effective.
No such provision exits at present. All in all, a more open and interactive relationship
with media persons would be in line with the high profile of the Bank in these countries.
24.    The circulation lists for Bank reports and publications may also be reviewed with
an eye towards broader dissemination. For example the libraries of major universities,
particularly those in non metropolitan towns may be systematically covered for
publications like the Bank Atlas and country reports. Similarly the RM staff should make
an effort, particularly in India, to increase their interaction outside the metropolitan cities.
One relatively inexpensive method would be for Bank and RM staff to give seminars and
address business and professional associations on their visits outside the metropolises.
This would require some advance work on the part of the public relations staff to establish
contacts in these areas.
VI.    USE OF LOCAL CONSULTANTS
25.    The use of local consultants and subcontracting of studies to research institutions
to prepare background papers or studies which are later used as inputs for CESW reports
is fairly widespread in all three countries. This practice appears to be somewhat further
advanced in sector work than in economic work but this may be a perception because of
the significant amount of studies done under technical assistance and in the context of


19
operations. The advantages of using local collaborators include (a) economy; (b)
familiarity and deeper understanding of local circumstances and institutions; (c) greater
sense of ownership in the final product, particularly if the consultant is well respected in
the country; (d) the interaction between the consultant and Bank staff benefits both, and
this helps develop analytical and policy capacity in the country; (e) the consultant may
become in many cases a spokes person (champion) for the point of view in the Bank
report, after the report is done. However, reports based on subcontracted work may
require more management and supervision than one being done wholly 'in-house" - in fact
or in the perception of managers. Further as was pointed out by some interlocutors, the
Bank loses some control of the process and the product when using local consultants.
This 'tisk" factor, and the management 'burden" inhibit greater reliance on local
consultants for CESW.
26.   There is however, a strong case for greater reliance on local consultants for CESW
in countries of South Asia and perhaps in all countries. As was pointed out by on
interlocutor (in Pakistan), the Bank tends to do CESW in all countries essentially relying
on its own staff In countries like those of South Asia where there was significant
indigenous potential, the Bank should use it more than it has done so far. One aspect of
CESW which was not discussed in the Approach Paper, but which following my
discussion is of very high priority, is its use for developing and strengthening the country's
analytical and policy capabilities. In actual fact, as was argued by some interlocutors in all
three countries, one effect of CESW has been to inadvertently erode rather than enhance
domestic capabilities in these areas. This has happened in two ways. First, the availability
of competent analysis and documentation on the priority policy questions when it is
required had reduced the need to have studies done at home, and therefore, on the demand
for such studies domestically produced. This aspect is strengthened by the fact that quite
reasonably, the Bank and other aid donors use the Bank's reports as the basis for their
decisions and for dialogue with the Government. Secondly, an unintended effect of the
Bank's shift in the last fifteen years (and more) away from planning and control towards
more market friendly economic regimes has been to devalue and erode the capabilities of


20
the Planning Commissions. In all three countries the Planning Commissions were the
centre for distinguished analytical and policy work in the earlier years, and they had
outstanding development economists.  Today, the erosion of their capability (and
authority) is seen in the fact that the contribution of the Planning Commissions to the
ongoing structural adjustment programs are minimal (even though some distinguished
names may still be found there). The argument is not that the Planning Commissions
should be rehabilitated. It is that the inhibiting effect of CESW done in the traditional
manner should be recognized and a concerted effort to use CESW for upgrading and
utilizing existing capabilities for policy analysis should be factored in.
27.   An approach to sector work which is being increasingly used is to commission
studies by local institutions and consultants on the basis of Bank approved or designed
TORs, Bank staff (a) supervise and support the consultants during the course of the
studies and; (b) produce a synthetic report on sectoral issues and priorities. (In both these
latter steps suitable consultants could also be use where appropriate). This is already
being done (e.g. see the Annex 4, para 17 ). It should be done more often - and not only
in sector work. For example, a study of state finances in India, subcontracted to a
research institute and done by various consultants was discussed at a Conference and then
published. It still is the best work on State finances in India. The objective should be
develop local capabilities so that over a period of time the Bank's staff involvement in
CESW is phased down. It does not make sense, that the Bank still produces a CEM on
India in broadly a similar way (as regards reliance on Bank staff) as was done perhaps 40
years ago.
28.   One argument against the above approach is that the Government, the Bank's
Management and Board and the other donors are interested in a Bank view of the issues
and its recommendations, and reports essentially prepared by local research institutes and
consultants would not carry the necessary weight. There are alternative and less resource
intensive ways that the traditional way of doing CESW to meet this objection which is
perhaps based on a misconception. First, brief synthetic reports based on and referring to


21
the indigenous work (including straight extracts) may still be produced. Second, one
could experiment with circulating the domestically produced report with a shot 'taff
assessment" with the Bank's staff views in this document. (This idea is somewhat along
the lines of the practice of the IMF to have a brief confidential staff assessment on selected
issues in Part I circulated with the more bulky Part II on Recent Economic Development).
Thirdly, if the Bank staff is in substantial agreement with the report - which is likely in
many cases, since staff would have drafted the TOR's and interacted with consultants
during its preparation - the report should be simply circulated as a Bank report. The
weight of the report would derive from the fact that report had been vetted by the Bank
and was circulated as a Bank report.
29.   This change in the CESW '1nodel" for the South Asian countries may have
implications for the staffing (from headquarters) of the Resident Missions. However,
given the broad based staffing of the RMs in the three countries studies, the very
competent local staff already in them, and the present information technology, these
implications are not likely to be prohibitive.
30.   Even within the traditional model of CESW  a certain and perhaps increasing
amount of local collaboration is being used. Some issues that were raised in the
discussions by persons exposed to such collaboration are mentioned here. First, the
relatively greater use by the Bank of individual consultants rather than research institutes
partly because of economy and partly because of greater 'tontrol" on the consultant was
mentioned by several research institute directors on reducing the institution building role
of collaboration. This may be self serving - but only partly so. Second, the little voice
given to consultants in how their work is used in the final report gives them a sense of
being little more than research assistants. In some cases the present practice may be
appropriate. In others their greater involvement in the final report may be desirable both
as a morale booster (incentive) and as improving the report. Thirdly, the present policy
where the consultant's work is owned by the Bank to be used at its discretion may result
in the work being not widely available or known. This is a disincentive for good


22
researchers. Even if an input is used in a Bank report the consultant should be allowed to
publish it (say after 6 months) with due acknowledgments. Even more so, if the input has
not been used. Fourthly, it was pointed out that often unrealistic ex ante deadlines were
set for consultants which were usually breached, sometimes by significant periods. This
led to cutting corners by consultants and relatively poor quality output, than would have
been prepared if the ex ante deadline had been closer to the actual elapsed time. Finally,
the issue of payment to individual consultants and to research institutes may need to be
looked into from the point of (a) some uniformity in the payment for similar work to
individuals of similar standing; (b) the payment made by other external agencies.
Particularly in India, there was a feeling among Directors of Institutes that the Bank was
getting 'too good a deal" While relevant this point was not raised in Pakistan and
Bangladesh.
VII. COORDINATION AMONG DONORS: DIVISION OF LABOUR
31.   In general the other donors with whom   discussions were held expressed
satisfaction with the prevailing state of coordination in operations and CESW with
perhaps one exception (in India). No cases of significant differences in views or
duplication of work were identified. Coordination mechanisms seem to have progressed
furthest in Bangladesh where a Local Consultative Group (LCG) meets not only pre
consortium and post consortium, but more or less on a monthly basis throughout the year.
It is now chaired by the Government, though initially, the Bank chaired it. Each monthly
meeting appears to focus on a particular area e.g. food security. In Pakistan the
coordination efforts were described as being on an 'tipward curve" with the very active
coordination under the social action program being picked for special mention. In India
there is a pre consortium and post consortium meeting of donors in the field and an
informal coordination group exists in the population area.  The UNDP Resident
Representative has recently initiated a periodic meeting of multilateral donors.


23
32.   However, while no significant issues of coordination are involved (except perhaps
in India; see Annex 4), a number of suggestions were made by interlocutors and these
need to be considered. The upgrading of coordination in the CESW area is particularly
important because if pursued energetically it could also lead to some systematic and
planned division of labour in economic and sector studies rather than the adhoc division
that appears to prevail at present. The Bank has a comparative advantage at present in its
ability to put together a comprehensive, systematic and integrated perspective of a sector
or a policy area as well as in bringing in a worldwide cross country perspective. This is
reinforced by its being viewed by other donors as the authoritative source for their own
judgments and positions as well as for information.  As a donor, interlocutor in
Bangladesh put it, when the Bank takes up an issue, the subject is on the table as a priority
for all donors. Such integrative studies should aim increasingly to be based on a program
of specific studies of particular aspects or subsectors which are carried out by local
consultants to others and financed by donors, the Bank, or even the Government. It is
important that the issues which are likely to figure in the pulling together exercise and the
information needed are adequately covered in the sub studies. This requires interaction
and coordination at the time of planning the sub studies, who ever is financing and doing
them. At the sector level, apparently this happens at least some of the time (e.g. in the
Water Resource Plan for Bangladesh).   Steps that would facilitate such ex ante
coordination include (a) a sharing of the CESW program among donors and ensuring that
TORs for all studies are circulated (perhaps in draft) among donors, so that particular
questions may be added or a particular orientation given at the formative stage; (b) the
provision of some extra funds by the Bank to a study being planned by another donor with
a view to generating some additional analysis and information of direct interest to the
Bank. (Perhaps this should be reciprocal - a donor could piggy back on a Bank financed
study); (c) systematic sharing of studies, some financed under TA or operations, among
donors. A monthly meeting of donors in the field (on the Bangladesh model) may not be
the desirable mechanism in all countries. However, there is a strong case for a monthly
newsletter in the RM which could be shared with other donors giving e.g. information on
CESW related missions (a month in advance) and a list of draft reports prepared. In


24
Bangladesh and Pakistan where seminars and workshops have been held on yellow and
green cover reports perhaps these reports could be informally shared with selected donors.
33.   While Governments in Bangladesh and Pakistan do not appear to oppose closer
coordination among donors, in India it was pointed out by non Government interlocutors
that the Government was very sensitive about the ganging up of donors and opposed to
formal coordination efforts. Better coordination in planning and implementing studies
should not however, cause difficulties.
34.   Division of labour with other institutions (e.g. IMF, ESCAP, ILO) etc. could also
be strengthened. Many relevant studies are carried out by these agencies (e.g. a review of
effects of the adjustment program on employment by ARTEP in India) and some idea of
their plans for work in the region could be an element in the Bank's own plan of studies.
VI. NETWORKING AMONG RESEARCH INSTITUTIONS IN SOUTH ASIA
35.   Discussions with research institutions in all the three countries confirmed that (a)
networking among research institutions across borders was minimal; (b) there was a great
interest in furthering such networking and; (c) there was strong support for a Bank role in
promoting networking.
36.   In India there are a large number of institutions and University faculties engaged in
economic and sectoral analysis and research. There are about 20 institutions being
supported by the Government's Indian Council for Social Science Research. The Indian
Economic Association is an active professional society. In Pakistan there are a few good
institutions in addition to the venerable Pakistan Institute of Development Economics.
But the Pakistan Economic Association is moribund. In Bangladesh, the Dhaka University
and the Bangladesh Institute of Development studies dominate, though there are
economics facilities in other Universities too. The Bangladesh Economics Association is
also active. Networking of scholars and researchers within the country was considered to


25
be in need for strengthening, particularly in Bangladesh, and it was suggested that the
Bank increase its links with researchers and academics outside the capital. This may also
be the case in Pakistan, and should certainly be an important objective in India.
37.    Some initiatives for developing networking among the three countries have been
undertaken, supported by the Ford Foundation and some German foundations. The
Centre for Policy Research in New Delhi has with such support published the results of a
study of Governance in five large South Asian countries and has also been carrying on a
'South Asian Regional Dialogue" with participants from across the Region for several
years. One or two cases of scholars from India spending time, in Pakistan and vice-versa
were also mentioned.
38.    SAARC, established formally in 1985, has as one of its objectives, 'to promote
active collaboration in the economic, social cultural, technical and scientific fields" The
report of an independent South Asian Commission on Poverty Alleviation was prepared in
1993 and a joint SAARC/World Bank informal workshop on poverty reduction in South
Asia was held in Annapolis (October 1993) with participation of regional scholars. A
regional study on Trade, Manufactures and Services was prepared in 1991 and resulted in
a draft agreement on SAARC preferential Trading Arrangement (SAPTA) in 1992 which
is still far from being realized. The organization has a scheme for 'Chairs, Fellowships and
Scholarships" for providing 'increased cross fertilization of ideas through greater
interaction among students, scholars and academics in SAARC countries" (SAARC in
Brief, page 23). A SAARC Documentation Centre (SDC) has been established in New
Delhi for facilitating access to information. The SDC is expected to focus on 'iocuments
generated in member countries, those generated elsewhere in the SAARC region and
access to international data bases" in technical areas as well as in the area of economic
development. It is evident the SAARC is emerging as an important channel for promoting
cross regional flow of ideas, and information, though how effective it will be remains to be
seen. The political strains between the two largest member countries clearly inhibit the
pace at which it can develop into an effective body for coordinating and networking. The


26
strengthening of links between SAARC and the Bank and other donor institutions (like
ADB) has however reportedly been opposed by an important member country which feels
that SAARC should maintain a distance from such organizations. This would clearly put a
brake on any overt effort by the Bank to support SAARC as an umbrella for networking
among research institutes. All decisions in SAARC have to be unanimous.
39.   The researchers I met in the sub-continent were almost all opposed to the idea of a
SAARC role in promoting networking on the grounds; (a) it has been an ineffective
organization without substantive achievements in its first decade; (b) it is a Government
organization and therefore too bureaucratic and constraining to effective networking and
free and open debate which academics and researchers would find stimulating; (c) it is a
'treature" of the Ministry of External Affairs and therefore less interested in substantive
economic questions (not fully borne out by the information in para 37 above). One senior
person in Pakistan, however, disagreed with this negative stance. Though fully in
agreement with the critics on the substance he argued that SAARC in the present
atmosphere of tension provided a neutral umbrella which should be useful for supporting
research on problems of common interest, and conferences and seminars (preferably
located in one of the five member countries other than India and Pakistan).
40.    All interlocutors had a roughly similar set of proposals for improving networking!
First, research on subjects of common interest, e.g. the impact of the Uruguay Round in
each country with broadly similar TORs with the result being discussed at a Conference in
the region and published. Second, programs for financing short visits (up to 6 months) of
scholars to neighbouring countries and institutes. Thirdly, a periodic conference of the
Directors of South Asian research institutes along the lines of one held by the ADB in
1988. This could coincide with the meeting of the Economic Association of a specific
country where it would be held. Fourthly, an exchange of annual reports of the research
institutes or failing that their being made available in the libraries of the RMs so that
scholars working on similar subjects could establish contact to mutual benefit. The
difficulty of getting publications from neighbouring countries and the high cost was also


27
mentioned as a problem the Bank could help with, but it would appear difficult for the
Bank to get into the library business. The SAARC documentation center, once it is
functioning could be brought to their attention instead.


28
ANNEX 1
IMPACT OF CESW: A CLIENT PERSPECTIVE
AN APPROACH PAPER
1.    The study proposes to review the impact of CESW in three large countries in
South Asia (India, Pakistan and Bangladesh) from the point of view of the major clients,
which include governments (civil servants and ministers)), parliamentarians, academics and
research institutions and representatives of the media.
2.    The primary instrument would be to collect client perceptions and views through a
series of interviews which will be conducted by a consultant through short missions to
each country. The persons to be interviewed will be selected in consultation with the
COD (headquarters) and the Resident Mission. In each country a staff member of the RM
would be associated with the consultant. The persons interviewed would in general be (a)
those within the government associated with ministries and organizations with the greatest
interaction with the Bank (e.g. MOF and Central Bank) as well as key sector ministries;
(b) researchers and academics in research institutes and ministries; (c) journalists ; (d) if
possible, appropriate parliamentarians and members of opposition and; (e) businessmen or
business associations. The effort would not try to cover the waterfront but focus on key
interlocutors (with the guidance of the RM). Some of the groups listed above would not
have been exposed to Bank CESW, but would have read about it in newspapers too.
Their views, based on limited exposure may still be pertinent.
3.    The purpose of the study would not be a post mortem of the strengths and
weaknesses of recent CESW but a forward looking attempt to identify the major shifts
required to increase the client orientation and effectiveness of CESW. Thus, the report
would attempt to indicate:


29
(a)    measures/processes which might be helpful in increasing the client
orientation and policy relevance of future CESW;
(b)   the kind of empirical/analytical orientation that should be aimed at in
CESW with this in mind, and in particular the usefulness of cross-country
experience and information;
(c)   the nature of packaging which would help towards this objective,
particularly the role of informal reports; and
(d)   the dissemination dimension.
However, views about recent CESW would provide a basis and context within
which the major issues listed below would be discussed with interlocutors.
4.     The major questions that would be pursued during the field mission would be the
following:
(a)   Was the CESW focused on the important issues? Were any important
issues neglected? Why?
(b)   Was the analysis considered to be objective and empirically well founded?
Or was the work descriptive and superficial?
(c)   Did the CESW provide adequate reference to cross-country experience and
information on the subject it covered?
(d)   Did the work provide a useful basis for designing or reorienting policy? If
not, what was missing? Too theoretical? Recommendations too general
and vague? Not relevant? Too revolutionary - not gradualistic enough?
Other?
(e)   Were the main messages of the CESW adequately disseminated: (i) within
the government; (ii) outside? By what means? What would be effective
instruments for better disseminations?; (iii) publication; (iv) seminars,
conferences, workshops; (v) circulation of popular/summary of major
conclusions and recommendations; and (vi) others.


30
(f)   How adequately were the institutional constraints/strengths recognized
within CESW? How did it affect the impact of the CESW? What are
considered to be the key institutional dimensions of the economic
environment CESW should take into account?
(g)   Was there an effort to collaborate with researchers and other in the field in
the implementation of specific CESW tasks? With what results? How
could the collaboration in CESW be increased?
(h)   What is considered to be the key short coming of the Bank's recent
CESW? (I) relevance and focus; (ii) quality of analysis; (iii) lack or nature
of policy recommendations; (iv) nature of packaging; informal, vs. formal
reports; (v) dissemination; (vi) timeliness, or lack of it; and (vii) others.
5.    In addition to the substantive questions, attention would also be given to process
and implementation questions which can often spell the difference between successful and
unsuccessful CESW. The degree of consultation with the government officials and the
involvement of the resident missions in the selection of the priority CESW tasks, and in
determining their focus would be examined. The degree to which the work was done in
collaboration with government officials (e.g. was there a local counterpart team set up)
and the use of academics and researchers in the country in doing part of the work would
also be examined, and their advantages/disadvantages considered. For example, the close
involvement of government officials in the selection of priorities in CESW may result in
shifting out studies of unpopular subjects (which while politically sensitive may be of key
significance). The government may also be sometimes more interested in immediate short-
term problems as against issues of long-run strategic importance. Similarly, the use of
local researchers may not necessarily be welcomed by the authorities, who may have
questions about their political 'toundness" As against these aspects there are some major
advantages relating to 'bwnership" and cost which probably would outweigh the
disadvantages.


31
6.     The approach being followed of essentially relying on discussions with a variety of
clients is, of course, subject to limitations which have to be considered. First, one cannot
take clients' responses at face value. An attempt has to be made to try to understand (and
attempt to allow for) the biases, both favourable and critical, in drawing conclusions.
Secondly, most interlocutors are likely to have had only a partial/limited exposure to Bank
CESW and may generalize on that basis. Only very few interlocutors may be using
different criteria to judge the effectiveness/relevance of the CESW. For example, the civil
servant and the researcher may be using different yardsticks. This is as it should be.
(Note: the questions in para 4 above aim to make explicit the basis of interlocutors
views). These consideration are sufficient to indicate that the drawing of conclusions on
the basis of field interview about CESW, should be a complex and difficult task.
7.     A second set of difficulties in assessing impact reflects the fact that the impact of a
piece of CESW depends on factors other than its quality and relevance! First, the political
and institutional dimensions and the public acceptability of a policy are important.
Second, 'the nature and skills of those individuals in government who have to implement
the policies are of crucial importance"  Thirdly, 'one cannot overemphasize the
importance of packaging - the simplicity and the salability of the ideas and the need to
pursue those in clear and non-technical language"."
8.     With all the provisos and qualifications implicit in the tenuous link between
economic analysis and economic policy, the study would still aim to focus on the apparent
association between recent CESW in each country and the policy changes that have been
initiated or are under active discussion in each country. The study of this association
seems to be both important, and feasible, because all the three countries being studied, a
structural adjustment process is under way supported by SALs and SECALs. The aim is
not to identify the role of the Bank in setting such a SAP in motion, but to try to list the
most important policy issues identified by CESW, the direction and (where done) the
See Michael Bruno, Economic Analysis and the Political Economy of Policy Formulation, European Economic
Review, 1990. The quotations in the text are from this paper.


32
design of policy changes recommended, and set them against the policy areas in which
changes occurred, and the extent to which they were in line with the implicit/explicit
design/direction in the CESW. Areas where CESW was done and recommendations made
but no changes occurred would not necessarily imply a failure of CESW; in these cases the
appropriate judgment would focus on the contributions to the awareness and
understanding of the issues and perhaps speculation on the constraints inhibiting action.
9.    While the approach of selling policy changes against policy recommendations just
indicated would be important for assessing the development impact of CESW, other
approaches to this end will also be explored, e.g. the ascertation between CESW and Bank
operations; the impact on other donors (particularly in Bangladesh).
10.   The planned output would be a report with an overview/conclusions pointing to
commonalties and differentiates between countries and lessons for increasing effectiveness
of CESW, together with an annex for each country studied. Also, questions for further
study, if any, will be indicated.


33
ANNEX 2
LIST OF PERSONS MET
BANGLADESH (August 27-September 6, 1994)
Mr. M. Lutfullah Majid, Secretary, ERD
Mr. M. Irshadul Haque, Secretary, Ministry of Education
Mr. A. H. Mofazzal Karim, Secretary, Ministry of Commerce
Prof Dr. Wahiduddin Mahmood, Dhaka University
Dr. Zaid Bakht, Senior Research Fellow, BIDS
Mr. Debapriya Bhatacharya, Research Fellow, BIDS
Mr. Abu Abdullah, Research Director, BIDS
Mr. C.K. Hyder, Secretary General, Metropolitan Chamber of Commerce
& Industry
Mr. Patrick J. Vath, Financial Sector Region Project Team
Mr. Forrest P. Cookson, Financial Sector Reform Project Team
Dr. Abdur Rab, Consultant
Mr. Slaheddine Khennissi, Resident Representative, IMF
Dr. A. H. Sahadatullah, Ex-Member, Planning Commission
Mr. Saeed A. Rana, Head, Agriculture, RMB
Dr. Tawfiq-E-Elahi Chowdhury, Secretary, Statistics Division, Ministry
of Planning
Mr. A.H.M. Abdul Hye, Secretary, Ministry of Industries
Dr. Muhiuddin Khan Alamgir, Chairman, Tariff Commission
Dr. A.K.M. Masihur Rahman, Secretary, Railway Division, Ministry
of Communication
Mr. Arun Banerjee, Head, Infrastructure, RMB
Mr. Owaise Saadat, Head, Industry and Finance, RMB
Prof Rehman Sobhan, Chairman, Centre for Policy Dialogue


34
Mr. Al-Hussainy, Ex-Chairman, Public Service Commission
Dr. Phillip Gowers, Head, Population and Health Office, RMB
Dr. Gholan Kibriya, Former Secretary of Finance
Mr. Hafeezuddin Ahmad, IFC Country Coordinator
Mr. Md. Faizue Razzaque, Secretary, Ministry of Energy &
Mineral Resources
Dr. Md. Yunus, Managing Director, Grameen Bank
Mr. G.H.P. van de Linden, Resident Representative, Asian
Development Bank
Mr. Mahbubur Rahman, President, FBCCI
Dr. Akbar Ali Khan, Chairman, National Board of Revenue
Mr. M. Morshed Khan, Special Envoy to the Prime Minister for
Private Sector
Professor Muzaffer Ahmed, Dhaka University
Mr. Islamuddin Malik, Secretary, Ministry of Food
Mr. Nasimuddin Ahmed, Secretary, Finance Division
Mr. Mahfuz Anam, Editor, The Daily Star
Dr. Nuimuddin Chowdhury, Consultant, IFPRI
Mr. John Swanson, Chief, Division of Food, USAID
Mr. Md. Akhter Ali, Secretary, Ministry of Agriculture
INDIA (November 14-December 3, 1994)
Mr. F. Yagci, Senior Economist, RIH
Mr. M. Dailami, Principal Economist, RMI
Mr. J. Khalilzadeh-Shirazi, Director, RMI
Mr. Nelson, Agricultural Adviser, RMI
Dr. Arvind Virmani, Adviser (Policy Planning) Ministry of Finance
Dr. Shankar Acharya, Chief Economist Adviser, Department of
Economic Affairs
Mr. Alfonso Mejia, RMI


35
Mr. Adrian Verspoor, Education Adviser, RMI
Dr. R.V. Ayyar, Jt., Secretary, Education, Ministry of HRD
Dr. A. Bagchi, Director, National Institute of Public
Finance & Policy
Mr. M.D. Kaurani, Jt. Secretary, Agriculture
Mr. V.K. Shunglu, Secretary, Family Welfare
Mr. A.K. Upadhyaya, Jt. Secretary, Power
Dr. Arjun Segupta, Member Secretary, Planning Commission
Dr. Raja Chelliah, Chairman, Tax Reforms Committee,
Ministry of Finance
Mr. Rajiv Kumar, Economic Adviser, Ministry of Finance
Mr. Ajay Dua, Jt. Secretary, Power
Mr. K.S. Sugathan, Jt. Secretary, Health
Mrs. Shailaja Chandra, Jr. Secretary, Health
Dr. S. N. Mishra, Director, Institute of Economic Growth
Dr. D.R. Mehta, Deputy Governor, Reserve Bank of India
Dr. Mahendra Dev, Indira Gandhi Institute of Dev. Research,
Bombay
Dr. P. V. Shenoy, Director, Institute for Social & Economic
Research, Bangalore
Dr. Satish Chandra, Former Director, ISEC, Bangalore
Dr. Sen, Professor of Economics, Institute of Management, Bangalore
Dr. S. Guhan, Institute for Dev. Studies, Madras
Mr. Venkatiramanan, Ex. Governor, RBI, Madras
Mr. Swaminathan Aiyer, Correspondent, London Economist
Mr. Sanjay Baru, Economics Editor, Times of India
Mr. Rakesh Mohan, Economic Adviser, Ministry of Industry
Dr. S. Bhide, Director, NCAER
Mr. Sudarshan, UNDP, New Delhi
Mr. Srivastava, Confederation of Indian Industry


36
Mr. Tulsi Dhar, Asian Development Bank, New Delhi
PAKISTAN (September 11-September 22, 1994)
Mr. R. A. Akhund, Former Secretary, Economic Affairs Division
Mr. V.A. Jafarey, Adviser to the Prime Minister for Finance
& Economic
Mr. W. Byrd, RMP
Mr. Qazi M. Alimullah, Deputy Chairman, Planning Commission
Mr. Nicholas Rosellini, Assistant, Resident Representative, UNDP
Mr. John Blackton, Director, USAID
Mr. Abid M. Hussain, Program Officer, Asian Development Bank
Mr. Yutaka Ohashi, Chief Representative, OECF
Mr. Ashfaq Mahmood, Additional Secretary Incharge, Planning
& Developmen Division
Mr. Fasihuddin, Chief Economist, Planning & Development Div.
Mr. Daud Berg, Former Additional Secretary (Power), Ministry of
Water & Power/Advisor, Private Power Board
Dr. A.R. Kemal, Joint Director, Pakistan Institute of Development
Economics (PIDE)
Ms. Najma Siddiqui, General Manager, National Rural Support
Program (MRSP)
Mr. Tariq Banuri, Executive Director, Sustainable Development
Policy Institute (SDPI)
Mr. A.G.N. Kazi, Former Deputy Chairman, Planning Commission
Mr. Sartaj Aziz, Former Finance Minister
Ms. Shahnaz Kazi, Chief of Research, PIDE
Mr. Zeba Sathar, PIDE
Mr. Saeed Ahmad Qureshi, Former Deputy Chairman, Planning
Commission
Mr. Niaz A. Naik, Former Secretary, Economic Affairs Division


37
Mr. Gulfraz Ahmad, Former Chairman, Oil and Gas Dev. Corp.
Mr. Muzaffar Mahmood Qureshi, Secretary, Ministry of Population Welfare
Dr. Muhammad Arif, Chairman, Bank of Punjab
Prof Anjum Nassem, Lahore University of Management Sciences (LUMS)
Mr. Najam Sethi, Chief Editor, The Friday Times
Mr. Sahid Kardar, Director, Systems Private Limited
Mr. Shams ul Mulk, Chairman, WAPDA
Mr. Saeed Ahmed Siddiqui, Chief Secretary, Government of Sindh
Mr. Yunus Khan, General Manager (Pakistan), Deutsche Bank
Dr. Hafeez A. Pasha, Former Minister for Commerce/Director, Applied
Economic Research Centre (AERC)
Dr. Arshad Zaman, Former Chief Economist, Planning Commission
NEPAL (January 12, 1995)
Mr. Y.S. Silwal, Secretary General, SAARC Secretariat
Mr. Prabal S.J.B. Rana, Director, SAARC
Mr. N. Navaratnarajah, Director, SAARC


38
ANNEX 3
IMPACT OF CESW: A CLIENT PERSPECTIVE (BANGLADESH)
SUMMARY
THE FOCUS AND COVERAGE OF CESW
1.    Most interlocutors stated that over time the Bank CESW had covered almost all
the important areas, although there may have not been formal reports produced in all
cases. During the past few years the focus had been mainly on competitiveness and
structural adjustment issues as a basis for achieving accelerated and sustainable growth.
2.    While the CESW had covered most important areas it was seen to be essentially
Bank driven. While it usually had responded well to the country's felt needs one or two
interlocutors said that the Bank had a tendency to follow development 'fashions" in
programming its CESW. The agenda in some of these areas was given by the Bank and
insufficient regard was paid to country conditions.
3.    In general there was satisfaction expressed about the consultation with the
government on the conduct of studies and the review process. In particular the process
for the CEM was picked out as fully consultative. However, it would appear that the
government's role is more or less passive: it reacts to Bank initiatives on CESW.
4.    There was universal support for circulating the rolling 3 year CESW program to
the government so that it could give its comments on studies it considered to be of
greatest priority and suggest additions and or deletions. The circulation of issues papers,
in draft, or even after they were finalized was also considered to be useful.


39
5.    Interlocutors did identify areas which had been relatively neglected by CESW.
These included a comprehensive look at human resource development issues, science and
technology, policy and research and development.  Other areas mentioned were
administrative reform and institutional reform and an empirical, on the ground, study of
the impact of reform on specific industrial subsectors. Surprisingly a major neglected area
by the Bank in Bangladesh (both for analysis and operations) was seen to be poverty and
its amelioration.
QUALITY OF BANK CESW
6.    The quality of Bank CESW was widely praised. Several persons commented on an
improvement in the quality of the economic reports in recent years.
7.    Despite this generally positive view about the CESW quality there was no shortage
of strong criticism. First, the Bank has a tendency to draw on many studies but not to
acknowledge debt to others in order to show higher value added. The more open
acknowledgment of others' work would have a positive fallout in increased credibility.
Secondly, the CESW tends to be excessively oriented towards making a case for a
particular position espoused by the Bank. The CESW should be distinct from the
subsequent process of drawing up a set of policy recommendations and dialoguing on
them, and the development of an operation and its conditionality. The CESW should be
objective, show an awareness of empirical shortcomings and of the pros and cons of
different positions, including an explicit recognition of alternative development economics
paradigms. This would increase its creditability and enhance the policy debate. A third
weakness was the relative absence of reference to cross country experience in the Bank
reports, though things had improved on this score in the recent years. However, the Bank
tended to choose cross country experience selectively in order to bolster its case rather
than to inform the analysis.


40
8.    Within the general desire for more reference to cross country experience there was
a special concern with the experience of the neighbouring countries - Pakistan and India
being presented in Bank reports, because of the similarities in economic organization,
institutions and problems. In addition to information on countries in the Region, one
interlocutor made a strong plea for the Bank to take a more aggressive stance on issues of
intra-regional cooperation. The regional economic aspects come out very strongly also in
the discussion of the structural adjustment program in Bangladesh. It is argued that the
trade liberalization in India and Bangladesh has been out of step, to the detriment of
incipient Bangladesh industry.
9.     Sector studies tended to view the sector issues too much in isolation and ignored
the linkages between sectors. This became an issue particularly with operations which
tried to support institutional change or reform in one sector, ignoring similar issues in
other sectors.
10.   The adjustment program was seen as imposed by the Bank and Fund and unlike
India not 'homegrown" The Government interlocutors said that there was no difference
in the objectives between the Government and the Bank, but there were questions about
the targets that were set and about the messages coming out of the experience i.e. how to
interpret the results.
11.   Several lessons relevant for CESW   were drawn by interlocutors.   First,
institutional and administrative constraints have to be factored into the analysis, since they
affect the conclusions, sometimes drastically. Secondly, the anticipated impact of policy
measures needs to be spelled out, including the transmission mechanisms from the
measures to the results, perhaps with the use of simulation models which integrate the
various elements of the analysis. Thirdly, when the measures are implemented, the effects
of the policies should be investigated on the ground and fed back into program design.


41
12.   The relations between the Bank and the government in the power sector were the
subject of much comment and complaint. The lack of progress on sector problems had
resulted in a cessation of Bank lending for the past 4 years. The absence of Bank
operations in power was decried by several bureaucrats as seriously damaging Bangladesh
development prospects.
13.   The review of the Annual Development Program done by the Bank as part of the
Servicing for the consortium was also the subject of negative comments. There seems to
have developed an obsession on the part of both donors and the Government on the
expenditure ratio (actual total expenditure in a year as a percentage of total planned
expenditure on ADP) as an index of government performance. This had led to a distortion
in the incentives in Government without necessarily ,making sure that it is a good proxy in
every case for implementation in real terms.
DISSEMINATION
14.   All interlocutors commented on an improvement in dissemination efforts in the
past few years. The initiative taken by the past Director of RM. to meet with academics
and businessmen and media and present in public the Bank's views as well as listen to their
views on economic matters was generally welcomed as having served a useful purpose.
The new policy on the release of gray cover report was also welcomed. To increase the
effectiveness of the seminars the Bank had to decide what was the objective of the
seminars; were they aimed primarily at dissemination-getting across the Bank's point of
view, or was the objective to engage in (and foster) a genuine debate on the issues and the
analysis and recommendations. The seminars conducted by the IMF were said by one
person to have been more successful because the Fund was in control of the agenda. It
had prepared brief documentation for it and secured a higher level of government
attendance for the whole period of the seminar. The only journalist interlocutor felt that
to get adequate media attention it would be useful to have brief notes on the issues in


42
layman's' language. This would help secure greater publicity because the Bank report was
to voluminous and difficult to digest and translate into newspaper stories.
COLLABORATION
15.   The Bank has used local consultants (both academics, retired bureaucrats as well
as government counterparts) to a significant extent, in economic but more so in sector
work and project related studies.  The use of nationals in CESW  was seen as
strengthening the understanding of local institutional and cultural factors, but also helping
in the dissemination of the Bank's views within the country. Their association with the
work may also increase the credibility of the work with the public. One interlocutor listed
two negatives for using local consultants - (a) their (political) biases, which may not
always be well known and; (b) the danger that their association with the report would
devalue the analysis in the eyes of the Government.
16.   The Bank has not viewed or pursued collaboration with local persons as a capacity
utilization and strengthening enterprise. The large volume of economic and sector analysis
provided by donors and may have a negative impact on local analytical capacity. There
was an erosion of analytical and policy formulation capacity in the government and the
country over time.  A greater focus by the Bank on capacity building through
collaboration was thus very important. This required (a) more active participation of local
consultants and counterparts on missions and in drafting of the report; (b) more efforts at
doing joint studies and contracting studies with local research institutions; (c) Bank
support for including researchers and academics in the committees established by the
government to monitor the implementation of specific reforms. Local consultants with
teams set up under Technical Assistance operations have done good work, often in
association with expatriate consultants.


43
RESEARCH INSTITUTE AND NETWORKING
17.   There is virtually no networking among researchers and institutions within the
country, except on personal terms. There is similarly practically no interaction with
researchers and institutions in other South Asian countries. Several academics argues that
the first priority was to increase networking among researchers within the country.
18.   There was a very negative reaction to SAARC as an umbrella for promoting
networking from two senior academics ('SAARC is totally government; totally
bureaucratic, it is totally devoid of economic content?) Three suggestions for promoting
regional networking were mooted: (a) short term (2-3 months) exchange visits of
scholars; (b) more work on regional issues e.g. intra regional trade, the restructuring of
duties, poverty; (c) a research project covering several countries a la Anne Krueger's multi
country research projects. One suggested topic was the impact of the Uruguay Round on
these countries. It was also stated that general purpose networking was not very useful.
It should be structured around specific areas of interest or common platforms.
COORDINATION AMONG DONORS: DIVISION OF LABOUR
19.   Discussion confirmed that there were no significant differences of views among
donors and that a mechanism existed for anticipating problems and sorting out difficulties
in the close contact between field offices. The institution of the local consultative group
(LCG) which not only met before and after the Paris consortium meeting, but also
approximately on a monthly basis in Dhaka, to discuss different issues was also
contributing to such coordination.
20.   Both ADB and USAID are involved in a large number of studies mostly under
T.A. However, there was believed to be a minimum of duplication with the Bank. Most
of the studies were being done by expatriate and local consultants and were focused on
fairly narrow and specific issues. These often were part of the background work used by


44
the Bank for its own more synthetic and integrated view of sectors and the economy. The
CEM was seen clearly by the two agencies as the Bank's responsibility to the consortium,
and does not duplicate any thing produced by other donors. It is prepared with adequate
consultation with the other donor agencies. However, in sector work interlocutors of
both donors agreed that a more systematic exchange of information on studies, planned,
on going and completed, could improve both the knowledge basis and enhance
coordination. It was felt that one meeting of the LCG should focus on the subject of
improving exchange of information of studies. A rather encouraging example of donor
coordination as well as growing government interaction and contribution (capacity
development) exists in the population sector where a series of projects involving a large
number of donors have evolved into a program of sector support and expanded to cover
associated areas like health and nutrition.


45
IMPACT OF CESW: A CLIENT PERSPECTIVE (BANGLADESH)
INTRODUCTION
1.    The Bank has had an important role in supporting economic development in
Bangladesh since the country became independent in 1971. The country has the highest
density of population relative to land among all the South Asian countries and perhaps the
lowest capita income and the highest proportion of absolute poor. Bangladesh is an IDA
country and has a high degree of dependence on external assistance. External aid financed
about the third of total imports in 1990-1993. CESW has been an important part of the
Bank's country assistance strategy. During the past six years (1989-1994) CESW on
Bangladesh averaged about 12.3 staff years annually, of which - 72% was accounted for
by sector work and the rest by economic work. (Excluding 1994, the average figures are
9.7 staff years and 67% respectively).
2.    The major clients for Bank CESW in Bangladesh as in other countries, include (a)
the Bank itself (to meet its operational and country dialogue requirements); (b) other
donors most of whom rely almost totally on the Bank for the long run, macro policy and
sectoral strategy perspective and for judgments on economic performance; (c) the
Government of Bangladesh; (d) academics and researchers in Bangladesh and abroad and;
(e) journalists and opinion makers and the ordinary citizen of the country. Particularly
with the advent of democracy and a free press in Bangladesh the importance of the client
other than the Government has become greater.
THE FOCUS AND COVERAGE OF CESW
3.    Most interlocutors stated that over time the Bank CESW had covered almost all
the important areas, although there may not have been formal reports produced in all
cases.  During the past few  years the focus had been mainly on international
competitiveness and other structural adjustment issues as a basis for achieving accelerated


46
and sustainable growth. This was considered to be the right priority by most Government
interlocutors. For example the focus on labour market issues was mentioned as an
example of seizing on a important issues - 'labour issues have become essential with
democracy and the heightened and very irresponsible agitations by trade unions" said a
retired bureaucrat. There has been a relative lack of formal sector reports, particularly in
infrastructure. however, this does no indicate a neglect of sector work but only that it has
not been pulled together and presented in formal reports. A transport sector report went
into gray in 1991 and an update is also in the works. In other sectors, analysis was done
and issues followed up in the context of operations. In some cases e.g. industry, no
comprehensive study appears to have been done, but a Jute sector review (1992) and
manufacturing public sector enterprises (1987) and privatization (1990 an 1994) together
with the documentation for the industrial sector adjustment loan and the CEM's review of
general policy issues would appear to indicate a fairly large amount of CESW relevant to
the sector. Similarly, in agriculture though the formal reports seem to have been focused
on food grains (1990 and 1992) a number of other initiatives are in the works. For
instance an agricultural issue paper has been under preparation for about two years. An
agricultural credit issues paper was also prepared. With impending food self sufficiency,
the issue of crop diversification has been addressed by a number of donors e.g. the Dutch,
CIDA. However, the Bank has now started looking more broadly at agricultural
diversification (as distinct from crop diversification) covering crops, livestock, fisheries
and forestry. The work on this study has proceeded slowly partly because a major multi
donor effort (the Flood Action Plan) since 1987-88 coordinated by the Bank will hopefully
eventually provide a water-master plan which will have an important bearing on the future
shape of the diversification issue. Subsector studies e.g. a agriculture study and a fisheries
sector study have also been done by the Bank. Here too, it would thus appear, that tough
a lot of work has been done and is underway, a comprehensive (an interlinked) overview
of the key sectors is lacking. As was explained by one senior interlocutor in the RMB:
'Bank reports do come out after a long gestation period by they turnout to be
comprehensive rather than limited to predefined areas". The synthesizing and integrated
view of the Bank CESW was appreciated by a major donor representative: 'The Bank is


47
able to pull together in a visible and credible way a lot of different studies and bring it to
attention" This more than compensated for the long gestation period of some studies
(and the absence of a comprehensive view during that period).
4.    While the CESW had covered most important areas it was seen to be essentially
Bank driven. While it usually had responded well to the country's felt needs one or two
interlocutors said that the Bank had a tendency to follow development 'fashions" in
programming its CESW e.g. the focus on privatization in recent years, on gender and
currently on environment and resettlement issues. These issues were fashionable because
international development experience has shown that they were important, and often
neglected by policy makers. Some interlocutors realized this. The problem in their views
was that the agenda in some of these areas was given by the Bank and insufficient regard
was paid to country conditions. The guidelines on resettlement were given as an example:
resettlement issues in a densely populated country like Bangladesh 'Without an inch of
unused land" were different from those of other less densely populated countries. Bank
guidelines do not recognize this adequately. The resettlement guidelines should also take
account of the nature of the project. ('The resettlement issues for the Jamuna Bridge are
very different than those for the Narmada. You should not apply the same guideline').
As senior R.M. staff point out this comment is uniformed about the principles of Bank
policy on resettlement and its application in Bangladesh. The basic principle that no one
should be made worse off because of a development project and that within a country a
common approach should be followed have been sought to be maintained with project
entities in the country. In fact the Bank interventions in s the resettlement area, they point
out, has 'brought to light the very inadequate attention the GOB has traditionally given to
peoples adversely affected by public construction projects".
5.    In general there was satisfaction expressed about the consultation with the
Government on the conduct of studies and the review process. In particular the process
for the CEM was picked out as fully consultative. The mission usually visits in October
when the thrust subject for the year is indicated. At the end of the mission the Aide


48
Memoire and the wrap up meeting give the Government an opportunity to be aware of the
Bank's views and issues and to give reactions. The draft green cover is discussed by
another mission in February or March. This review covers all the bases and provides an
opportunity for the Government to react. One interlocutor stated that changes between
the green cover and gray showed that the Bank did take account of government's
comments. Similar views were expressed about sector work, though only by one or two
interlocutors. However, it would appear that the Government's role is more or less
passive: it reacts to Bank initiatives on CESW. No once could recall any Bank study
undertaken as a result of a Government request though one interlocutor stated that the
Jute sector study was undertaken 'himost" at the Government's request (whatever that
may mean). The limited readership of the Bank's reports was mentioned by Government
interlocutors. One said of the CEM that not more than 12 persons read the whole
document in Government. Most read parts. For senior people a brief summary was
prepared by middle level officials.
6.    There was universal support for strengthening the existing consultation process by
the circulation of the rolling 3 years CESW program to the Government so that it could
give its comments on studies it considered to be greatest priority and suggest additions
and or deletions. The circulation of issues papers, in draft, or even after they were
finalized was also considered to be useful.
7.    Interlocutors did identify several areas which had been relatively neglected by
CESW. One was a comprehensive look at human resource development issues, which 'hs
the Bank's own studies show is crucial for development" (A vocational and technical
education review was done in 1989 but an HRD strategy for Bangladesh has yet to be
outlined). A second area mentioned by interlocutors was science and technology and
research and development. Capabilities in these areas would require 20 years to attain and
only the Bank could address the issues from a long term perspective. A third area for
study, again mentioned in several meetings were administrative reform and institutional
reform. One interlocutor put it as follows: 'The Bank has shield away from addressing


49
issues related to governance and implementation which are the real bottlenecks which are
impeding progress today" A fourth area mentioned was an empirical, on the ground,
study of the impact of reform on specific industrial subsectors. As one person said that
'We could do more analysis of where policy gaps remain, what is the experience with
measures taken and what are the midterm corrections required". (See below).
8.    Surprisingly a major perceived neglected area by the Bank in Bangladesh (both for
analysis and operations) was seen to be poverty and its amelioration. This was mentioned
by several interlocutors (including at least two in senior Government positions). One of
them stated that 'The Bank's contribution to poverty amelioration is minimal" The Bank
does not seem to have produced a comprehensive (integrated) study of poverty in
Bangladesh. (The interlocutors did not seem to be aware of the Poverty Assessment done
a few years ago and the current update). Nor does it seem to have initiated in depth micro
studies. One interlocutor said that the Bank had not focused directly on rural poverty
though it had done a rural development study (1982) and projects. On the other hand
another felt that the Bank had viewed only the rural poverty dimension and neglected
urban poverty, which, given the very high rates of migration and possibilities of social
unrest, was more important. The initiator of the famous poverty alleviation initiative in
Bangladesh was, as is well known, a vehement critic of the Bank. He gave me a copy of
his letter to Mr. Preston dated November 17, 1992 criticizing and asking for clarifications
about the Bank's poverty focus. In his view it was important to do a study of the Bank's
projects in Bangladesh during the last 20-25 years with a view to assessing their impact on
poverty. He went on to argue that the Bank does not have a strategy to deal with the
really poor. This point was also stated by an interlocutor in Government who stated that
the Bank's rural development projects had helped only those with land. 'There was
nothing for the 35% landless"  These negative perceptions of the Bank's poverty
amelioration role in Bangladesh cannot be simply dismissed as biased, or countered by
saying that every Bank intervention has a poverty impact or that the Bank's CAS gives
priority to poverty amelioration.


50
QUALITY OF BANK CESW
9.     The quality of Bank CESW was widely praised, particularly by other donors and
by Government interlocutors and even by one or two strong critics in academic and
research institutes. Several of them commented on an improvement in the quality of the
economic reports in recent years. However, there was a difference of view on the practice
of having a major them in the CEM each year e.g. resource mobilization, external
competitiveness, implementation of structural reforms. One group liked the idea of a
'thrust area" different in each CEM, with detailed discussion. Another group argued that
it led to a discontinuity of focus and may lead to the misconception that the theme of 2
years ago e.g. resource mobilization had been addressed and ceased to be a central
concern. As one senior interlocutor said: 'bertain issues are discussed but then they are
not pursued. Last year it was X, this year it is Y, next year it will be Z. Meanwhile for
long periods there is no discussion on topic X" What was needed, he went on, was a
comprehensive (not necessarily long) view of the economic performance and prospects,
and key issues and problems. The subject matter for the thrust area could be in an
Annexure or a separate special report. Specific studies received high praise for analytical
quality e.g. the taxation study (1989) and the previous two CEMs (1993, 1994). The
sector reports were also considered to be of good quality, though most academic
interlocutors said that they were not familiar with the sector reports since they were less
widely available. One person from BIDS suggested that it would be useful if the essence
of sector studies was available in the CEMS.
10.   Despite this generally positive view about the CESW quality there was no shortage
of quite strong criticism particularly among the academic and research institutions. As
regards technical flaws, the Food Security report (1992) was criticized for (a) mistaken
conclusions about the economics of wheat in Bangladesh and; (b) the choice of the wrong
international price as relevant for domestic pricing policy, leading to a wrong estimate of
effective protection for rice production.  This example was mentioned by several
interlocutors, even those in Government who welcomed the report as timely and correct in


51
its assessment that Bangladesh was approaching food self sufficiency and hence a
watershed in the approach required to agricultural development issues. Other criticisms
were of a more general nature and perhaps more significant. First, one eminent academic
interlocutor felt that the greatest strength of the Bank's CESW was the ability to
synthesize and present a systematic picture based on other work in the country by
academics and other-agencies. however, 'the Bank has a tendency to draw on many
studies but not to acknowledge debt to others in order to show higher value added" The
more open acknowledgment of others' work would have a positive fallout in increased
credibility. Secondly, the CESW tends to be excessively oriented towards making a case
for a particular position espoused by the Bank. A strong critic put it uncharitably: 'You
are ideologically driven. You have a point of view and you will prove it by selectively
excluding evidence with is inconvenient" As an example he cited Prof Waheeduddin's
study of the impact of the reform program which concluded that it led to stagnation of
investment. 'The study was locked up" This person also claimed that in the recent
privatization study there were 60 unsubstantiated assertion statements in the first 26
pages. He argued that the general point that the Bank is making is the following: the
efficiency of industrial sector is being compromised because real wages are increasing
because of Trade Union activity while productivity has remained low and even declined
and that this has compromised investment activity. This argument is based on the jute
industry, he said. The arguments need to be supported by empirical analysis of man days
lost in labour disputes and the link with productivity, sector by sector because what is true
of jute or textiles may not be true of capital intensive industries. A more restrained
academic interlocutor made the same point by saying that the formal CESW should be
distinct from the subsequent process of drawing up a set of policy recommendations and
dialoguing on them, and the development of an operation and its conditionality. The
CESW he felt should be objective, show an awareness of empirical shortcomings and of
the pros and cons of different positions, including an explicit recognition of an alternative
development economics paradigms. This would increase its credibility and enhance the
policy debate. As a consequence the policy conclusions in formal CESW reports would
have to be more nuanced and qualified. The CESW would then be the basis of more


52
sharply focused and special case pleading for a certain line of action, worked out in detail
in informal reports and in the work on operation.
11.   A third weakness which was mentioned by many interlocutors was the relative
absence of reference to cross country experience in the Bank reports, though things had
improved on this score in the recent years. One interlocutor, who has followed CESW for
a considerable period, said that cross country experience had been referred to in only three
cases: (a) in a study of fertilizer subsidies (1985) comparative data was given on India and
Pakistan as an argument for raising the fertilizer price; (b) in the jute sector study,
productivity in Bangladesh was compared with other countries and shown to be lower
and; (c) in the 1992 CEM study of external competitiveness the movement of exchange
rates was compared with India and Pakistan However, he went on to caution that cross
country experience is not easily generalizable. For example in the case of fertilizers there
may be different climatic, soil and cropping patterns explaining the need for a different
pricing policy, or in the case of jute the lower productivity could reflect structural factors
(e.g. strikes, overmanning and lack of adequate 0 and M). Thus the special situation of
each country needs to be kept in mind and facile judgments on the basis of comparative
cross country information avoided. A further point made by another interlocutor, was that
the Bank tended to choose cross country experience selectively in order to bolster its case
rather than to inform the analysis. The use of Mexico and Chile as countries with
successful privatization programs without mentioning other countries where privatization
had failed gave a false picture of the problems and likelihood of success with privatization.
12.   Within the general desire for more reference to cross country experience there was
a special interest in the experience of the neighbouring countries - Pakistan and India -
being presented in Bank reports, because of the similarities in economic organization,
institutions and problems. One interlocutor referred positively to the successful progress
of privatization in Pakistan, and the experience in telecommunication. 'We can relate to
that information in a more understandable way than being told about Chile and Mexico,
countries with which we have little familiarity" In addition to information on countries in


53
South Asia, one interlocutor made a strong plea for the Bank to take a more aggressive
stance on issues of intra-regional cooperation. He said the Bank is too risk averse. It
should be more of a risk taker. 'National boundaries are disappearing and the regional
dimension is becoming more important world wide. The Bank should try to promote this
trend in South Asia. The benefit to be gained from more regional cooperation should be
highlighted. The Bank should not shy away from this area because of the political
problems between some countries" The regional economic aspects came out very
strongly also in the discussion of the structural adjustment program in Bangladesh. The
argument was that the trade liberalization had progressed much further in Bangladesh than
in India where imports of finished goods were still banned. As a result of the reduction in
tariffs on finished goods in Bangladesh, Indian manufactures (fluorescent bulbs, electric
goods etc.) have flooded Bangladesh while domestic manufactures cannot compete in
India. The liberalization between the two neighbours has been out of step, to the
detriment of incipient Bangladesh industry. One interlocutor made a specific request for a
study of the effects of the Uruguay Round on the three large South Asian countries. He
referred to the fact that the Ford Foundation had recently supported country studies of
governance issues in South Asia (through the Centre for Policy Research in New Delhi)
and earlier a study of public enterprise in several South Asian countries which provided
the basis for very useful cross country understanding on these matters.
13.   A fourth general weakness of CESW pointed by interlocutors both in government
and outside was with reference to sector studies. These tended to view sector issues too
much in isolation and ignored the linkages between sectors. This became an issue
particularly with operations which tried to support institutional change or reform in a
sector, ignoring similar issues in other sectors. One sector cannot move too far ahead of
others, without being pulled back, they argued. One person mentioned the fact that in the
gas sector the concerned enterprises had been given the freedom to raise prices
periodically within a maximum limit, while other energy enterprises cannot do so. It was
important that this measure be generalized otherwise it many not survive long, he argued.


54
CESW AND POLICY AND INSTITUTIONAL REFORM
14.   A wide range of arguments were raised with reference to the Bank's operations by
interlocutors even though they had been clearly informed that the present mission was on
Bank CESW and not operations To some extent this reflected the close association in the
minds of interlocutors of CESW and operations, particularly in the case of sector work.
however, particularly for Government interlocutors it also reflects the fact that their major
concern in relations with the Bank relates to operations. The private sector interlocutors
also focused on the structural reform which is where Bank activities affected them more
directly. The questions raised were primarily about the pace and sequencing of the
reforms and the operational stance in specific sectors. The adjustment program was seen
as imposed by the Bank and Fund and unlike India not 'homegrown" The Government
interlocutors said that there was no difference in the objectives between the Government
and the Bank, but there were questions about the targets that were set and about the
messages coming out of the experience i.e. how to interpret the results. Moreover, they
believed that the Bank did not give enough attention to their concerns as the program
unfolded. A senior interlocutor said 'Sometimes the Bank is not ready to change or to
accept views other than its own. Inflexibility reduces the value, relevance and usefulness
of their report. This is an evolving situation. Response to our views should be more
positive and constructive. This is a kind of a partnership. There had to be interaction and
mutual learning" One academic interlocutor described the situation as one in which the
division of labour is excessive. 'The analytical work is done by the World Bank, and the
policy implications are pursued through lending. The Government role is only to receive
the recommendations and to look at their political feasibility. The technical portion in this
division of labour is with the World Bank.    The role of the Government is
implementation"  More specifically the following problems were raised about the
structural adjustment experience. First, the pace of trade liberalization has been excessive
and competition from India has resulted in difficulties for domestic industry (see para 12
above). At the same time one interlocutor (a consultant) argued that greater emphasis in
the tariff reform should have been put on achieving a more uniform tariff structure,


55
resulting in more uniform levels of effective protection. Despite tariff reduction the
structure of incentive continues to be distorted excessively,
15.   Secondly, while the reform program has succeeded in securing macro stability it is
not much of an achievement since macrostability is associated with a 'precariously low
level of investment" The stagnation of investment and of growth, and in particular the
failure of private investment to respond is explained by the Bank reports as essentially due
to the imperfect and incomplete implementation of the reforms and the remedy suggested
is an acceleration of the current reform process. This conclusion has not been (perhaps
cannot be) adequately substantiated. For example the stagnation of private investment
was seen by different interlocutors as resulting from different causes and therefore
requiring different corrective policies and different time perspectives. Some blamed it on
labour difficulties, others on the uncertainties created by the rapid trade liberalization, and
yet others on the lack of confidence on the part of businessmen about the Government's
commitment for carrying through the program, partly reflecting slow progress in key areas
like privatization. One interlocutor blamed the lack of an entrepreneurial tradition in
Bangladesh, which will take time to develop. A major difficulty referred to by several
interlocutors was that while the objective of private sector development had been stated
by the Government, things had not changed on the ground. The administrative and legal
framework had yet to be modified. One person gave the example that while energy had
been opened up for private sector investment in power generation the existing legislation
made it illegal to sell privately generated power. Another pointed out that the commercial
laws, e.g. company legislation and bankruptcy legislation have been revised but not yet
approved by the Government. (The bankruptcy law has been before the cabinet for 14
months but is yet to be approved). Thus one can take one's pick of explanations for
private sector stagnation. The important point is that some empirical work is necessary to
ascertain to what extent different factors are crucial. It is not constructive and viable to
say that action on all the fronts listed above is necessary-questions of priority, sequencing,
and time frame still arise. One expatriate consultant stated that there was also a question
whether the issues central to the Bank's view were really the central ones. The Bank, he


56
said: was arguing that (a) ADP expenditure should be increased; (b) the quality of public
investment should be raised; (c) protection reduced; (d) the bureaucratic hindrances and
controls reduced and; (e) financial sector efficiency increased to stimulate private
manufacturing industry which would lead to rapid and sustained growth. For him the real
issues inhibiting private manufacturing were (a) the exchange rate; (b) high real interest
rates and; (c) the uncertainty resulting from the tariff liberalization. More generally in this
context the finding of the Bank's general studies of structural adjustment programs has
been that in many countries while exports have responded, investment has tended to
stagnate. The reasons for this are not adequately understood. Cross country studies; thus
also raise doubts about the message the Bank is trying to market in Bangladesh. And
some of academic critics are aware of this. (One of them referred to his discussions with
Ram Agarwala of the Bank, one of the early 'gurus" of the 'distortionary index" approach
to explaining country economic performance and his currently heterodex views on
structural adjustment programs). One interlocutor in BIDS said that the Bank is not
totally rigid in its views, but it learns with a time lag, and gave the example that in the
1980's the Bank was arguing that the structural adjustment was working while academics
were more skeptical. Now the Bank, he felt, was coming round to their point of view.
But it still went on with the same paradigm for adjustment, while acknowledging that it
had not worked. he summed up his view: 'We disagreed on design, we disagreed on
whether it is working. Now you agree that is not working. But you stick to the original
design".
16.   The only issue about sequencing raised by two or three interlocutors related to the
sequence of reforms in the financial sector and the real sector (e.g. laws, institutions,
administration etc.). One person argued that the reform of the financial sector should have
waited for reform of the real sector while another argued the reverse. Perhaps this only
points to the fact that progress in both areas was necessary and that the Bank was right in
addressing both together through FSAC, ISAC and PSAC.


57
17.   Several lessons relevant for CESW   were drawn by interlocutors.   First,
institutional and administrative constraints have to be factored into the analysis, since they
affect the conclusions, sometimes drastically. For example, said one interlocutor, in
Bangladesh the tax authorities fail to collect taxes from local companies while fUll taxes
are paid by foreign companies (a study showed that taxes were I to 2% of sales for
domestic companies and 5% of sales for foreign companies). This discourages foreign
investment and also reduces tax revenue. Another gave the example that raising energy
prices increased the reward from Stealing" power. Thus the financial outturn was less
and system losses higher than anticipated. Secondly, the anticipated impact of policy
measures needs to be spelled out, including the transmission mechanisms from the
measures to the results, perhaps with the use of simulation models which integrate the
various elements of the analysis. Thirdly, when the measures are implemented, the effects
of the policies should be investigated on the ground and fed back into program design. A
study of the impact of the tariff reform on different industries and the compensatory
measures that were required to help those most adversely affected to adjust, was
considered an urgent requirement. One critic stated that 'since 1986 trade policy reform
has been at the centre, But the Bank has not done a study or developed a program to help
local producers to deal with competition through technology, finance etc.
18.   A number of specific pieces of CESW were mentioned for the impact they had in
raising awareness of issues and outlining and approach to tackle them, and which were
subsequently followed up in operations. The tax study (1989) was praised as technically
sophisticated ('backed by a general, equilibrium framework'), timely and relevant and
having actionable recommendations on income tax and VAT which were followed up.
Similarly, the public expenditure study was picked out as being very relevant when it was
undertaken ('in the last years of the Ershad regime there was no fiscal discipline'). It
focused on the need for a strong resource mobilization effort, restraining current
expenditure and restoring discipline to the fisc, all key issues at the time. With the change
in Government the official stance would have changed in any case, but the report probably
contributed, was one view. Similarly the focus on implementation issues in the CEM


58
(1993) and on competitiveness and the labour market in more recent studies were all
indicative of the Bank being very much on to the key issues. In sector work, the studies
on minor irrigation and rural development in the early eighties were praised for
underpinning operations in those areas and the successful transition to a more private
sector and market oriented framework in agriculture generally (private trade in fertilizer,
foodgrains and irrigation and other agricultural equipment and the elimination of fertilizer
subsidies) was driven by Bank sector work and operations. The report on the jute
industry (1992) was followed through with a jute sector adjustment credit, though the
operation was criticized by one interlocutor as having too much of a focus on financial
restructuring and not adequately dealing with technological and economic issues. A
report on the financial sector in (1987) was the background for FSAC which was also
supported by a USAID T.A. project. The operation resulted in a more market based
interest rate system, a reduction of interest rated subsidies, improved capitalization of
commercial banks and better classification and recovery of loans. A member of the
U.S.A.I.D. T.A. team supporting the financial reform felt that the delay in enacting legal
reforms-company law, bankruptcy legislation - had adversely affected the financial reform.
In his view, there was a real question in Bangladesh whether arrears on loans reflected
poor investment decisions or just deliberate avoidance of payment by the borrowers.
('The borrower doesn't see the need to repay because the legal system is weak and his
ability to negotiate new loans is not seriously impeded by default'). He also felt that the
team had been working very much on its own without enough support from the Bank
which would have added to their clout and effectiveness.
19.   The ISAC-2 was not based on any single major piece of CESW   but brought
together experience of ISAC-1 and conclusions on trade policy and private sector
development in general economic work. The ISAC was criticized by Government
interlocutors as being too much of a Christmas tree. There were 26 conditions of
effectiveness and the reform effort encompassed so many areas that the Government was
finding it difficult to monitor its implementation. ('There are 1000 conditions" said a
senior MOF interlocutor). That the ISAC-2 was ambitious was acknowledged by a senior


59
RMB staff. He accepted that from the Government angle it has dissipated their effort and
exceeded their capability for carrying out reforms. However, he concluded. 'It has been
the most difficult-but the most significant" One critic argued that most of the institutional
and procedural reforms initiated were 'bmpty shells" This comment related to the export
promotion bureau and even to the high level Board of Investment. The Customs
Department was still as difficult and inefficient as ever and some of the legal reforms were
yet to be enacted. One former bureaucrat said that the Bank did not take adequate
account of 'bureaucratic drag" and another (in the private sector) said that the politicians
had changed but the bureaucrats hadn't and this undercut the institutional and procedural
changes.
20.   The relations between the Bank and the Government in the power sector were the
subject of much comment and complaint. As pointed out by a senior RMB staff, in
contrast with the transport sector where a comprehensive sector study existed and
operations were well linked with its recommendations, in energy the sector work was
done in the context of project preparation and supervision. The lack of progress on sector
problems had resulted in a cessation of lending for the past 4 years, as well as no formal
sector work in power. However, the Bank continued to be well informed about power
sector issues and carry on an active dialogue to support power sector reform. However,
despite this the absence of Bank operations in power was decried by several bureaucrats
as seriously damaging Bangladesh's development prospects. In their perception: (a) the
Bank management had chosen to focus on 'peripheral" issues e.g. system losses from
power theft to the detriment of the fundamental issues - the development of power
supplies, without which the growth of the country would be jeopardized; (b) there is a
difference between the Government and the Bank's perception of whether there has been
adequate progress in improving the quantitative indicators of sector performance. On
interlocutor argued that the 'tystems losses had increased to 42% and after great effort we
brought them down to 34% where they have stood for the past 6 months. We believe that
we have done much to contain the problem, even though the losses figure has not gone
down further. However, your people disagree" Incidentally the ADB judgment on this


60
matter is closer to that of Government. (See par 37 below); (c) the Bank also shares some
of the blame for the failure to achieve financial resources generation targets in the sector.
All the blame should not go to the Government. The Bank's analysis did not take
adequately into account the fact that raising tariffs does not automatically translate into
additional revenue since it increases the incentive to V~eal" power. More focus should
have been paid to strengthening the billing and collection systems and the legal and
administrative system to check this from happening; (d) the state has to continue to be in
power generation in a country like Bangladesh. Since investments are lumpy and capacity
has to be built ahead of demand and since foreign private sector investment is likely to be
available only after a lag, the Bank should continue to finance power generation. The
Government does not have the resources or capability to go ahead on its own. ('We have
taken some difficult decisions-tariffs, deregulation, management of public finance,
monetary policy etc. The country needs help in raising investment in a key infrastructure.
The Bank should help'). A senior RMB staff member reacted negatively to this litany of
complaints, considering them to be at best 'half truths". The basic sectoral issue in his
view was one of 'governance" - the government and the bureaucrats have simply failed to
enforce rules and regulation which already exist, year after year. It would be irresponsible
to take a position on this matter following a very brief visit. But given the fact that the
power sector problems of a similar nature appear to plague the other countries, a general
look at the experience with power in South Asia may be worth considering.
21.    The review of the Annual Development Program done by the Bank as part of the
servicing for the consortium was also the subject of negative comments by several
Government interlocutors. The initial motivation of the exercise was presumably to speed
up bureaucratic hurdles and decision making which was hindering implementation,
delaying projects and resulting in embarrassingly large undisburred aid pipelines. This
justified concern may have led to a Frankenstein. There seems to have developed an
obsession on the part of both donors and the Government on the expenditure ratio (actual
total expenditure in a year as a percentage of total planned expenditure on ADP) as an
index of Government performance. This had led to a distortion in the incentives in


61
Government which reward a higher expenditure ratio, without necessarily making sure
that it is a good proxy in every case for implementation in real terms. The Government
has transferred items from the current budget to the A.D.P. (e.g. expenditure on school
repairs) in order to show a higher percentage of ADP fulfillment, and there is a lively
discussion whether the achievement rate was 89% or 92% or 94%. The Government
would also like to include TK 500 crores - given as advance payment on the Jamuna
Bridge in ADP expenditure, the Bank would not! In the railways, one interlocutor said,
some projects were completed below expected cost and this was showing up as poor
performance. Another pointed to the fact that there was too much focus on the aggregate
percentage and not enough on the composition of expenditure: the same aggregate figure
could have different implications depending on the sectors and projects where the
shortfalls occurred and the reasons for them. A third interlocutor pointed out that part of
the explanation for slow disbursement was the complicated and time consuming
procedures of donors for disbursement. As evidence he pointed to the fact that the
expenditure ratio for non aided projects in the ADP was higher than it was for the projects
undertaken with aid. Obviously, this study and its perceived biases, need to be looked at
again.
DISSEMINATION
22.   All interlocutors commented favourably on an improvement in public dissemination
efforts of CESW in the past few years. Several, in Government the private sector and
academia, had favourable things to say about the initiative taken by the past Director of
RMB to meet with them and present in public the Bank's views as well as listen to their
views on economic matters. The effort had been confined primarily to economic work
(CEM) and sector issues were disseminated only to the extent that they were reflected in
the CEM. Seminars on the last two CEMs, one under the auspices of the Metropolitan
Chamber of Commerce and the most recent one conducted by the Centre for Policy
Dialogue were generally welcomed as having served a useful purpose. The new policy on
the release of gray cover reports was also welcomed.


62
23.    A  senior Government interlocutor, was concerned about the fact that the
adjustment program was seen by the public and researchers as imposed by the Bank and
not one developed by the Government. He stressed that public discussion of the program
by the Bank and a better understanding of its rationale and justification would help the
Government implement the reform. In his view, therefore, the priority was public
dissemination and not dissemination within the Government.  Another Government
interlocutor argued for a public seminar on the green cover CEM, when the report was
still in draft on the ground that discussion of the draft would give feedback to the Bank as
well as the Government and could influence the final gray cover. One interlocutor (from a
donor agency) stressed the need for a seminar with the press if the Bank wants to reach
the public.
24.    Two interlocutors raised questions about the two previous seminars. First, the
Bank had to decide what was the objective of the seminars; were they aimed primarily at
dissemination-getting across the Bank's point of view, or was the objective to engage in
(and foster) a genuine debate on the issues and the analysis and recommendations. ('Do
you want to inform, publicize or convince or use it for a brain storming session?'). The
objectives would have implications for the organization, chairing and the persons invited
to the seminars. In this interlocutor's view the recent CEM seminar was conducted and
controlled by the Director of the Center for Policy dialogue whose interests dominated the
seminar. Thus though the session on financial issues was supposed to cover 2 hours it was
condensed to half an hour since discussion of other matters was allowed to extend beyond
the allotted time. Further, the critics of the Bank were given excessive attention which
precluded a balanced discussion. (This was considered to be a plus for the seminar by a
recent member of the RMB economic team: 'We should listen to what they have to say').
The seminars conducted by the IMF were said by one person to have been more successful
because the Fund was in control of the agenda; it had prepared brief documentation for
them and secured a higher level of Government attendance for the whole period of the
seminar. One suggestion was that perhaps the seminars should be organized by the


63
Government and used by them as a opportunity to have a public debate with the Bank. In
this case it could usefully be done at the green cover stage when the Bank mission visits to
discuss the report.
25.    The only journalist interlocutor felt that to get adequate media attention it would
be useful to have brief notes on the issues in layman's language. This would help secure
greater publicity because the Bank reports were too voluminous and difficult to digest and
translate into newspaper stories amidst tight deadlines. The recent initiative by the RMB
of translating the executive summary of the CEM into Bangladesh and giving it to the
press is a welcome initiative considering the fact that of the 50 daily papers in Dhaka
about 90% are language newspapers.
26.    In addition to dissemination to the public (including business) there is the issue of
more effective dissemination within the Government of CESW output. Formal reports
being and technical have a very limited readership. As mentioned elsewhere in this Annex,
an interlocutor judges that only about a dozen persons in Government probably read the
complete CEM. Summaries for higher officials and political level members of the
Government were prepared by middle level technicians. While participation in seminars
and meetings with Bank staff may serve to inform these people about the messages of
formal CESW, there was clearly a role for sharp focused policy briefs based on the CESW
reports to carry the messages to the Civil Servants and politicians in a non-perishable form
and as a means of effective dialoguing.  However, this point was not made by
interlocutors, except the academic who argued for a two stage process in CESW -
balanced reports followed by more special pleading informal reports for policy purposes.
(para 10)
COLLABORATION
27.   The Bank has used local consultants (both academics, retired bureaucrats as well
as Government counterparts) to a significant extent, in economic but more so in sector


64
work and project related studies. One Government interlocutor recalled working on the
minor irrigation and rural development studies in the early 1980s, including drafting parts
of the final reports. The use of nationals in CESW was seen as strengthening the
understanding of local institutional and cultural factors, but also helping in the
dissemination of the Bank's views within the country. To the extent that Government
counterparts were generalists (not technicians), it added a dimension of realism to the
analysis of 'bxperts" on the mission, was also stated by one person. But the counterparts
had to be competent, he added. The setting up of counterpart teams was also seen as
desirable at least partly because the interaction with the Bank mission helped upgrade the
capability and perspective of Government staff According to one senior interlocutor the
Government could not be expected to set up counterpart teams for all studies and the time
such counterparts could allocate to the mission given the pressure of routine/urgent work
was often limited. Therefore the participation of counterpart teams in missions and in
report writing would always remain limited. However, another interlocutor argued that
'Unless there is active involvement of the Government the study will not have an impact"
This point was made by yet another Government interlocutor as follows: 'Representation
of the counterpart should be reasonable. It should not all be expert dominated. An impact
oriented study requires a consumer representative on the team".
28.    As far as local consultants are concerned the Bank had tended to rely largely o
individuals rather than on institutions. Some studies have been farmed out to the BIDS
(and perhaps to others). One critic said that the Bank prefers to use like minded
consultants and that there were a few individuals who were used for several tasks at the
same time. (He went on to add that the Bank did not use those who were critical of it and
mentioned a local academic as an example. It appears that the problem of this person was
with the Government which was negative on his being used by the Bank).    One
interlocutor listed two negatives in using local consultants - (a) their (political) biases,
which may not always be well known and; (b) the danger that their association with the
report would devalue the analysis in the eyes of the Government. He went on to list two
pluses of using local consultants: (a) they would strengthen the understanding of local


65
factors and institutions and; (b) their association may increase the credibility of the
analysis, if not with the Government, then at least with the public at large, in Bangladesh.
In his experience, the individual consultant's reports were mostly used for background and
seldom saw the light of day as such. The list of sector reports for which such work was
done included the Agricultural Credit Review, Minor Irrigation Review, Rural
Development Review, Crop Diversification Study, Jute Sector review and Food Security.
(The focus on agricultural reports in the list reflects the interlocutor's own area of
interest). One weakness of local consultants mentioned was that most of them were good
at micro studies and in depth look at specific issues. There were very few people with the
ability to take in the broad picture-synthesizing and integrating the micro analysis.
29.   The Bank's impact on analytical and policy information capability in Bangladesh
was discussed in detail by two interlocutors, one in Government and the other in
academia. The Bank had not viewed or pursued collaboration with local persons as a
capacity utilization and strengthening enterprise. One person drew a parallel between the
negative association between the volume of aid and the level of domestic saving discussed
in the development literature, and the large volume of economic and sector analysis
provided by donors and its impact on local analytical capacity. Several persons agreed
that there had been a decline in the analytical capability in Government over time. A
person in Government stated that this was an indirect and perhaps unintended result of the
Bank's advice to reduce the central role of the Planning Commission (which was seen as a
bottleneck for decisions) and its support for the establishment of planning cells in the line
Ministries. In the event the role of the Planning Commission had been eroded (as well as
the quality of its staff) while the planning cells never really took off. Thus there was an
erosion of analytical and policy formulation capacity in Government over time. In the non
Government sector also there was decline in quality because many of the best people had
gone abroad and, unlike India, the supply of economists and other technicians was not so
large for the quality of personnel to be virtually unimpaired despite this development. A
greater focus by the Bank on capacity building through collaboration in CESW was thus
very important. This requires (a) more active participation of local consultants and


66
counterparts on missions and in drafting of the report; (b) more efforts at doing joint
studies and contracting studies with local research institutions; (c) Bank support for
including researchers and academics in the committees established by the Government to
monitor the implementation of specific reforms.
30.   Local consultant with teams set up under Technical Assistance operations have
done good work, often in association with expatriate consultants. Thus the P.I.A.G.
(Policy Implementation and Analysis Group) in the Ministry of Industry under a USAID
project seems to have been quite active, having produced several studies including one of
Industrial Regulatory Constraints. A member of the group, however, regretted that the
studies had not had an impact on the Government. Similarly the IFPRI study of food
security issues, which was widely mentioned as having done very good work, was
composed of 5 full time members of which two were expatriate and 3 were local
consultants.
RESEARCH INSTITUTES AND NETWORKING
31.    There is virtually no networking among researchers and institutions within the
country, except on personal terms. There is similarly practically no interaction with
researchers and institutions in other South Asian countries. Several academics argued that
the first priority was to increase networking among researchers within the country. The
role of professional associations in supporting this process was mentioned. It was also
suggested the Bank should invite persons from Universities and institutions other than in
Dhaka to its seminars and workshops and add them to its roster of local consultants.
32.   For encouraging networking between researchers in the Region, the ADB initiative
of getting together the heads of Asian research institutes in 1989 was mentioned
favourably, and it could usefully be periodically repeated. One suggestion was to explore
establishing a regional federation of research institutes in South Asia. There was a very
negative reaction to SAARC as an umbrella for promoting networking from two senior


67
academics ('SAARC is totally government; totally bureaucratic, it is totally devoid of
economic content; networking goes out of the hand of institutions; a more free wheeling
interaction is desirable'). Three suggestions for promoting regional networking were
mooted: (a) short term (2-3 months) exchange visits of scholars; (b) more work on
regional issues e.g. intra regional trade, the restructuring of duties, poverty; (c) a research
project covering several countries a la Anne Krueger's multi country research projects.
One suggested topic was the impact of the Uruguay Round on these countries. It was
also stated that general purpose networking was not very useful it should be structured
around specific areas of interest or common platforms.
COORDINATION AMONG DONORS: DIVISION OF LABOR
33.   Discussion with two other major donors - ADB and USAID confirmed that there
were no significant differences of views among donors and that a mechanism existed for
anticipating problems and sorting out difficulties in the close contact between field offices.
The institution of the local consultative group (LCG) which not only met before and after
the Paris consortium meeting, but also approximately once a month in Dhaka, to discuss
different issues was also contributing to such coordination. Originally the Bank chaired
the meeting but now the Government was playing a more active role. The meeting on the
Agricultural Diversification study was, for instance, called by the Ministry of Agriculture.
34.   Both ADB and USAID are involved in a large number of studies mostly under
T.A. However, there was believed to be a minimum of duplication with the Bank. Most
of the studies were being done by expatriate and local consultants and were focused on
fairly narrow and specific issues. These often were part of the background work used by
the Bank for its own more synthetic and integrated view of sectors and the economy. This
complementary role of the Bank's CESW and work under T.A. was highlighted by the
USAID staff. They gave the example that the 1992 CEM had highlighted the issue of
implementation of the reform program while their T.A. project on implementation of
reform had put teams in the ministries to assist with implementation.


68
35.   An apparent case of duplication, that between the Food Security study of the Bank
and the work of the IFPRI team set up in 1989 under USAID T.A. was mentioned by
several interlocutors. They said that the work of the IFPRI team was more in depth, more
precise and more useful for policy while the Bank's report was too general. However,
following up of the issue confirmed the complementary nature of the two efforts more or
less in line with the comment in the previous paragraph. The Bank study was launched in
1990 soon after a significant escalation in Government intervention and distortions in
foodgrains policy. This was before the IFPRI study had really taken off Further once the
problem was highlighted and the issues outlined by the Bank the IFPRI work focused on
the detailed and the micro questions in food policy.
36.   The CEM was seen clearly by the two agencies as the Bank' responsibility to the
consortium, and does not duplicate any thing produced by other donor. It is prepared
with adequate consultation with the two donor agencies. However, in sector work
interlocutors of both donors agreed that a more systematic exchange of information on
studies, planned, on going and completed, could improve both the knowledge basis and
enhance coordination. The ADB representative stated that in his view the sector work
done by ADB and work on its projects was less well known than the Bank's work since
much of it was just given to the Government and to no on else. He was engaged in
preparing a list of all sector studies for the information of other donors. He also felt that
more ADB sector reports should be processed and circulated. It was suggested that one
meeting of the LCG should focus on the subject of improving exchange of information of
studies.
37.   The ADB is active in a number of sectors where the Bank is also active. However,
the ADB representative did not feel that there was much duplication of effort in the
operations area either. In common sectors both institutions conveyed broadly the same
messages. In the power sector ADB is more inclined to give the benefit of doubt to the
government and to resume operations. It is essentially a difference of perception about the


69
government's performance in dealing with the issues. There is no difference on the
perception of the issues. When operating in the same sectors the division of labour
between the two institutions sometimes is geographical (in water supply the WB is in
Dhaka, the ADB in smaller cities) and sometimes functional (e.g. the ADB is in social
forestry while the Bank is focusing on economic forestry). There is currently a problem
between the two on informal education, but it is expected to be resolved between
headquarters staff.
38.   A rather encouraging example of donor coordination as well as growing
Government interaction and contribution (capacity development) exists in the population
sector where a series of projects involving a large number of donors have evolved into a
program of sector support and expanded to cover associated areas like health and
nutrition. Each time the concept has been developed in the context of the Five Year Plan
with Government/Donor/Bank workshops on sector planning and policy which were
subsequently followed through in operations. The required series of studies have been
done in the context of the project development and with continuous interaction between
all parties. The impact of the sustained support in this area on population problems in
Bangladesh is widely acknowledged.
39.   Another very complex and more controversial multi donor effort which is still on
going is the Flood Action Plan (FAP). The FAP started in 1987-88 and comprises 26
separate studies financed by different donors and coordinate by the Bank under a UNDP
project. The Plan as it has emerged is the subject of wide debate and a strong attack by
international NGOs, and the Bank is also a party to the debate. This matter is likely to be
more than an issue of just donor coordination for flood control. It is really in the end a
Water Management Plan for Bangladesh, which unfortunately cannot be formulated
without a regional understanding on the sharing of water resources.


70
ANNEX 4
IMPACT OF CESW: A CLIENT PERSPECTIVE (INDIA)
INTRODUCTION
1.    India has been perhaps the most important client of the World Bank Group over an
extended period of time, though in recent years it shares this position with China and
perhaps with Mexico, Brazil and Russia. The relations between the Bank and India up to
1970 were studied in detail by Mason and Asher in their monumental history of the Bank
and they concluded that India has had as much impact on the Bank, if not more, than the
Bank has had on India. Another review of Bank India relations to be published soon was
undertaken by S. Guhan for the currently ongoing history of the Bank (1970-90) being
prepared by Messrs. Lewis and Webb.
COVERAGE OF CESW
2.    There was general agreement among interlocutors, both within and outside the
Government, that the CESW had focused on the important areas and issues, both at the
economy wide and sector levels. One interlocutor (at a research institute) said, 'Whatever
the Bank has done has been in priority areas" Another, a senior former civil servant,
speaking of sector work said that 'it was comprehensive; it focused on sectors where we
had emerging problems e.g. energy, petroleum; and it was timely" A third person (in
Government) said that the 'Bank has been on the ball in trying to cover areas which
needed attention e.g. trade policy, industrial policy, infrastructure" In the line ministries
also the general refrain was that in their sector the Bank had focused on the priority issues.
For example in agriculture "the Bank was stressing the right basic issues".


71
3.     There was a realization particularly among Government interlocutors that certain
parts of CESW, and in particular the CEM, were only partly addressed to the country
audience, being primarily addressed to meeting the Bank's own requirements and those of
other donors. An interlocutor in the MOF said the 'therefore, we make sure that our
views are reflected in it" He went on to say, however, that the CEM was a very useful
exercise in taking stock of macro and sector progress over the year. While it depends on
the Government's Economic Survey, it does not duplicate it, for the survey is the
Government's review of the economy from a very different perspective (underpinning the
Budget) he said. Sector work was seen to be more directly resting on and deriving from
the Bank's operations, focusing on issues arising in the context of experience with projects
and efforts to address them. There was little concern expressed about the CESW being
'Bank driven" and responding to international development fashions, a point that was
made most strongly in Bangladesh, but also in Pakistan. One interlocutor said referring to
work on environment initiated by the Bank - 'if it had focused on questions like ozone
then one could consider it 'xternally driven" However, since it focused o issues like
resettlement and water, areas of interest to us, it is ok" Another interlocutor mentioned
appreciatively that the Bank had responded promptly when requested by the Government
for study of specific issues e.g. the appropriate level of the fiscal deficit. (For another
view, below, para 8).
4.     A number of subjects which could have been covered by CESW      but were not,
were however mentioned.     One was the need to have a model 'power purchase
agreement" to help guide the states in their negotiations with private investors in power
generation. The Bank, it was argued, did not deliver on this request because of the
problems with the states in power lending. ('It was the wrong time to get out of power,
just when our power policy was changing. One has to blame the internal dynamics of the
Bank for this') " Another Government interlocutor felt that there was a need for a
"The RM staff has a convincing case against this argument. The Bank had offered to set up a consultant team to
develop guidelines for agreements in power generation. This offer was not taken up. Subsequently a TA credit
was also given to finance consultants to develop power projects which could then be offered to private investors


72
comprehensive review of the international experience in the private financing of basic
infrastructure and the lessons for India. He also referred to the difference between the
Ministry of Finance and the Ministry of Power on Government counter guarantees to
private investors. The former is emphasizing the dangers of counter guarantees; the latter
realizes that for meeting power requirements private investment is essential and without
counter guarantees such investment would not be forthcoming in the amount needed.
Similarly for meeting the Government's medium term export targets ambitious
investments in roads are required and these would again need private investment. And,
one could extend the same argument to the social sectors. Thus a comprehensive
multisectoral view of the modalities and magnitudes of private sector finance of
infrastructure was very important.
5.     A third Government interlocutor argued for more emphasis on the role of the state.
In his view the Bank needs to dissociate itself from the image that it believes that 'it is
only the market that is going to solve the problem, and that the state at every level must
withdraw" He went on to state that if in India the market is going to determine
everything then the policy will come 'h cropper" (his words). In a country where a
number of basis facilities are not provided (witness the recent plague scare) the Bank must
identify itself with all pervasive development in which the Government has to be there in
many areas. ('There is a theology associated with the Bank. That association has made
the public sector appear as target'). The Bank must therefore, speak up in favour of
effective social sector planning and prepare a study on the basis of international
experience, of the best way to deliver social services and how to go about it.
6.     A fourth interlocutor (again in Government) who believed strongly in regional
cooperation in South Asia, argued that the Bank has neglected the subject. He argued
that in defense, in regional development, in infrastructure there was a 'Vegional dividend"
to be harvested in support of economic development. Because of political strains between
for bidding. This credit has not been used. As one staff put it. "They want cook book type of recipes which do
not exist. There is no substitute for good case by case advice".


73
some countries in the region studies done by Indian scholars on these issues were suspect.
Bank studies would be considered objective and carry greater weight. ('The Bank could
help clear the myopia'). Specific regional questions for study could be the Calcutta
Dhaka highway, the development of Bangladesh gas fields for sale to the Indian market-
where benefits to both countries could be easily demonstrated. A number of these ideas
have been talked about among academics and intellectuals. But they needed serious study
and greater push from somewhere to fructify. However, he felt, that the Bank itself wears
"country blinkers" because of the way it is organized.
7.    The same interlocutor, identified several other subjects for priority study by the
Bank. There has been piece meal work by consultants on industrial restructuring in public
sector corporations. These could be pulled together for a more comprehensive view of
industrial restructuring. A Bank study of industrial sickness in India could also be quite
useful, and if one had existed would have benefited the Government's own study (the
Onkar Goswami report). The likely impact of the changed economic policies on the
existing industrial structure was also important. Another area for study, he identified, was
the role of administered prices in distortions in the price structure. This study should
include several sectors such as agriculture, petroleum, coal where administered prices are
important. he also argued for more CESW on the states, including centre-state relations.
He believed that the Bank should greatly increase awareness of policy issues at the state
level. (This is already happening). Finally, he felt that a view of the planning process in
India was missing. How is sectoral perspective planning done, and how are plan funds
allocated? The process, the criteria, the results and how these could be improved was
worth reviewing.
QUALITY OF CESW
8.    There was almost complete unanimity among those who had read the Bank's
economic and sector reports about their high quality. The following characteristics of
Bank reports were most frequently mentioned as their strengths: First, they almost always


74
focus on the important issues in the areas they cover. Secondly, the studies are usually
professional and objective, though some exceptions were pointed out (see below).
Thirdly, they are comprehensive and provide a good synthetic view of their subject,
pulling together a large amount of information and drawing out policy implications. In the
word of an interlocutor in a research institute. 'The orderly documentation, the time
series data from identified sources makes the document very valuable in itself There are
no comparative sources available. Even these who attack the Bank use them". Fourthly,
the detailed information on institutional structures, processes and procedures in some
reports (mainly sector and special studies) makes them useful even for discussion within
Government. An interlocutor in the power ministry praised the CESW for going into
'tetails" for being 'bxhaustive" and for looking at familiar and well know issues 'from
angles which we may have tended to overlook".
9.    A senior interlocutor in the MOF said that the quality of the CESW 'has been
pretty good" He classified economic reports into three groups. The CEM, an annual
exercise of stock taking in his view is only partly directed at the Government, being
designed more for donors. It was 'Very useful" Then there were the special studies of
particular policy issues e.g. industrial regulation, trade policy, specific industry studies
(including one of the capital goods industry a few year ago). These went deeper into the
subject than the CEM. In his experience it had been very useful to have had these studies
available, since it is not easy to mount such studies in India"....special studies and the
Bank reports on sectors and subsectors do fill a need. Even if they didn't lead to anything,
they improve the knowledge base on which policy is made" Taking the recent Trade
Policy study as an example he said that the second volume went into considerable details
which were found very useful for discussions with the Ministry of Commerce and 'made
us think afresh" Since this report does not contain merely generalities but gets into the
nitty grity it forces the people in charge to respond in detail, even if it makes some errors
sometimes, he continued. The recent public expenditure study was also characterized as a
'good hard hitting report". At a third level, in the view of this interlocutor, things had not
worked quite as well. This was in field of informal, quick studies of specific issues done


75
on demand. He characterized this as an ability to use the World Bank as a consultant: 'it
would be nice to ring up someone and ask for an input in two weeks on a policy issue.
As an example, recently there had been a request for a paper on foreign investment. 'The
paper came 6 months later; by that time the Government's views had jelled" Thus an
opportunity to influence policy was missed. He felt that there should be more of this kind
of requests. However, '(a) we don't ask enough; (b) where we do, we have not got
timely results" In his view, in the hierarchy of reports, the most general (the CEM) was
minimally government demand driven; the special reports and sector reports were are least
partially demand driven. The request for quick inputs on policy issues were wholly
demand driven.
10.   Despite the generally favourable view on CESW there was no shortage of criticism
of Bank studies, from a number of different perspectives. One Government interlocutor in
a line ministry questioned the Bank's emphasis on studies as such, and the time they took.
He argued that there was a plethora of studies already existing, and in many cases even the
necessary data was available, through not always in one place. Further, '"ll the players are
old hands at what they are doing' and familiar with the problems and the solutions. Using
a local colloquium, he said 'Grind crudely, why do you have to grind everything so fine?"
(However even he accepted that the Bank studies were 'ttressing the right basic issues" -
his problem was that he would rather get on with the projects). Another interlocutor in
the social sector voiced a similar refrain. She viewed sector work as a precursor of
projects: 'I know today exactly what I would do if we had a 100 million dollars. Why do
we need two years to do studies?" However, she herself went on to acknowledge that
'We are presuming that everyone will know what we do. The preparation and discussion
of the studies e.g. in workshops involves others and brings them  along"  The
documentation brings a certain professionalism to the exercise and helps persuade others
she concluded. However, it is time consuming, she complained. Others were more
sympathetic to the need for and the usefulness of the studies, but pointed out the following
weaknesses: First, the ideological element had become stronger in recent years. One
interlocutor (in a line Ministry) felt that the quality of the CESW in the 1980s had been


76
better. 'The earlier work had been more down to earth. The later work is too
contaminated by structural adjustment and ideological overtones" As an illustration he
mentioned that a few years back a study was done under Japanese grant funding for the
restructuring of 3 major PSEs. The consultants recommended that in order to revitalize
them, among other things significant investments were required. Because of the Bank's
ideological commitment to privatization 'the Bank just junked the whole thing. The
ideological view prevailed over a more balanced approach." Another interlocutor, (from
a research institute) had a more understanding view on the subject of ideological bias of
CESW. He said that 'Bank has a definite mind set. That is no secret. It believes in
market forces and freeing up the economy for the private sector. The Bank is not
suppressing facts or views. It may sanitize the report and give greater weight to
information that is consistent with its point of view. However, there is enough material in
the reports to question the findings" Thus an ideological bias was there, but it was above
board and the reports, being comprehensive, provided information which could be used by
critics to question the conclusions.
11.   A second aspect of Bank reports which could be improved according to several
interlocutors was the provision of information on cross country experience.  One
interlocutor noted an improvement in this regard in recent CESW, but wanted to see more
cross country information. Another interlocutor, in a line Ministry, said that while
comparative experience was very useful; there has to be a balance between international
experience and local circumstances if the question at issue becomes very specific.
('Comparative country experience is good, but the question is how to apply it to the
specific case. The policy dialogue must focus on the contextuality'). In contract to
Bangladesh and Pakistan, Government interlocutors with one or two exceptions did not
express a particular interest in information on other countries in South Asia. The
emphasis was on relevant cross country experience and it was argued that while often
experience of other countries in the region may be relevant, it was not necessarily so. On
some issues what was done in other parts of the world was likely to be more relevant than
what was done in neighbouring countries. As one person said we are interested in best


77
practice rather than just any experience. The argument in favour of greater focus of
neighbouring country experience because of the similarity of institutions and problems was
questioned by one interlocutor o the ground that since 1947 the countries have developed
along different lines. For example the interlocutor in the power ministry pointed out that
WAPDA in Pakistan was very different from the Indian set up. However one interlocutor
(predictably in the MOF) was very interested in information on the progress of economic
reform in neighbouring countries. He wanted information on the progress of trade
liberalization of consumers goods in Bangladesh so that it could be used to 'thame" some
of the local policy makers and politicians to move faster on that front.
12.   A third weakness of some of the CESW pointed out was the cautiousness of the
policy recommendations. One interlocutor in Government believed that sometimes the
Bank's reports tended to strike a compromise on what they think is possible. Thus in
some areas they are lagging behind the Government rather than leading the Government.
He characterized it as 'tailism" - tailing the Government. The 1990 trade report was
mentioned as one example of this. He also gave the example of telecommunications
where the studies were not hard hitting enough and the Bank loans did not lead to
required restructuring: 'The report (unspecified) always justified the lending program
without insisting on changes" he said. He also expressed concern about the coal sector
loan currently under discussion where he felt that the Bank loan should be made only
under stringent conditions. 'Otherwise it is not in our interest. It is not helping us. In the
Indian case there has been over emphasis in getting the finance moving. The financial
crisis of 1991 is a result of the Bank's being soft on India" He went on to say that very
good detailed analysis was not useful unless it led to very clear policy recommendations
and a clear decision by the Bank on the benchmarks for lending or not lending.
13.   The general reaction of interlocutors in Government however, was in contrast with
the position just stated. They wanted information not recommendations. On the need to
spell out the policy conclusions in reports one interlocutor stated that the detailed and
comprehensive information in Bank reports was more important than the policy


78
recommendations they contain. 'Now every Government has persons who have been to
the same schools as Bank staff and it is not necessary to bludgeon them on the head"
Another interlocutor (in the MOF) had a somewhat different perception. He too believed
that Bank reports were most useful as 'information compendiums" In his view the policy
implications in many studies were familiar to the policy makers responsible for decisions
about the Indian reform program (1991-94). They knew market economics and the
development literature, including the World Bank literature. However, there were people
at the borderline who were likely to be influenced by the policy conclusions that the bank's
studies brought out 'nd that may have made our job easier'. Thus the policy conclusions
were useful for the uniformed and the skeptics though not for the current policy makers.
14.   Finally, one interlocutor in Government complained about the fact that the
management aspect is either missing or underplayed in many reports relative to their
importance. Even where administrative and management issues are examined this is done
by '"mateurs" - economists and technicians - who do not have expertise in this area. ('It
is like a surgeon talking on medicine'). The Bank should strengthen the management
expertise in its staff - it is very strong on economic analysis and technical matters, almost
exclusively so he thought. As an example he referred to a study on rural credit where it
was recommended the Regional Rural Banks should be merged into a National Rural
Bank. This was a management issue and for the 'bxperts". He respected the Bank view
on policy but not on management.
CESW, LENDING AND STRUCTURAL ADJUSTMENT
15.   There were a variety of views, sometimes contradictory, expressed by interlocutors
about the relationship between the CESW and the Indian reform program, as well as the
general linkage between CESW and operations. In general the interlocutors in the line
Ministries felt that while the sector work was of a 'high standard, very comprehensive and
covered the right issues", there was a problem in the strong link with lending. The basic
dilemma e.g. in power is that 'the Bank views itself as the reformer of the power sector in


79
India and not just a provider of loans. It is not attuned to political realities". The Bank
was charged in this sector with being 'too rigid and more obstinate" in expecting action.
'There is no difference between us on the objectives to be reached only on how far one
can go and how fast", one interlocutor argued again in the context of power. Further, he
complained that the Bank expects to control the project, in fact the sector, while providing
only 1%   of the project finance.    Another interlocutor referred to the 'institutional
arrogance" of the Bank: 'they try to get very far reaching changes often disproportionate
to their financial contribution" A third interlocutor echoed these views. In the power
sector particularly when it relates to state entities the Bank is expecting a metamorphosis,
he argued. In a democratic setup change has to be gradual and sensitive to the overall
needs of the system. As long as the direction of change is clear, measured by agreed
indicators, it should be acceptable, he continued. For example in agriculture, power tariffs
cannot be expected to increase from virtually no tariff to a virtual marginal cost tariff  "
A similar point was made by an interlocutor in a social sector ministry. 'The Bank is very
strong in its economic logic. But while economic logic may be very important other logic
may be there. Economic logic cannot always dominate other logic".
16.    Discussions with RM staff indicate a somewhat different story, where in the power
sector in the Bank could be charged with excessive leniency, continuing to lend despite
mounting evidence that the Government was unable to live up to the undertakings it made
in project after project. No lending in power has occurred since 19_. This has meant an
interruption in the dialogue which had been very active till around 1990. A report on long
term issues in the power sector was done in 1991. No comments were received from the
Government and it was issued informally in December of that year. Another report, done
jointly with the Government and the ADB on Tariffs and Transmission regulations (Feb.
1
21This interlocutor, again referring to power, said that the Banks monitoring of the situation should be periodic and
the indicators being monitored should be so designed. for example in some projects it is stipulated that the
level of receivables is not to exceed 2 months of average billing. If the figure becomes 2.1 or 2.2 the borrower
is in trouble. Excessive resources and energies are wasted in the implementing agencies to monitor this figure.
This target could be specified as an indicator to be met on certain dates, e.g. January 1 and June 30, to reduce
this administrative burden.


80
1994) is still awaiting comments. However, efforts to keep on a dialogue with some of
the states are ongoing in the context of restructuring the sector with a view to eventual
privatization. Thus in India, as in Bangladesh. the power sector raises the perennial
question of precisely when the cessation of lending rather than continuation of lending
becomes the preferred option for supporting policy reforms. Interestingly, the two critics
of the Bank's approach to policy change in the sector quoted above were of the opinion
that the Bank had been able to influence sectoral policy to a considerable extent through
its loan covenants and the monitoring of their implementation.  'it has furthered
commercialization of the sector, which is desirable" one of them concluded, adding that
'Bank functionaries are able to interact effectively with senior bureaucratic levels and with
political levels".
17.   In the social sectors, health and education, the views of the Government
interlocutors on sector work (including work done in the context of project preparation
and the Bank's overall approach were much more positive. One interlocutor who in the
late 1980's had been in the power ministry said. 'The Bank appears to be much more
sensible in the social sectors; in energy the emphasis on discipline led to continuous delays.
They were pursuing commonsense solutions there, but they could not be implemented"
The sector work in the health sector was complimented for (a) the collaborative nature of
the exercise-large involvement of local consultants and with the Government interlocutors
feeling that they were in control; (b) the open and understanding attitude of the Bank's
staff who listened to the local experts and focused more on the broad advice, allowing the
consultant studies to go on without undue interference. ('We found a tremendous
flexibility in their approach'); (c) the Bank's contribution was primarily in bringing in
international expertise and experience and in pulling together and summarizing the diverse
efforts and to help in finding solutions. ('Their contribution was always to help in finding
solutions.....not a fault finding exercise.....never felt that our point of view was not taken
seriously; no talking down or up'). The interlocutor in the Ministry of Health, went on to
say that there is no quarrel with the contents of the Bank reports, though not all the
recommendations can be followed up. The interlocutor in education, where formally no


81
sector work is done by the Bank, spoke along similar lines as in health. The model being
used is similar: a program of studies mainly by local consultants are undertaken. The
Bank comments/helps with the T.O.Rs and through missions has an ongoing interaction
during the period the studies are done, providing support/solutions where necessary.
Through aide memoires it keeps the Government informed on the status of the studies and
the emerging issues and findings. Once the studies are done an integrating/synthesizing
report is prepared by the Bank presenting a comprehensive picture of the problems and the
strategy for the sector. The work thus provides an underpinning to projects designed to
deal with the issues. It also is picked up in more general country work. (Thus the CEM
for 1995 is expected to have a section on primary education). One interlocutor spoke of
the sector work as joint work and said that he viewed the Bank as 'bur consultant" with
whom there was constant interaction. He went on to say that there were differences of
perception between the Government and the Bank, but that was to be expected ('Even
with the states we have differences" But the dialogue has always been professional.')
Occasionally there were differences between the Bank's international experts and the
equally eminent domestic experts on specific issues. As an example he referred to the
Bank's view on adult literacy He agreed that the Bank was right in its conclusion that non
formal education has not been effective. However, in India non formal education was
needed because of limited access to schools. 'We can't abandon it. We have to make it
work. The question is how to reform it". The interlocutor used this example to draw a
more general conclusion: in a country like India the Bank's role is how best to support
Indian government policy. Thus the policy dialogue is more a discussion and elaboration
of a program for carrying out the policy and not a discussion how to change the policy.
18.    On the overall question of the relationship between the CESW  and the Indian
reform program undertaken since 1991, the public perception is that the reforms have
been imposed by the Bank and the Fund." However, the interlocutors, had a richer ad
3/ In a newspaper interview former President Venkataraman said in November 1994: "Liberalization started as early
as 1980.. but it was the foreign exchange crisis which accentuated it. The IMF and the World Bank would not
give loans except on the conditionalities they placed. Therefore, the Government of India followed the
conditionalities", Pioneer Lucknow, Nov. 3, 1994.


82
more nuanced understanding. In general, the view is that the CESW had been useful in a
broad way but the design of the program was indigenous and the relevant decisions were
taken on the basis of conviction, not reluctantly under pressure. (except perhaps during a
very short period in 1991). One interlocutor who had been involved with the process
during 1991-94 said 'hll the movers in this program did not need to use particular
information from Bank CESW. Most of us know market economics and the literature,
including World Bank literature" He took the example of industrial licensing, the
problems of which were 'tommon knowledge, which did not need a big study to
demonstrate" and the conclusion - a market solution, was well known. Thus there was
not a very direct link between the industrial deregulation and the Bank study of the subject
a few years ago. However, he acknowledged that the Bank's reports may have had an
impact on the skeptics within the system, though the decisions would have been made any
way during the past 2-3 years. Another interlocutor (also formerly in the MOF) felt that in
the 1980's the Bank's thinking had been in line with that of the Government on many
issues. At the time, with the gradual move by the Government towards more liberal
policies the Bank also talked in terms of very gradualistic change. However, the position
changed '1omewhat abruptly" in 1989 when the financial crisis appeared imminent and the
Bank began to push for more rapid changes, in his view because it sensed the
Government's increased dependence on its support. He went on to say that India had
much local expertise and in many areas Government committees had produced reports
which were as good as any Bank sector or special reports. ("..often our attitude was that
if they (Bank) want to do this or that study let them do it - we felt that we had an
understanding of our problems which the Bank report was unlikely to improve or add
to'). Thus the policy reform took place when it did and took the shape it did because with
changed circumstances the Government concluded that policy changes were necessary.
The reforms were imposed by circumstances and not by the Bank. In his view, their
design was dictated by the Government's understanding of the issues in formulating which
the Bank's CESW had only a marginal role. Other interlocutors, however, were more
positive in their assessment of the link between CESW and the Indian reform. One of
them said that 'because of the failure of our institutions and universities to do detailed


83
studies Bank studies have a lot of influence through a process of osmosis" A number of
people hesitate to accept this because 'We are not willing to admit that there is something
that we don't know" Another interlocutor (in the MOF) said that the Bank CESW had
raised the awareness of certain issues and also provided the information and the general
analysis which was useful in the internal debates and discussions. However, he went on to
say, that this applied at the general level and not to specific numbers. ('If we are talking
12% or 15% then analysis is not relevant. But if we are arguing about the modalities and
whether to liberalize or not general economic reasoning helps'). Another interlocutor
gave the example of telecommunications as a case of Bank influence on policy changes.
(For a different view see para 11). In November 1992 a joint seminar was held on
comparative experiences in telecommunications reform. this was very successful and
resulted in change in telecom policy after a lag of about 2 years. The two conditions, he
identified as having helped (apart from the quality of the papers and discussions at the
seminar) were: (a) it is always useful to have a dynamic local partner, rather than an
academic partner, because 'Your exercises are not academic exercises" and (b) setting up
of a working group to follow up from the seminar. There was a champion ('%omeone
who knows the inside and believes in your point of view') who took up the matter and
followed through. He contrasted this experience with that in urban development where
despite many Bank studies there was little progress since the Bank failed to identify a local
"champion".
19.   There was a clear understanding on the part of the sectoral interlocutors as well as
others, of the intimate relationship between CESW and the conditionality associated with
specific Bank operations. However, there was little complaint or resentment, except the
occasional complaint that the Bank 'too rigid" These were offset by others who said that
the Bank slowed great understanding and 'flexibility" ('The Bank listens'). One
interlocutor (in MOF) summed up his position as follows: 'If there is a study that is
where the ideas for conditionality will come from. And then we will react to them. The
ideas may not be new or unknown. But the study is the place where it is all together".


84
LOCAL COLLABORATION
20.   The existence of significant local expertise both in the public and private sector
results in a large use of local consultants in CESW in India. the use of local collaborators
is largest in the area of sector and special studies. The use of local consultants in
economic work is relatively less. The existence of significant local staff expertise in the
RIl which has been built up over the years and which contributes to the CESW, adds to
the local presence in the implementation of CESW. As mentioned earlier the approach for
sector work and special studies that is emerging (and which is perhaps furthest advanced
in the education sector) is to sub-contract specific parts of the studies to local consultants
(individuals or institutes). The persons are selected sometimes in consultation with the
Government; the TORs are set by the Bank staff which also monitors the progress of the
studies and are ready with advice and support in case of difficulties. The completed pieces
are reviewed and then brought together in a synthetic report usually prepared by Bank
headquarters staff (with varying degree of participation of local RMI staff). A staff
interlocutor in the RMI who is very much for this approach to sector work said that the
problems faced by this approach are (a) skepticism of some headquarter staff about the
capabilities of local consultants ('We think that we know best'); (b) concern of managers
about the timing and quality of the eventual product. ('You lose some control of the
process and the product'). However, the benefits are in the shape of better understanding
of the local conditions and the greater sense of ownership, so that the studies are
internalized much quicker. ('The product is much more valuable. The Bank will have to
get into a more patient mode'). A third benefit is that it is much cheaper in budgetary
funds. A fourth benefit that was pointed out is that even after the report is completed the
local collaborator is around and becomes a spokesman for the views of the report. Finally,
it helps build up local potential.. Government interlocutors in the line ministries were
unanimous in praising their experience with the Bank in such joint or collaborative work.
They found the intellectual contribution of Bank staff during the implementation of the
sub-studies as well as the final synthetic product that was produced by them to be very
useful (see above).


85
21.   A useful approach of linking together the special and sector studies with the CEM
has also emerged. A summary of the special or sector study is incorporated as a special
topic in the subsequent CEM.
22.   Apart from these studies, local consultants (and local staff in RMI) are also used
to do specific pieces of analysis with the object of using the results in a Bank report. Most
often this is done with individual consultants (more economical, easier to 'tontrol" and
interact with), though occasionally analysis of a significant data set is sub-contracted to an
institute. Interlocutors who had worked with the Bank as consultants had the following
comments on their experience: First, the Bank appears to be getting their services quite
cheaply. Some of them have worked as expatriate consultants (for other agencies, but
also for the Bank) and commented on the big difference in payment. Directors of at least
two institutes also made the same point with the additional comment that the Bank was
getting free the institutes' infrastructure, which the consultants used. When asked why
they did not have a system of 'taxation" on individual consultants' remuneration (which in
Pakistan was mentioned as working by the Director of a research institute), the answer
was that there was such a system on paper, but no one adhered to it. Second, the
collaborators said that the Bank staff appeared to set them very short deadlines for the
product, at the time of initiation of the studies and usually then agreed to extensions of
deadlines. This affected the quality of the work. They would get better quality if the
consultant had known in advance the expost deadline. One consultant referred to the fact
that he was doing 2 background papers in the context of state wide studies being done for
an Agricultural Development Project. The initially (imposed) deadlines were in the nature
of about 2 months. In fact it took about 4-5 months. If the consultant had planned the
work as a 5 months exercise the final product would have been better. Similarly for a
agricultural trade liberalization study, he was given 3 to 4 months, but it went on for a
year. Thirdly, the consultants are rarely involved in the subsequent use made of the
analysis or the synthesis/integrating exercise that often used their work. Thus, they were
used to some extent like research assistants. Sometimes the consultants participate in


86
Bank/Government sponsored conferences or workshops where their work is also featured.
That was considered useful, but it was not clear whether their comments were 'heard" or
(as one consultant put it) 'the Bank was going through the motions without taking it
seriously".
23.   An interlocutor in a research institute which had done several studies for the Bank
had the following comments on the basis of that experience. First, the amount of
resources allocated to a study are sometimes not commensurate with the importance of
the issue being looked at. In one case (protection coefficient for consumer goods) the
study was based on a survey in Delhi and around Delhi. The estimate so generated could
not carry much weight given the importance of the issue and that India is a large country.
In another study the total amount of money devoted to the data collection and analysis
was less than the cost incurred on Bank staff who came to India to discuss it with the
consultants. Was this the right balance of expenditure in the study? Secondly, the
analytical approaches to very complex issues are sometimes designed 'omewhat crudely"
in the interest of time (and perhaps of economy). A study of institutions and organizations
in the agriculture sector in two Indian states to be done in 3 months could not be much
more than a directory of the institutions. But it was expected to be an evaluation of the
effectiveness of these institutions. A study pertaining to the health sector was mentioned
as being a good one-the time period given was about a year and there was very meaningful
interaction with Bank staff which benefited the collaborators. Thirdly, the interlocutor felt
that the Bank should revise its policy on the dissemination of the results of such sub
contracted studies. At present, the product becomes an input into the Bank's work, to be
used at their discretion. It was felt that after a lapse of time (say 6 months) the
subcontractor should be permitted to publish the study, so that it gets wider dissemination.
This would also be an incentive for the concerned researchers.
24.   There was a unanimous reaction from interlocutors that in a country like India with
a vast amount of economic and technical expertise more local collaboration could be
undertaken. To the question whether the studies by local consultant would 'levalue" in


87
some sense the Bank's economic/sector reports, there was again a negative reaction. One
interlocutor said that it depends on the quality. A good report would be so considered
whether produced by Bank expatriate staff or by local consultants. Another interlocutor
making the same point contrasted the Narasimhan committee (financial sector) report
(excellent) with the Bank's financial sector study (misguided/ideological) going on to add.
'It depends on the person who writes the report" A third interlocutor said that provided
such reports are vetted and are presented as Bank reports, he did not think that there was
any question of the feared 'Uevaluation" His counter question was, 'Mnaybe it would be
devalued in the Bank".
DISSEMINATION
25.   Up to a few years ago there was great sensitivity in Government about the Bank's
profile and the dissemination of its views within the country. Reports and discussions on
them were kept very closely under control by the Ministry of Finance. However, in this
period two CEMs, one focused on industry and the other on poverty were permitted to be
brought out in red cover. In the past few years there has been a 1800 turnaround and the
Government has been more supportive of the dissemination of Bank studies both within
the Government and in the general public, the media and in academia. Almost all
interlocutors were in favour of greater dissemination. One or two, however, felt that a
certain amount of discretion should be left with the Government whether certain reports
should be widely disseminated or not. One person (in the MOF) commenting on the new
disclosure policy of the Bank under which the Bank is required to release a report to
anyone requesting it, said that 'it takes the Government out of the decision making to
release the report" He did go on to say that it is too early to say what the impact would
be .e.g. on the Bank's access to confidential information, and on the Government's
willingness to support the processing of certain reports into gray cover. however, another
interlocutor said that the new disclosure policy as 'h damn good thing" The MOF in the
past had tried to bury what some one there did not like or was afraid of the political
impact.


88
26.    Seminars and workshops were felt by some interlocutors (in Government and
academia) to be a preferred method for dissemination of CESW. First, they stimulated
people to read (or at least glance) at the report/papers presented. Otherwise few people
read Bank reports, unless of immediate direct relevance for their work. Second, the broad
spectrum of participants, and their comments, gave a better understanding of the subject
than merely reading the report. Thirdly, in some cases additional and new information
(e.g. about experience in other countries) emerged from some international participants. It
was recognized that such seminars could have purposes other than pure dissemination
(e.g. in the white or yellow cover stage to get a feed back for revising the report itself).
The telecommunication seminar was one among several mentioned in a positive vein by
interlocutors.
27.    A seasoned economic journalist, however, argued that seminars and workshops are
for 'the academics and the backroom boys in Government". Their impact on public
perceptions is small. He went on to point to two developments which made dissemination
to the general public (and therefore to the media) very important. First, change in the
Government's paranoiac attitude towards the leakage of Bank reports and wide agreement
in Government and the public with the broad elements of the reform program being
supported by the Bank. Second, a big change in the economic journals and journalists - a
big increase in numbers and in quality as well as their more sympathetic political
orientation ('Formerly there were few economic journalists, and most of them were
predominantly Marxist'). This interlocutor went on to make two specific suggestions; (a)
the papers/report for seminars should be given not to journalists but to their editors, with a
suggestion that they could use them as and when it was suitable not just in the context of
stories about the seminar. For example, to publish an extract on an issue of relevance
even a few months later when some development made the subject 'hews'" (b)
Commission short papers from journalists (say 2-4 staff weeks) on various subject. the
could be supported or supervised by a staff member of the RMI and based on the relevant
reports. This would force them to develop a comprehensive view of an issue, which they


89
otherwise would not find time for. The journalist would learn; the Bank would learn, and
there would be dissemination, he concluded.
28.   Another younger journalist interlocutor who has come from academia spoke about
the great ignorance among the general public about the World Bank. Many think of it as a
commercial bank, and are not aware that it is involved in development and poverty
alleviation. He said that in the left-organized massive demonstration against the reform
program in 1992, all the posters were against the IMF, and not one against the Bank.
Secondly, and only some what inconsistently, he went on to say that the Bank's projects
are being 'bver shadowed" by the policy questions. The role of the Bank in funding
projects and thus contributing to development is not highlighted enough by the Bank.
Thirdly, he complained about the rather aloof attitude of the RMI with the media (adding
that since the present Director of the RM took over, he has found a significant
improvement in this regard). He contrasted his experience with the Bank's external affairs
staff at the Madrid Conference (his first Annual Meeting) 'tefreshingly different" from his
experience in New Delhi. Bank officials 'Were extremely media friendly" He had no
problem of access to Bank documents. 'They (the RMI) are very good at communication
of material. But not good at interpersonal communication" This interlocutor felt that if
the Bank wants to understand the context and the political constraints on its reform
proposals it should interact more with journalists. He referred to Mr. Narvekar's (IMF)
recent visit to New Delhi where he admitted that 'hn important element missing in their
([MF's) thinking process is an understanding of the political process" This journalist
commented on the Bank's bias toward economics and technicians. 'The Bank and Fund
have never really invested in political advice. How are the program going to impinge on
the politics" In India there is much discussion of the need to have a political consensus
for reform and of the political constraints. If the Bank wants an understanding of these
aspects it cannot rely on its (a) own staff ('they haven't invested in this area an don't need
to'); (b) government officials ('their views would be biased, and they are often out of
touch with the ground reality'); (c) academics ('they are often committed to certain
position'). The preferred option is to talk to journalists 'Who keep tag on the politics"


90
On major projects too, the Bank should get a feedback from journalists about the political
effects, and how they are likely to impinge on the project. This person had two specific
proposals for the Bank to consider: First, the Bank should try to build links with the
younger new generation ofjournalists and in particular with the local language press; some
of these should be invited to the press briefings and occasionally a briefing should be
arranged for them (e.g. for the Tamil Press in Madras). (The circulation of local language
newspapers is several times that of English newspapers). Secondly, he supported the idea
of a Bank 'bducation" program allowing journalists to spend a week or so at Bank
headquarters. This should be preceded by a short orientation at the RMI before the
person visits Washington.
29.   A researcher who had occasion to work on documents in the RMI Library argued
that (a) the library should have a complete set of Bank reports (Projects, CESW, OED
etc) on India; and )b) should make these facilities available for researchers. It could be
used to generate some desk studies of certain areas and issues by local short term
consultants. e.g. journalist ('Why not educate some journalists'). He also felt that a more
generous policy of providing Bank publications (at least selected publications) to research
institutions and education institutions, while expensive, may be quite effective in spreading
the Bank's message and experience.
30.   Resident staff agreed that 'dissemination could be done better" They made two
observations in this context. First, experience indicated that 'We spend too much time on
the big studies and two little time on the more focused small studies which have a greater
impact" One staff interlocutor pointed to the favourable experience with the forestry
sector study (2 workshops and a 'leaked" publication in a journal) and the irrigation sector
study (3 workshops) as against the comprehensive agricultural sector study. The variety
of issues and the comprehensiveness tend to inhibit debate and discussion and follow up.
Secondly, CESW that is followed up by operations had much greater impact that where a
report merely ends up '1itting on the shelf' Thus it was pointed out that Agricultural


91
Sector study would have had more impact if the sectoral adjustment loan (ASAL) had
come through.
RESEARCH INSTITUTES AND NETWORKING
31.   There is a remarkably large number of research institutions both in Delhi and
distributed all over the Country, some with very distinguished staff.  No formal
networking system exists within the country. The Government's Indian Council for Social
Science Research (ICSSR) which funds about 20 institutes nationwide perhaps provides a
formal liaison channel for some of them. (One interlocutor criticized the ICSSR. It has
not played any role in developing networking among institutions in India. It is too
bureaucratic and stultifying, he said). The Indian Economic Association is an august and
active body. The many conferences and seminars also provide a medium for informal
networking among Indian researchers. However, staff of all the institutes contacted
agreed (a) that there was hardly any contact among researchers in South Asia (b) that
there was a great need for strengthening such contacts and (c) that they would welcome
Bank support in this endeavor. The Director of the Centre for Policy Research (New
Delhi) pointed to the regional studies done by his institution, bringing together researchers
from several countries. A study of Problems in Governance (country studies in 5
volumes), another on 'Harnessing the Eastern Himalayan Rivers" and a third volume
reporting on a private initiative for a 'South Asian Regional Dialogue" which had been
conducted now for several years have been published . The work was done mainly with
Ford Foundation financial support. He was very positive about this experience of working
with researchers in neighboring countries and believed that the links can be strengthened,
both through the finance of research on specific issues and by workshops and seminars on
particular topics where researchers could report on what they had done pertaining to their
(own) country. The amounts involved in a conference were not large (about 20,000
dollars) he said, but his institute could not afford it for one conference from its own funds.
So Bank finance of such seminars would help. He also supported the idea of short
exchange visits of scholars to/from neighboring countries. They had one Pakistani


92
economist spend a year with them, with Ford Foundation support. These views were
echoed in more or less similar terms by other researchers. For example an interlocutor
spoke in glowing terms of a seminar on the experience with decentralized government in
which China and the Philippines were included in addition to large South Asia countries.
This too was financed by the Ford Foundation.
32.   There were sharply divided views on SAARC as a vehicle for strengthening
networking in South Asia, but the large majority of researchers were opposed to it. In the
words of one interlocutor 'The trouble with SAARC is that it is Government - a creation
of the Ministry of External Affairs.....Putting it into SAARC you are getting into the
Government network" Another interlocutor said that SAARC has not got 'bff the
ground" and that it is beset with political problems which might 'bedevil" efforts at
networking with their help. He said that his experience in international seminars was that
'there is absolutely no problem in establishing a dialogue with our counterparts in Pakistan
and Sri Lanka".
COORDINATION WITH OTHER DONORS: DIVISION OF LABOUR
33.   Interviews were confined to two multilateral donors. Unfortunately, due to
absence of relevant persons from Delhi meeting were not possible with any major bilateral
donor representative. The staff member of the ADB resident office stated that one of his
responsibilities was to brief visitors from Manila about ongoing or recent World Bank
studies to avoid duplication and to benefit from them. His problem was that World Bank
was involved in so many things and the RMI was so big that even individuals there were
not always aware of all the things that were ongoing. In the area of population there was
an informal donor group functioning so that things were better. In his view the easiest and
perhaps least resource intensive way to avoid duplication was to keep each office informed
though a regular exchange of information perhaps in the form of a 'hewsletter' say on a
quarterly or bimonthly basis. He felt meetings were an 'bxpensive" approach to
coordination. The ADB has access to the confidential (i.e. draft) reports of the World


93
Bank and he reported no difficulty in getting World Bank studies. There were no
difference of views between the ADB and the Bank on major issues though there may be
differences between them on matters of detail or perceptions of progress in certain areas.
He however, did not give any specific example of such difference.
34.   The staff interlocutor in the UNDP, however, had a more skeptical view of the
present state of coordination with the World Bank. He would like to see a more active
effort on the part of Bank staff to interact with UNDP. He went on to identify the
following areas where there could be improvement. First, there is the old perennial, that
the UNDP does not have access to the green cover Bank economic and sector reports.
Secondly, very few visiting Bank staff and consultants visit the UNDP for discussions and
for learning about UNDP studies. ('There is a perception that Bank staff does not regard
the UNDP as having the type of people worth talking to; attempt to coordinate with the
Bank has not been very successful'). Thirdly, the UNDP is focused on technical
assistance (including studies) and increasingly the Bank has had more and more funds (e.g.
through bilateral sources) for such studies. This makes closer coordination even more
essential. Part of the problem he argued, was that the Bank staff wants everything on its
own terms and does not show flexibility either in terms of the specific questions it is
interested in or the timing of the studies. He gave the example of the currently ongoing
poverty assessment. The UNDP has financed a survey covering 40,000 households of
human development indicators (including poverty, health, education) by the National
Council of Applied Economic Research. The survey was completed in May 1994. The
data is being coded and the results are expected to be available in July 1995. The
information being generated would have been very useful for the poverty assessment by
the Bank. However, the Bank staff could not wait since it wanted information for the next
CEM and decided to use the NSS data for 1987/88, to be analyzed by a study to be
contracted to the Indira Gandhi Institute.  He felt that if there had been better
communications, and the Bank had agreed to provide some additional resources to the
UNDP study the data processing could have been accelerated to meet the requirements of
the poverty assessment study. This point was also made by the interlocutor in the
NCAER. The UNDP interlocutor concluded 'Everybody would have been happy and the


94
NCAER staff would have benefited from the interaction with the specialists of the Bank"
A second example which was mentioned were studies on access to and financing of social
services in health, education, social insurance and on the demographic transition that are
being carried on under a program for supporting research on social sector strategy and
financing for human development. The studies are being done under eminent persons like
Vaidyanathan, Guhan and Visaria (all were at the same time with the World Bank in
Washington, one as an alternate ED). However there has been little interest or interaction
with Bank staff though sector work in these areas has been done by the Bank. Interaction
with the RMI staff is intermittent and spotty. However, sometimes the RMI staff in Delhi
are also not in the full picture. As an example the interlocutor mentioned a UNDP project
with the Ministry of Finance on legal reforms required to support the economic reform
program. A Bank lawyer from headquarters is on the advisory committee for the study
being done by the National Law School of India. Apparently this staff member is leaving
the Bank, but the local UNDP has been unable to get the necessary information from the
RM since no one there was in the picture. Thus they are not aware of what the
Washington staff had agreed with UNDP. The matter was troublesome because a
workshop had been planned to bring people from other countries (e.g. Indonesia) to speak
about their experience with legal reforms to support economic reform, for the benefit and
at the request of the MOF. This interlocutor, like the person in ADB, felt that a country
level newsletter of activities shared with major donors would probably be useful. The
UNDP has started such a newsletter. Another recent initiative has been a periodic meeting
of all UN system donors in the country organized by the UN Res. Rep. Four meetings
have been held and the Bank attended all of them. The Bank representative made a
positive contribution to the meetings by drawing attention to an existing coordinating
group in population and also suggesting that relevant NGOs could be invited to participate
in some meetings.
35.   There is an immediate issue where coordination/interaction with a study just
starting appears important. The large UNDP sponsored household survey mentioned
earlier is planned to be repeated on a subsample basis very 3 years. Meanwhile, the ADB


95
is supporting a comprehensive study by the NCAER for monitoring the impact of the
reform program over the next 3 years, covering industry, agriculture, the social sectors
and macrovariables. The study would include surveys using the UNDP survey as
benchmark and a medium term macro model for projection and would produce reports on
a monthly and quarterly basis. There would also be two reports a year on agriculture.
Two conferences are planned (the first in early 1995) to discuss the approach to the study,
to which experts from countries like Indonesia and Korea would also be invited. The
Bank could at little extra cost get its own particular interests incorporated into this study
at this early stage. Another area where there is scope for cooperation is that of medium
and short term projections. At present three independent annual exercises on the economy
are being done by CMIE, the NCAER and the Institute of Economic Growth. A synthesis
of these was done this year for an annual conference by the Indira Gandhi Institute. In this
case again a small injection of resources and an indication of specific interests could result
in output of use for CESW at low cost. (The research grant for the IEG projection model
exercise is running out this year and the researchers were looking for a sum of $ 10,000 a
year to keep it current and running).
36.    One aspect inhibiting formal donor coordination is the Government's suspicion of
donors getting together. Different people in line ministries deal with donor agencies. The
Department of Economic Affairs cannot cover everything on going in the line Ministries.
Different Joint Secretaries in DEA deal with different donor agencies. Therefore, it is
difficult for them to coordinate on their side. Consequently, better coordination on the
donor side despite Government suspicions, may benefit them as well.


96
ANNEX 5
THE IMPACT OF CESW: A CLIENT PERSPECTIVE (PAKISTAN)
SUMMARY
COVERAGE OF CESW
1.    In general the perception of interlocutors was that all the important areas and
issues had been covered by the Bank's CESW, though one needed to sometimes go back
to reports prepared in the 1980s for detailed investigation of particular subjects. There
were no significant omissions or differences between the Bank's perception of priority
areas and that of the Government. However, the CESW program was seen as Bank
driven. The Bank program also tended to be influenced by 'tevelopment fashions", like
gender, basic needs, privatization, it its choice of CESW subjects.
2.    There was universal support for a greater involvement of Government
interlocutors in the early formulative stages of the CESW programme, and in the
elaboration and discussions of issues papers for individual tasks. This includes, making
the 3 years rolling CESW programme and the underlying thinking available to the
Government and discussing draft issue papers with people in the area of the proposed
study.
3.    Several interlocutors indicated that in recent years the CESW has tended to focus
excessively on short and medium term macro adjustment issues to the relative neglect of
long term development issues. Academic interlocutors argued that the Bank continues to
be too deferential to Government sensitivities by staying away from certain crucial areas
e.g. population studies. Another area is the whole area of centre state fiscal relations


97
which the Bank has been trying to promote work on and also the subject of regional
inequalities.
QUALITY OF CESW
4.    There was almost unanimous appreciation from the Government interlocutors
about the quality and usefulness of the analysis in Bank's economic and sector reports.
The academic and research community had more questions about analytical quality of
some reports. The following general weaknesses impacting on CESW effectiveness were
however, raised mainly by the Government interlocutors. First, the studies sometimes
seemed to be ideologically driven - aimed to convince readers of the validity of a particular
position. The pros and cons were not presented in a balanced manner. Secondly, there
was the need for a clearer articulation and appreciation of the linkages between macro
policies and also between sector policies. At the macro-level it was argued, the old system
of planning and intervention, to a great extent allowed for weak linkages between policies
(and institutions). With greater market and private sector orientation the linkages between
various policy instruments became more important. Thirdly, some of the CESW showed
an inadequate awareness of special institutional, cultural and structural characteristics of
Pakistan. With the progress of economic reform and the adoption of a liberal market
economy, institutional and administrative issues were emerging as the real constraints on
development. The old institutional framework based on control and intervention had to be
reoriented. Procedures and decisions had to be streamlined and decentralized. New legal
frameworks had to be devised. Fourthly, Bank reports tend to stand on their own -
'teinventing the wheel" - and to ignore previous work in the area, including explicit
acknowledgment of the Bank's own earlier studies.  Finally, interlocutors without
exception, would like to see more information on cross country experience than is at
present available in the Bank reports. Within this, interest was expressed in the experience
of other South Asian countries given than they faced similar problems and had similar
institutional, cultural and structural features.


98
CESW AND POLICY AND INSTITUTIONAL CHANGE
5.    In the case of sector work, there has generally been a close link perceived between
reports and Bank operations which usually do focus on policy and institutional issues. The
CEM was also almost unanimously praised for raising awareness of important issues
(tight on target') and as forming the basis of significant policy dialogue between the
Government and donors. It was also praised as the pre-eminent source of information on
the economy. CESW, and underlying work in sectors, was quite often also seen as
providing the basis for the conditionality enshrined in operations. The elaboration of the
conditionality and its specific form was not necessarily in the CESW but the link was
obvious to most Government interlocutors.
PUBLIC SECTOR DEVELOPMENT EXPENDITURE REVIEW (PSDER)
6.    The annual public sector development expenditure review (PSDER) was criticized.
First, it tended to strengthen the short term perspective within the Bank. The Bank's
advice should really focus on the overall plan and development strategy as well as the
strategy within sectors. Secondly, the concept of the core program within the PSDP
tended to broadly coincide
with all the donor aided projects. For the donors it was difficult to accept that any project
they were financing was not a part of the core. Thirdly, it was somewhat of an exercise of
second guessing the decisions of the Priorities Committee which were commented on by
the PSDER, often within a relatively short time which usually was there, before the
meeting of the APCC. The Bank should build up institutions like the Priorities
Committee.
THE SOCIAL ACTION PROGRAM (SAP)
7.    There was wide agreement among interlocutors that the SAP was a very
significant if overdue initiative. However, there was no shortage of critical comments.


99
First, the program was seen as Bank driven, though it is presented as a Government
initiative supported by donors. Second, the monitoring of the program was seen as too
intrusive by Government interlocutors. Thirdly, there is a bias towards quantitative
indicators (number of schools etc.) at the expense of the more basic qualitative factors e.g.
community leadership. Fourthly the analytical work underlying the SAP was perfunctory.
For example the kind of hard questions about health that were raised in the WDR, 1993,
had yet to be asked and analyzed in Pakistan.
DISSEMENATION
8.    Better and wider dissemination of Bank CESW  was seen by all as a desirable
objective. There has been significant progress in the wider public dissemination as well as
discussion within Government of Bank CESW in recent years; mainly since the adoption
of democratic elections. The Bank has taken an innovative approach in some cases by
discussing the draft report (yellow or green) in seminars to which not only Government
officials but academics and researchers and others have been invited.
9.    In recent years, the public profile of the Bank has become much higher, with the
adoption of structural adjustment reforms in 1988. The Bank is news. There appears to
be a genuine lack of consensus on the structural adjustment program - on its components
as well as the pace and time frame of changes. The program obviously hurts some
powerful vested interest. The media has played up stories of countries where adjustment
has not worked; and the success stories are not believed even if reported. The Bank
therefore, should modify its philosophy of keeping away from the public eye. A more
active public relations efforts needs to be mounted. First, there should be more frequent
briefings of the press by the RMP, and greater access to Bank officials. Secondly, it
would be useful if on the occasion of release of reports a short ('five or six page') write
up in non technical language were made available. There should also be a system of briefs
and flyers on important issues and developments ('you have got to market your ideas').
Thirdly, there is a need to educate the press. The Bank may consider financing a short (2


100
week) visit to the Bank of about 10 journalists, where they could receive an intensive
briefing on the Bank and the major international development issues (not only in Pakistan).
COLLABORATION AND JOINT STUDIES
10.   The greater use of local collaborators and consultants was supported by almost all
interlocutors because it would (a) lead to building up local capacity for policy oriented
analytical work (b) introduce a greater awareness of local institutional and cultural factors
into the analysis and (c) promote a greater sense of ownership in the conclusions and
recommendations which could mean more successful implementation. It would also
facilitate wider dissemination. For countries in South Asia CESW should be more
strongly geared to using and strengthening the indigenous capacity for policy analysis
through three measures. First, using more local consultants and research institutions for
CESW tasks and associating some senior officials with finalizing Bank reports. Second
more joint studies, particularly on sector matters, with Pakistani research institutions.
Thirdly, encouraging more open public debate on at least the less sensitive policy issues.
However, as the bottom line the CESW reports had to be clearly seen as the Bank's
reports, with the institution's standards of quality and objectivity not being compromised
and its staff responsibility for the views expressed not eroded.
RESEARCH INSTITUTES AND CESW
11.   In Pakistan the use of individual consultants (including those on staff of research
institutes) for CESW has been far more prevalent than a formal association with the
institutes. This was seen as having seriously inhibited the institution building possibilities
of collaboration on CESW. The issues which inhibit progress in this area relate to
questions of management an control which partly reflect skepticism about the quality
(soundness ?) of leadership in at least some of the institutions. If a study was contracted
with an institute, the head would determine the team that would work on it as well as
supervise its day to day work. On the Bank side also, task managers understandably


101
prefer to be in charge of who does what and when. Both these attitudes have tended to
tilt the scales in favor of individual consultants.
RESEARCH INSTITUTES AND NETWORKING
12.   The networking among research institutes is almost non-existent. One suggestion
for improving networking within the country was for the Bank to finance and participate
in two or three workshops on various subjects. The strengthening of the infrastructure of
research institutions libraries, data bases, information technology would also help. A third
approach would be the Bank to start some training programs in those areas which are of
interest to the Bank, and locate it in a research institute.
13.   Networking across South Asia among research institutions is non-existent. As
regards the role of SAARC in facilitating networking there ere two opinions expressed.
One view was that SAARC was a Government outfit with the Ministry of External Affairs
in the lead role. Further all decisions are by consensus. These characteristics made it
unsuitable for this role. However, another view was that given the political difficulties,
SAARC provided the kind of neutral umbrella which could be usefully explored for
networking.
COORDINATION AMONG DONORS: DIVISION OF LABOUR
14.   All the donor representatives were positive about the coordination among donors
in the field. No significant areas of differences were identified. Ad-hoc meetings of
donors in the field e.g. on environment and on gender contributed to donor coordination.
It was suggested that it may be useful to start some informal donor working groups in the
field along some themes to follow up progress in certain areas that had appeared to be
important in consortium meetings. Better exchange of work programme and of reports
would also help. One complaint was that the Bank was less forthcoming than USAID in
making its data available to other researchers and pointed to the data tapes for the


102
household survey initiated by the Bank being taken to Washington, and not made available
to local researchers even after a lapse of 3 years. The pre-consortium and post consortium
meetings of donors in the field were seen as useful.
15.   The ADB staff indicated three steps that would be desirable to strengthen
coordination: (a) the ADB's country program mission which visits the country every year
talks to all the donors. It would be useful if the Bank's country portfolio review mission
were to meet also with ADB staff in the field (b) the CEM missions in past years used to
visit the ADB field offices for discussions, but this practice has been dropped in recent
years. It should be resumed. (c) exante sharing of the CESW work program between the
two institutions.


103
IMPACT OF CESW: A CLIENT PERSPECTIVE (PAKISTAN)
INTRODUCTION
1.    Pakistan has been an important client of the World Bank, judged by almost any
criteria. The relations between the Bank and Pakistan up to the mid eighties have been the
subject of a detailed review which can still be read with profit." On the whole the study
was the record of a congenial and productive relationship. It concluded that 'the Bank's
record in Pakistan is one of solid achievement.  The institution had contributed
intellectually as well as materially to the development enterprise ...." (para 2.01). The
study went on to make three comments, which are relevant for the present study and
provide a historical perspective to it. It noted that the tenor of the Bank's relations with
Pakistan have shifted from Government to Government. In the 1960s 'it was harmonious
to the point, sometimes of seeming to almost to lack a mind of its own" In much of the
1970s there was 'Inuch tension and some conflict" By the later 1970s the relationship
had become quite positive while displaying a more mutually objective interaction than in
the 1960s (para 1.83). This last stage would appear to have continued, and would
appropriately described the current relationship between the Government and the Bank.
2.     At the same time the Lewis report noted a 'great deal of continuity" in the basis
objective - to help the client in pursuing three development goals- growth, equity and self
reliance. While the relative priorities given to these objectives have fluctuated, both on the
side of the Bank and of the Government, the differences between the two 'have been over
the appropriate means for pursuing a particular goal in a particular period" (para 1.840
emphasis in original). If to this we were to add, differences about the pace at which
specific means are to be implemented, then the observation of the Lewis report would also
hold today. There is no difference on the objectives, but a significant variation of
"World Bank in Pakistan: Review of a Relationship, 1960-1984 in 2 volumes, Report no. 6048,, January 27, 1986
prepared by a team under Prof John P. Lewis.


104
perceptions in Pakistan on the appropriate instruments to use and the pace at which the
objectives are to be achieved.
3.     A third significant judgment of the Lewis report was on the Bank's contribution to
Pakistan's development objectives. On growth the country record was 'butstanding" and
the Bank was seen as having contributed 'importantly, in some instances, decisively"
(para 1.90). The country's worst developmental shortfalls were seen to be in the social
sectors. The Bank was judged to have 'ttarted passively in the 1960s" and given the
subject 'growing attention the 1970s and 1980s, but its efforts have been encountering
resource constraints first and principally on Government side"(para 1.91). As regards the
third objective, self-reliance, Pakistan's progress was viewed as 'painfully slow and
unreliable" The Bank was seen as having raised its voices loudly enough and often on
internal resource mobilization, with little evident effect (para 1.92).  Today these
judgments would need to be modified. The priority given to the social sectors, and within
these to specific matters like gender, both by the Government and by the Bank is clearly
greater. The understanding of the diagnostics and the correctives is better, and action on
a significant scale is under way with the support of the Bank and other donors. An
important element of the new understanding is that while resources are important, the
crucial issues in social sector programs relate to institutions and community involvement
and leadership. Similarly, while the progress on domestic resource mobilization has been
slow, macropolicies, financial sector reform, tax reform and the sharp increase in the
private sector role in the economy mark, at long last, a start towards greater self reliance.
COVERAGE OF PRIORITY AREAS IN CESW
4.     In general the perception of interlocutors was that all the important areas and
issues had been covered by the Bank's CESW, though one needed to sometime go back to
reports prepared in the 1980s for detailed investigation of particular subjects (e.g. effective
protection and some industry subsector studies). There were no significant omissions or
differences between the Bank's perception of priority areas and that of the Government.


105
However, the CESW program was seen as Bank driven. None of the interlocutors could
recall a piece of CESW which was done at the request of the Government, though one
person mentioned that" we asked for Bank support for a household energy survey and
they turned around and made it one of the conditions in the next loan to the energy
sector"  The Bank CESW    program was also seen as influenced by 'development
fashions", like gender, basic needs, privatization. While generally this was mentioned as a
weakness, one senior interlocutor observed that such fashions reflected international
development experience which could be very relevant to Pakistan. Thus the fact that the
programme was Bank driven was considered by one or two person (in Government) as
not necessarily a bad thing. Sometimes it made the Government more aware of the need
to address certain issues.
5.    At the same time there was universal support for a greater involvement of
Government interlocutors in the early formulative stages of the CESW programme, and in
the elaboration and discussions of issues papers for individual tasks. Making the 3 year
rolling CESW programme and the underlying thinking available to the Government at the
beginning of the fiscal year and discussing it with RMP would make persons aware of
what was planned and give them an opportunity for providing feedback. It was also noted
that a given time pressures, substantive contribution may not always be expected but it
would certainly increase the sense of consultation and of voice at little additional cost. In
the case of specific tasks draft issue papers could also be profitably discussed with people
in the area of the proposed study. It would at the least indicate the interlocutors more
clearly what to expect from the eventual mission and report.
6.    However, even after increased consultation with the Government most
interlocutors were aware that the CESW would continue to be in the main Bank (supply)
driven. Some interlocutors said that this is as it should be. The Bank has its own
institutional and operational needs-creditworthiness assessment, internal reporting needs
and the need to underpin and strengthen its own operations; as chairman of the consortium
it also had to meet the needs and concerns of other donors and of the development


106
community at large. Within that envelope the country's own concerns could find a greater
role through more consultation, collaboration etc.
7.    Several interlocutors within the Government expressed the concern that with the
advent of SALs and SECALs, the CESW has become too narrowly focused on the
development of conditionality for such operations. A set of policy measures were often
outlined in the CESW, which then tended to become the agenda to be 'imposed" in the
subsequent operation. They went on to point out that in Pakistan, unlike India, they had
never had 'hangups" about a planned socialistic economy, but believed in a liberal
capitalism. Therefore, there was no difference with the broad objectives and directions of
Bank adjustment operations. But they felt the Bank's attitude to be too rigid. Once an
agenda had been set on the basis of the study there was little scope to change the intensity,
pace and focus and indeed the details of the conditionality being associated with an
operation. On the other hand, several interlocutors disagreed with this assessment. They
argued that in their experience, Bank staff tended to be understanding and flexible on such
matters except when they were working on the instructions/directions of Senior
management in Washington, which had tied their hands. But both set of interlocutors
were implicitly acknowledging the close relationship between CESW and operations in
recent years. This is not only an objective desirable in itself, but also a fact that all CESW
which were linked to lending were better received.
8.    However, there was a trade off in this close relationship with lending. Several
interlocutors indicated that in recent years the CESW has tended to focus excessively on
short and medium term macro adjustment issues to the relative neglect of long term
development issues. This comment, perhaps, applied to the CEM rather than to some of
the sector work which it would be difficult to fit into this comment. (Even in the case of
the CEM the fact that the theme of the next CEM is 'Pakistan in 2010" would throw
doubt on this criticism).


107
9.    A more serious comment regarding areas suffering relative neglect came from
some academic interlocutors. They argued that the Bank continued to be too deferential
to Government sensitivities by staying away from  certain crucial areas.  While
complimenting the Bank's work for raising awareness of gender concerns, the area of
population studies was mentioned as one where the Bank had been more hesitant than
desirable. This acquired increased significance with the withdrawal of USAID from
Pakistan, since they had hitherto played a lead role in population. A second area
(mentioned incidentally also by a Government interlocutor) is the whole area of centre
state fiscal relations which the Bank has been trying to promote work on and also the
subject of regional inequalities. These remain sensitive subjects. The challenge is to
encourage study and analysis of the area if not by the Bank then by local research
institutes and academics perhaps supported by some imaginative funding.
QUALITY OF CESW
10.   There was almost unanimous appreciation from the Government interlocutors
about the quality and usefulness of the analysis in Bank's economic and sector reports.
One of these with long experience of the Bank (on the economic side) said that the reports
in the 1960s and 1970s had tended to be descriptive but as the Bank gained experience the
analysis had 'become tighter" He also felt that the empirical basis of the analysis varied
and it was difficult to generalize. For example, he argued, the Government was aware that
analytical macro framework within which the ESAF and the first financial adjustment loan
were negotiated was infeasible, but 'there was a pressure to get a loan on both sides. The
Bank and Fund instead of trying to get another client should have taken a harder look" In
the event the Government's fears were confirmed and the programme came unstuck.
Another Government interlocutor pointed out that some analytically poor reports had been
produced in the 1980s e.g. in the area of trade policy; these remained in yellow or green
2The Lewis report had identified centre-state financial relations as a key area to be followed up despite the strong
reservations of Government of Pakistan (paras 2.32 to 2.37)


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cover not because of Government sensitivities but because of questions relating to quality
of analysis.
11.   As one would expect, the academic and research community had more questions
about the analytical quality of some reports. As an example the faulty methodology used
to arrive at a measure of smuggling in a 1987 study of trade were mentioned. The authors
were aware of the problem but insisted on using the resultant estimate on the false
argument that 'k bad estimate is better than no estimate" Similarly a study of effective
exchange rates to get an estimate of anti-export bias was faulty because it ignored
domestic taxes. If domestic taxes were included not only would the effective protection
estimated be different, but perhaps the relative ranking of sectors change. The 1992 trade
regime study was criticized for using data pertaining to 1983, collected for the 1987 study,
without adequately highlighting the fact. In their view the input structure data for the
three subsectors studied in depth, engineering, chemicals and textiles were thus seriously
out of date and therefore the policy conclusions based on them suspect. The expectations
from the Bank's studies were very high - 'toming from the Bank it should be the best that
can be done' - and these aberrations were considered - 'intriguing" - perhaps resulting
from pressure to devise conditionality for operations.
12.   A number of less narrowly technical issues about the quality of CESW were raised,
mainly by the Government interlocutors. First, the studies sometimes seemed to be
ideologically driven - aimed to convince readers of the validity of a particular position.
The pros and cons were not presented in a balanced manner. Thus 'they try to prove that
the countries that are more liberalized have better economies, but they underplay the costs
of the structural adjustment and how should these be met in the short run"  The
stagnation in growth in Mexico and the inflation in Turkey were mentioned as costs that
raised questions about their being considered success stories.  Similarly, while
privatization was shown to be very successful in Pakistan, the whole issue of the
transparency of the process was not discussed in the Bank report. In a more constructive
fashion the same point was made by another senior interlocutor. He felt that more work


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needed to be done about the effects of the reform measures on specific economic sectors
and to devise compensatory packages for them to ease/smoothen the transition. In
particular, he mentioned the actual expost impact of the tariff reform on specific industries
as a matter for urgent empirical study (not the expected impact on a priority grounds with
given input structures and the change in structure of protection, as had been done). This
would (a) counter the argument being made in sections of the press about de-
industrialization in Pakistan because of structural adjustment and; (b) help devise
compensatory packages for the smooth progress of structural adjustment.   The
interlocutor was not against the reform. He said that once tariff reform and financial
reform was started it had to be carried to its logical conclusion, but impact studies and
compensatory packages were important for this objective.
13.   A second general weakness that was pointed out was the need for a clear
articulation and appreciation of the linkages between macro policies and also between
sector policies. At the macro-level it was argued, the old system of planning and
intervention, to a great extent allowed for some weak linkages between policies (and
institutions). With greater market and private sector orientation the linkages between
various policy instruments became more important, e.g. clarity in the relative roles of the
State Bank, the Ministry of Finance and the Planning Commission. A greater integration
of the approach and measures in different areas - monetary, fiscal and balance of payments
for example - was therefore, needed. Perhaps there was need to develop a multi-sector
simulation model to understand better the interlinkages between policy instruments. A
similar but distinct point was made also with reference to sector studies. Such studies
tended to focus exclusively on each sector in isolation, and intersectoral linkages were
ignored or not adequately considered. This sometimes led to faulty policy conclusions,
and more seriously, to sector operations which were undermined by the absence of
requisite focus on required progress or changes in other sectors. A more integrated
approach to sector problems would help. Not many concrete example of such sectoral
"blinkers" were forth coming. However, one example given was that in the pursuit of
privatization of WAPDA, the fact that WAPDA has as one of its original objectives the


110
development of the water resources of Pakistan in an integrated and multi sectoral fashion,
required that after privatization this responsibility would have to be placed somewhere.
However, while the decision to privatize WAPDA was taken on Bank's advice, this
responsibility has yet to be allocated. Another example was the lack of synergy between
the population, health and the rural education the S.A.P., even though at the local level
these inevitably impinge one each other.
14.    A third general weakness of some of the CESW      pointed out was its inadequate
awareness of special institutional, cultural and structural characteristics of Pakistan. A
number of interlocutors exempted sector work from this, though one or two did not.
Among examples given was the study of the revenue implications of trade liberalization
and tariff reductions in the context of the first EFF and SAL. It was estimated that the
loss of revenue would be more than made up partly by agriculture income and general
sales taxes. The fact that in Pakistan, customs revenue accrues to the centre while the
agriculture income tax and sales tax would accrue to the provinces, and the subsequent
results were not analyzed. Other examples related more to inflexibility in conditionality of
specific operations rather than CESW proper.' The point was made in a more
constructive and forward looking ways by others. First with the progress of economic
reform and the adoption of a liberal market economy, the crucial issues were institutional
and administrative. These were emerging as the real constraints on development. The old
institutional framework based on control and intervention had to be reoriented.
Procedures and decisions has to be streamlined and decentralized. New legal frameworks
had to be devised in some area; in other the existing ones had to be modified. Secondly,
with the increased orientation of lending to the social sectors etc. donors were dealing
with provincial and local government and moving into difficult, politically changed areas.
The focus of ESW has therefore to shift to a greater degree to institutional and
3 In a rural education project a school is not to be designated a boy's or a girl's school, which creates problems for
persons who would like to send female children to a girl's school! In another case the complaint was that the
donor would not accept a Government ordinance but insists on a particular measure being passed in parliament.
"A sense of proportion is needed. Under our constitution an ordinance is as good as a law. Next step would be,
a law is not enough, we need a constitutional provision", was the reaction of the person.


111
administrative issues and to regulatory frameworks and legal reform. For example the role
of an independent judiciary in the working of the new order had to be understood and
disseminated. One of the major donor interlocutors pointed out that some of these
matters many not be most appropriately dealt with through CESW but by Technical
Assistance (including studies under such T.A.). He noted that the current issues re in the
area of governance and implementation require technical assistance, not analysis.
15.   Interestingly, one interlocutor in Government argued that in the new environment
with private investment replacing official assistance, the traditional Bank monitoring of
economic performance would be even more important than in the past. The Government
itself would need the Bank's advice e.g. on the areas where private capital should be
encouraged and were it should not. Private investors would of course value the Bank's
objective assessment.
16.   Another point that was raised by a few interlocutors-and vehemently by one in
Government was for a greater discussion of global experience in CESW and the lessons
learnt from operations and involvement in each sector. As one person put it, each sector
report should start with these lessons and their implications. This section should not just
be an evaluation of the country's performance but also that of the Bank. (Which
approaches worked and why, and which did not). The interlocutors were aware that a
OED does a world wide review of Bank project experience (and of adjustment
operations), but felt that the results not just of worldwide but the specific experience in
Pakistan would make sectoral reports more useful and enhance the sector policy dialogue.
17.   The tendency of Bank reports to stand on their own - "reinventing the wheel" -
and to ignore previous work in the areas, including explicit acknowledgment of the Bank's
own earlier studies was commented on by several academic researchers and one or two
Government officials.  The recent report on the agriculture sector was criticised
specifically for not even acknowledging the major report of the Agriculture Commission
which was obviously extensively used, and on which the Bank report builds. While Bank


112
economic and sector reports should not try to become more academic, a more explicit
acknowledgment of recent relevant studies would improve both credibility and reduce
some irritation. A brief reference to earlier Bank reports on the subject and their major
conclusions may also be useful, and provide a historical memory often missing in the
Bank.
18.   Interlocutors without exception would like to see more information on cross
country experience than is at present available in the Bank reports. Within this, particular
interest was expressed in the experience of other South Asian countries given that they
faced similar problems and had similar institutional, cultural and structural features. One
interlocutor said that acquiring such information was Pakistan's responsibility and they
could get Bank reports on neighbouring countries from their Executive Director's office
but this happened haphazardly. Information encapsulated in a Bank report would be more
easily assimilable within the Government. It was pointed out that in 1988 when the Bank
and Fund were pressing for a reduction of the budget deficit from 7% of GDP in Pakistan,
the Government was aware that next door India with a deficit of 10% was not being "put
under the gun". This affected the credibility of the Bank in the Government's eyes. It
would have been better if the Bank had explicitly discussed the matter and indicated why
India's situation was different (e.g. their domestic saving was significantly higher).
19.   At the same time the interlocutors felt that the Bank should not try to push intra
regional cooperation because there were major political problems with India which
precluded the matter from being viewed simply in economic terms. However, one
interlocutor, who was formerly in Government made a strong case for studies of "regional
optimization" which would at least raise awareness of the benefits foregone by
nationalistic policies ignoring the regional perspective. He referred in particular to the
importance of a study of the sources and markets for natural gas which would show the
advantages of an integrated development of gas sources (including Oman and other
Middle East sources) and markets in South Asia, as opposed to the present mode of
dedicated links between sources and markets (e.g. Oman and India). An academic


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interlocutor also commented favourably on the need for more Bank papers like that
produced by Prof Sirinivasan (Regional Trading Agreements and Beyond: Exploring
Some Options for South Asia, Report No. IDP-142, July 1994).
CESW AND POLICY AND INSTITUTIONAL CHANGE
20.    A significant portion of the sector work originated in the context of project
preparation and appraisal and in studies financed under T.A.  This knowledge is
periodically pulled together and a synthetic view of the sector taken in sector memoranda
and reports. In the case of Sector work therefore, there generally has been a close link
between reports and Bank operations which usually do focus on policy and institutional
issues. For example one interlocutor reported that in energy, the sector work was geared
to two sector loans (1985, 1989) and there was no subsequent green or gray cover sector
study. The focus of the work was on policy and institutional issues even though the
operations financed investment. The work laid the basis of a long term energy strategy for
Pakistan focused on (a) resource mobilization for energy development; (b) pricing and
demand management and; (c) institutional and regulatory development. A systematic
energy options study has been prepared only now (green) describing options and the
implied policy and institutional environment. Another example is the irrigation and
drainage sector where a recent report on issues and options, prepared by two Bank staff
pulls together existing information and some local consultant studies. Its focus inadequate
O & M, serious equity questions, distorted cropping patters bureaucratic overload, and
deteriorating overall system created a very active debate in Pakistan.  So did its
recommendations, e.g. pilot approaches to let traditional farmer associations handle their
own affairs since they would have a vested interest in 0 & M. However, at the end there
has emerged a considerable degree of consensus and heightened awareness that something
different has to be attempted.
21.   The CEM was also almost unanimously praised for raising awareness of important
issues ("right on target') and as forming the basis of significant policy dialogue between


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the Government and donors. It was also praised as the pre eminent handy source of
information on the economy. used as such even by the Ministry of Finance and the
Planning Commission. The following comments from interlocutors (Government, and
other donors) relate mainly to the CEM but also cover some of the economic work (e.g.
trade and tax policy and poverty). First, with the emphasis on macro adjustment the focus
has tended to be excessively short term.  The discussions of the sectors and long run
development issues has tended to became more and more perfunctory.           Second,
sometimes the discussion tends to be too historical and descriptive. Studies should be
shorter, and forward looking stressing areas for policy change. Third, with reference to
part II of the CEM, it was suggested that at the end of each section there should be the
distilled policy recommendations and a summary. Basically, the essence of the sector
studies should be brought into the CEMs.
22.    In the context of the policy relevance of CESW, it is important to note that despite
my attempt to distinguish CESW from Bank operations, and request to interlocutors to
focus on the former, many tended in their comments to speak mainly of their interaction
with the Bank in the context of operations. Of course, this might only reflect their main
focus of interaction with the Bank-money talks. But it also may reflect the strong link
between CESW and operations particularly following adjustment lending. CESW, and
underlying work in sectors, was quite often seen as providing the basis for the
conditionality enshrined in operations. 4
CRITICISM OF THE ADJUSTMENT PROGRAM:
23.    To the extent that the major elements of the adjustment program are perceived as
based on CESW there may be some value in listing the various criticism of the program
4/ There were two contrasting views of this conditionality to be noted. First, irritation and unhappiness at the often
"unrealistic", "inflexible" and "rigid' position taken at negotiations on specific conditions (e.g. the figure by
which power tariffs be raised or the exact number of persons on a Board). Second, the subsequent strong
interest in facilitating disbursement which led Bank staff to explore ways by which the letter of the
conditionality could be said to be fulfilled/ "They are prepared to sweep conditionality under the rug".


115
that were made by interlocutors. On privatization one former Deputy Chairman, stated
that left to himself he would have first privatized the banks before moving to industrial
enterprises. There was no difference on the objective, but the only issue is that of
transparency and preventing sale to cronies.  Privatizing banks first would have
contributed to transparency. Another interlocutor questioned the wisdom of privatizing
D.F.I's. since certain social development objectives - e.g. supporting investment and
enterprises in backward regions like Balochistan would continue to be important.
Similarly another fell that the private sector could not be relied on for providing
educational and health services in sparsely populated and poor areas. The underlying
theme was that the greater private sector orientation could exacerbate regional and
interregional inequalities. With the background experiences of the economic neglect
underlying the breakaway of East Pakistan (for which, as the Lewis study points out, the
Bank too is blamed) this sensitivity to the possible impact of market orientation on
regional inequality is perhaps understandable. One interlocutor who had been closely
involved in implementing the financial sector reforms fell that while there were many good
things in it, some lacunae should have been corrected. First, there was inadequate
attention to the question of the small borrowers in a disadvantaged location. ("All the new
commercial banks want to be in Karachi and Lahore. They had to be pushed to other
locations and then asked to do at least 20% of their business in their domicile, with the
result that they did trade finance in their domiciled area and financed productive
investment in Karachi and Lahore.") Newcomers also find it difficult to get loans from the
private sector. Secondly, the Bank should have been provided for technical assistance to
evaluate the quality of bank portfolios and the subsequent capitalization requirements.
The first FSAL relied on the banks to do the evaluation, but portfolio analysis remains a
weak element in the banking system. Thirdly, the personnel resources of the banks are still
quite poor despite effort to improve them. Two specific weaknesses that have major
consequences one (a) failure to place responsibility for bad loans on the manger/staff who
approved them and (b) failure to restrict credit to management/entrepreneur who has a
poor record on the previous transactions from negotiating new loans.


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24.   The 1988 Fund-Bank adjustment program was faulted by a former minister for
trying to do too much and in the wrong sequence. "The budget deficit reduction target
was ambitious. Theoretically, the financial sector reform had shut the taps for the
Government to borrow. However, it merely raised the cost of borrowing: with the result
that 60% of the additional tax effort undertaken within the program was swallowed up by
the increased cost of borrowing". Secondly, "the tariff reduction program was also too
ambitious particularly once tariff levels had been brought down significantly. There is a
difference between reducing tariff from 150% to 90% and from 45 to 30%. The former
cuts hardly bite - the latter cut to the bone; the decline should have been tapered over a
longer time period. The revenue consequences also affected the budget. By the time we
realized it, it was too late it was enshrined in conditionality". Thirdly, "the adjustment of
the exchange rate was ill timed, and it is effects undercut by the raising of administered
prices".
PUBLIC SECTOR DEVELOPMENT EXPENDITURE REVIEW (PSDER)
25.   Several interlocutors commented on the confidential report prepared by the Bank
(in association with the ADB and OECF) for the Government as an input for the decision
of the Annual Plan Coordination Committee and the National Economic Council on the
next Budget. One senior interlocutor argued that the annual review of the PSDP by the
Bank was not very useful for several reasons. First, it tended to strengthen the short term
perspective within the Bank. The Bank's advice should really focus on the overall plan
and development strategy as well as the strategy within sectors. Then, all that the Bank
had to determine whether the PSDP was consistent with the strategy rather than focus on
individual projects. In the PSDER the view of the wood was lost because of the trees.
"The sector programs and policies have to be evaluated: policies are more important than
projects. More important than the public investment program in the 8th plan was the
policy framework for achieving the plan objectives, since the Government would be
contracting. An annual plan is not too useful for evaluating the framework". Secondly,
the concept of the core program within the PSDP tended to broadly coincide with all the


117
donor aided projects. For the donors it was difficult to accept that any project they were
financing was not a part of the core. A conflict of interest was present in his view.
Thirdly, it was somewhat of an exercise of second guessing the decisions of the Priorities
Committee, on whose recommendations the PSDER commented, often within a relatively
short time which usually was there, before the meeting of the APCC. The Bank should
build up institutions like the Priorities Committee. The present arrangement might also
encourage avoiding of difficult decisions by Government officials by passing them on to
the shoulders of the Bank (what could we do; this is what the Bank wants).
THE SOCIAL ACTION PROGRAM (SAP)
26.    The SAP is a broad based "umbrella" approach to improve primary education,
primary health care, population and rural water supply and sanitation services in Pakistan,
undertaken by the Government with support of donors. Its basic premise, based on the
experience, gained by donors from an extensive portfolio of projects, is that the main
problems-implementation, poor project design, low levels of effort and political will - are
common across all services and areas of the country. The SAP project supports programs
in all four basic services, province by province and aims at improving the overall
implementation environment as well as addressing important sector level issues. The SAP
framework includes (a) a decentralized structure, to clarify responsibilities for
implementation; (b) performance based monitorible annual agreements to determine
funding; (c) mechanism for continuing policy dialogue, coordination and monitoring and
(d) a participatory development program to encourage community participation and
experimentation through NGOs. National and provincial committees have been set up to
monitor and coordinate the SAP, as also a multi donor support unit sponsored by several
donors to coordinate the donor's policy dialogue with the Government. Through this
comprehensive and high profile effort the SAP project is seen as strengthening the
performance of basic social services even over a short period of 3 years. This outline of
SAP is given to provide the context for the comments received on the SAP.


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27.    There was wide agreement among interlocutors that the SAP was a very
significant if overdue initiative. However, there was no shortage of critical comments on
it by Government interlocutors, by researchers and consultants, by NGOs representatives
and even by one or two donor representatives. First, the program was seen as excessively
Bank driven, though it is presented as a Government initiative supported by donors. One
interlocutor had a more balanced view. "At one stage the Bank pushed us to prepare
SAP. Then we pushed the Bank for the finance for it". Another said that the Bank came
two years too late (i.e. after the SAP was ready it delayed). Second, the monitoring of the
program was seen as too intrusive by Government interlocutors - "you are trying to tell us
where to put schools". "The Bank is dealing with federal Government, provincial
Governments and local Governments and this creates problems and political difficulties".
Thirdly, there is a bias towards quantitative indicators - number of schools etc. at the
expense of the more basic qualitative factors e.g. community leadership. Reliance on
traditional local organizations, argued one NGO interlocutor, is not enough partly because
they have been eroded and because they are susceptible to/reflective of Government
control. She felt that "our biggest need is developing a cadre of local activists, and this
takes time and working at the grassroots level".   That militates against quick
disbursement, which she believed was the primary driving force of Bank staff ("You are
more interested in disbursement than development"). The Government she charged, was
naturally very happy with the Bank for supporting it. ("Essentially the A.D.P. in the
Social Sectors has become the SA.P.   There is a lot of lip service to community
involvement but the old system continues"). Referring to her own organizations, she
stated that it prefers to deal with groups of about 20 to 60 households, staying with small
groups and hamlets. The criteria for identifying such a group were (a) geographical
proximity; (b) common interest; and (c) social viability (e.g. clan, religion, economic).
They also insist on the community sharing in the cost of the development intervention.
These, in depth, local efforts were inconsistent with the rather ambitious quantitative
objectives of the SAP. Another retired Government interlocutor also stressed that
"community leadership is the crux of the SAP. Without that people will not be prepared
to share in costs, and given the strain on current expenditures, without community


119
involvement the facilities will not be maintained". He went on that he had no idea to what
extent this was being followed in the implementation. A donor interlocutor stated that
"initially the Bank had tended to downplay the local level issues in order to get on with
disbursement, but now there is a belated realization of these, and consequent difficulties
with Government". He also felt that there was too much emphasis on quantitative
measures of program implementation at the expense of concerns with the quality. A
fourth issue mentioned related to Bank's rigid adherence to its own procedures and
systems, instead of seeing the borrower - lender relationship as a partnership. The
concern, again expressed at the NGO level, was that the Bank did not have respect for
their procedures and systems - the price of support to an NGO was the adoption of the
Bank's own procedures. A final comment, coming from a donor representative, was that
the analytical work underlying the SAP was perfunctory. He stated that for example the
kind of hard questions about health that were raised in the WDR, 1993, had yet to be
asked and analyzed in Pakistan. In his view the SAP was a case where experience at the
project level led to an opportunistic operational initiative without an underlying analysis
and without the requisite intellectual underpinnings.
DISSEMINATION
28.   Better and wider dissemination of Bank CESW was seen by all as a desirable
objective, even by the senior interlocutor who pointed to the problem that "on the one
hand we want the report (CEM) to be frank and candid, and on the other hand there are
Government sensitivities - it may lead to unjustified criticism of the Government". he also
pointed out that popular myths are very difficult to dispel. In his opinion one or two
recent seminars (e.g. those by the Fund on structural adjustment) have not helped to
change public perceptions. But "certainly they did no harm". Another senior interlocutor
mentioned that the Bank should encourage more open public debate on the non-sensitive
issues where there is agreement with the Government e.g. agricultural price reform. But
to be helpful the sense of "complacency" exhibited even by middle level Bank officials in
seminars needs to be tempered. This referred perhaps to the fact that Bank staff do not


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see it necessary to defend the positions taken in the reports which have been approved by
their immediate supervisors against the criticisms being made, or agree to more than
cosmetic changes in these reports.
29.    There has been significant progress in the wider public dissemination as well as
discussion within Government of Bank CESW in recent years, mainly since the adoption
of democratic elections. The Bank has taken an innovative approach in some cases by
discussing the draft report (yellow or green) in seminars to which not only Government
officials but academics and researchers and others have been invited. For example, the
Irrigation and Drainage Issues and Options Study was discussed with the Pakistan
Engineering Council (a professional body), the Pakistan Council of Water Resources and
WAPDA in yellow cover and in a further series of seminars in green cover. The
Sustainable Strategy in Agriculture report has similarly been exposed to both public and
private sector experts from the initial stage. Initially there were brain storming sessions
held on the background papers with key Government personnel participating. This was
followed by discussions in the provinces. At the end of the mission an aide memoire was
prepared and discussed at a seminar. The yellow cover was circulated to Government and
local consultants. The green cover was discussed in two widely attended seminars in
Islamabad and Lahore.
30.   In recent years, the public profile of the Bank has become much higher, with the
adoption of structural adjustment reforms in 1988. The Bank is news, as the only
journalist interviewed stressed in his comments.  Both the 1988 and 1992 ESAF
agreements ("people don't distinguish between the Bank and Fund in Pakistan") were
negotiated with caretaker Governments and implemented by subsequently elected
Governments. This has raised a veil of suspicion that the institutions collaborated to "tie
the hands of the elected Governments" for structural adjustment. In fact it was even
argued that Mr. Qureshi's Government asked the IMF to insist on stronger conditionality
in order offset any backsliding later on. The notion that the program is imposed, and that
it is imperialistic and anti people needs to be countered, he argued. (Attending the first


121
day of a 3 day international seminar on structural adjustment in Karachi tended to confirm
to me this point of view. The press people and many of the academics there were severely
critical of the program which was "hurting the poor". Much of the criticism was
uninformed and emotional). The journalist interlocutor went on to say that the problem is
that there is a genuine lack of consensus on the program - on its components as well as the
pace and time frame of changes. The program obviously imposes hardships on some
powerful vested interests. The media has played up stories of countries where adjustment
has not worked; and the success stories are not believed even if reported. These factors
are reinforced by occasional Government officials giving vent to frustration about rigid
conditions in off the record press briefings - "what can we do. They insist on such and
such measures.
31.   The interlocutor said he himself was in agreement with the broad elements of the
Bank-Fund program except the pace of the reduction of the budget deficit which was
partly responsible for recession and slow growth in the past two years ("If the Bank
insisted that the proceeds of privatization should go into debt reduction and then accepted
a deficit of 5.5% of GDP instead of insisting on a reduction to 4.5% it might have been a
better option").
32.   The interlocutor felt that in the light of these development the Bank and Fund)
should modify their philosophy of keeping away from the public eye. ("By doing so they
have lost the battle for hearts and minds"). A more active public relations effort need to
be mounted. The recent policy of releasing gray cover reports was welcome. But, the
institution has to do more to get its ideas across in a country like Pakistan where trained
economic journalists were almost not existent. He made the following suggestions for the
future. First, there should be more frequent briefings of the press by the RMP, and greater
access to Bank officials. Secondly, a more open policy on gray cover reports was not
enough. Many of these studies were quite voluminous, or technical. It would be useful if
on the occasion of release of reports a short ("five or six page page") write up in non
technical language were made available. There should also be a system of briefs and flyers


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on important issues and development ("you have got to market your ideas"). Thirdly,
there is a need to educate the press. For this more than briefing is needed. The
individual's suggestion was that the Bank may consider financing a short (2 week) visit to
the Bank of about 10 journalists, where they could receive an intensive briefing on the
Bank and the major international development issues (not only in Pakistan).
COLLABORATION AND JOINT STUDIES
33.   The greater use of local collaborators and consultants was supported by almost all
interlocutors because it would (a) lead to building up local capacity for policy oriented
analytical work; (b) introduce a greater awareness of local institutional and cultural factors
into the analysis and (c) promote a greater sense of ownership in the conclusions and
recommendations which could mean more successful implementation. It would also
facilitate wider dissemination. Different degree of emphasis was given to these various
benefits by different interlocutors. In fact all of them were not mentioned by any single
person.
34.   A senior interlocutor with international experience was critical of the Bank for
having a uniform approach to CESW in all countries. He characterized client countries
into three groups on the basis of local capabilities for economic analysis: (a) those where
local capabilities are weak: in these the Bank CESW can contribute significantly; (b)
countries with growing capabilities; and (c) countries with strong capabilities - some may
even be ahead of the Bank. The South Asian countries he argued are essentially in type
(b) and (c). Unfortunately the Bank's CESW does not keep this typology in mind, which
should influence the approach to CESW. For countries in South Asia he argued that
CESW should be more strongly geared to using and strengthening the indigenous capacity
for policy analysis through three measures. First, using more local consultants and
research institutions for CESW tasks and associating some senior officials with finalizing
Bank reports. Second more joint studies, particularly on sector matters, with Pakistani


123
research institutions. Thirdly, encouraging more open public debate on at least the less
sensitive policy issues.
35.   In fact in Pakistan CESW has come some way in recognizing and relying on local
experts on both in Government and outside. The use of local consultants to prepare
background papers in the case of the energy options reports, the irrigation and drainage
report and the sustainable agricultural strategy report, was mentioned with approval.
However, the local consultants rarely participated on missions and in the final preparation
of the report for which they provided background papers. One could speak of them thus
as more or less glorified research assistants with no voice in the preparation of the final
document. To the extent that the yellow cover draft is discussed in seminars (where they
participate) and they have an opportunity to inject their views into the final product, this
characterization is perhaps unjust. One danger in the use of local consultants which was
pointed out was the tendency for the Bank to rely on four or five persons for most of the
work since they were reliable and like thinking. One individual may thus have four of five
assignments on his plate. A second weakness is that most consultants are hired by the
Bank in their personal capacity so that the institution building dimension of collaboration
is undercut (see below para 39).
36.   In a few cases Government has been able to appoint counterpart teams to work
with Bank missions and in some cases (the energy study and irrigation and drainage)
individuals have even participated in drafting parts of the report. However, the constraint
on the Government side is the shortage of qualified people and the pressure on the best of
them of routine/short term urgent business, which prevents their being spared for such
work. This was recognized by a few interlocutors. One of them pointed to another
constraint. "Our middle level and technical people are often just as well aware of the issue
as the Bank staff, but they are not listened to by their seniors. Sot the middle level people
find it an effective way of getting their concerns put before the decision maker through
Bank produced reports. Presumably the same problem would be faced to some extent by


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analysis produced locally outside Government. In other words, even if local capability for
analysis was there it was only useful if mediated and presented through a Bank report.
37.   One donor representative while supporting the greater use of local consultants
however, stressed the fact that as the bottom line the CESW reports had to be clearly seen
as the Bank's report, with the institution's standards of quality and objectivity not being
compromised and its staff responsibility for the views expressed not eroded.  He
reiterated something which one or two local interlocutors also pointed out: since 1961 the
Bank has taken on the responsibility of reviewing Pakistan's policies and prospects and of
conducting the policy dialogue on behalf of all the donors. The CESW (in particular the
CEM) is the prime vehicle for carrying out this responsibility. The recent changes in the
pattern of capital flows towards greater private flows increases the importance of the
Bank's assessment as being perceived to be objective and independent and the best
possible, and not merely a synthesis of views and work of others. For this interlocutor the
ownership of the judgments in the CESW rested squarely on the Bank but the CESW
could be more client friendly and have more impact through use of local consultants and
research institutes, and through a more open and early discussion of the reports in the
country.
38.   Another point to be considered is the use of private (i.e. non academic),
consultants. The consulting profession in Pakistan is very narrow but is growing fast, and
under the private sector orientation and the entry of multinationals in the economy, the
demand for their services has grown rapidly. One consultant interviewed felt that with
local consultants the quality of understanding of the local environment improves, but "a
private consultant is ultimately a consultant". On the basis of his experience of several
project related studies he felt that sometimes the Bank comes with a set agenda and with
insufficient awareness of inter-sectoral linkages - this results in unrealistic policy and
project objectives, which the private consultants goes along with, even against his/her
better judgment. Thus the better understanding of the local institutional conditions


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resulting from using local consultants may not necessarily be reflected in more realistic
conclusion and objectives.
RESEARCH INSTITUTES AND CESW
39.   In Pakistan the use of individual consultants (including those on staff of research
institutes) for CESW has been far more prevalent than a formal association with the
institutes. This was seen as having seriously inhibited the institution building possibilities
of collaboration on CESW, and may have even contributed to their weakening. The
Director of one institute and two others referred to them as being more of a collection of
individual consultants than research institutions. For institutions it was important to have
some investment in infrastructure - e.g. library and information technology, some common
objectives and a work program which was more than the sum of its parts. At the same
time institutions found it difficult to keep good people without allowing them individual
consulting options, since they could not pay them enough. In one institute, the Director
said that if he could pay adequate salaries he would not allow individual consulting. As it
is, staff members contribute 30% of their consulting emoluments to the institution which
uses it to fund staff development (e.g. Ph.D. training abroad).
40.    In the past some major economic studies (under T.A. projects) have been given to
a research institute (e.g. on effective protection). There was a steering committee to
oversee the study in which the Bank was represented (as well as a steering committee at
headquarters). The objects of the study were to (a) establish a data base (b) develop
estimates of effective protection to be used as a basis of tariff rationalization and (c)
strengthen local capability and institutions. A 24 volume study resulted, but according to
a senior Government interlocutor none of the objectives was even approached, and
certainly not reached. However, despite this mixed experience most persons who had
views on the subject believed that some studies could be usefully done jointly with certain
research institutions or farmed out to them. Studies which required extensive data
collection in field, and which had a long gestation period, and required a team of


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researchers, perhaps with specific specializations could be more suitable for contracting
out to institutions. Not many such studies are part of the normal CESW, but the
institutions in Pakistan which in principle could be able to undertake such a collaboration
and T.A. There are several institutions in Pakistan which in principle could be able to
undertake such a collaboration. The issues which inhibit progress in this are relate to
questions of management and control which partly reflect skepticism about the quality
(soundness ?) of leadership in at least some of the institutions. Some young researchers
and academics referred to the fact that if a study was contracted with an institute, the head
would determine the team that would work on it as well as supervise its day to day work.
questions of favourtism and inequitable sharing of the work and the rewards (including
recognition) would arise. On the Bank side also, task managers understandably prefer to
be in charge of which does what and when. Both these attitudes have tended to tilt the
scales in favour of individual consultants. The Director of one institute reported that a
recent trade and industry mission had discussed consultancy with him. His preference was
for an institutional relation. However, the Bank preferred individuals because of "more"
control, less cost, and more assured quality". However, he went on to add that at least
half the work he was involved in with the Bank was on an institutional basis. This
Director also suggested that it might be useful to select a task in the existing CESW
program to be farmed out on a pilot basis. He also added that in his experience there had
been some learning and some benefit from interacting with the Bank even on the basis of
individual consultancies.
RESEARCH INSTITUTES AND NETWORKING
41.   The networking among research institutes in Pakistan is almost non-existent. The
Pakistan Economic Association is defunct, the last meeting being held in 1973. PSDE has
started the Pakistan Society of Development Economics, which has an annual meeting. In
the past it has tended to have too wide a coverage and been excessively supply driven.
Anything one works on, said one information, is published. However, PSDE could
provide a starting point for stronger networking, he thought. One suggestion for


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improving networking within the country was for the Bank to finance and participate in
two or three workshops on various subjects. Papers would be prepared by individuals
from different institutes and the leadership could be taken on a rotating basis. The
strengthening of the infrastructure of research institutions - libraries, data bases,
information technology-as suggested by another interlocutor would also help. A "third
approach would be for the Bank to start some training programs in those areas which are
of interest to the Bank, and locate them in a research institutes. This could develop only if
there is a long term relationship".
42.   Networking across South Asia among research institutions is non existent. Several
persons commented on the relatively stronger network among institutes in India. An
Institute of Public Finance is being set-up in Pakistan, on the model of the Indian Institute
which is admired as having formulated and designed the on going tax reforms in that
country. Given the political difficulties with India better networking across South Asia
was seen as a distant prospect since the strongest institutes with whom networking would
pay are in India.
43.    As regards the role of SAARC in facilitating networking there were two opinions
expressed. One researcher pointed out that SAARC was a Government outfit with the
Ministry of External Affairs in the lead role. Further all decisions are by consensus. These
characteristics made it unsuitable for this role. However, another researcher felt that given
the political difficulties, SAARC provided the kind of neutral umbrella which could be
usefully explored for networking. In fact some SAARC sponsored networking was going
on. In early September here was a SAARC conference on the Economics of Higher
Education in Islamabad. The Indian delegation, however, consisted of civil servants. He
also pointed out that SAARC has also started a program of short term visits of researchers
across countries. Under this one Indian economist was to visit the AERC (Karachi) for
one year. The Bank could support networking by supporting (financing) both kind of
initiatives conferences and scholar visits. For seminars his advice was that (a) choose a
relatively non sensitive subject of regional interest e.g. the progress and the issues in


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replacing octroi taxes with property taxes with South Asia; (b) location of the seminar
should be at least initially, in one of the "neutral" countries e.g. Sri Lanka, Nepal,
Bangladesh or other countries.
COORDINATION AMONG DONORS: DIVISION OF LABOUR
44.   All donor representatives we met were positive about the coordination among
donors in the field. No significant areas of differences were identified. The Deputy
UNDP Representative said that in earlier periods the Bank had not been I the social sector
("Soft Sectors") and there had been a traditional division of labour with UNDP which
focused to a greater extent on them. This was no longer true. However, the Social
Action Program involving many donors was well coordinated. he also emphasized the
crucial role of institutional factors and the policy framework in successful T.A. In the past
UNDP's T.A. suffered from neglect of pre-project preparation and the assumption that the
enabling environment was a given. However, "what is assumed to work often does not
work". Thus for increased client responsiveness more attention to pre-project analysis
particularly of the enabling environment was required. The UNDP insisted of "providing
technical inputs within a given framework is now looking also at the framework". He
noted that the Bank had also increase its presence in the T.A. areas, but the effort was
well coordinated with the UNDP. He pointed to adhoc meetings of donors in the field e.g.
on environment and on gender as contributing to such coordination. He suggested that it
may be useful to start some informal donor working groups in the field along some themes
to follow up progress in areas that had appeared to be important in consortium meetings.
Better exchange of work programme and of reports would also help.
45.   The Director, USAID also stated that coordination was working well. There was
a shortage of good analysis and data and he discounted the possibilities of wasteful
duplication. his main concern for the future was that with USAID puling out of Pakistan
it was important for the Bank to fill the gap in economic work particularly in the areas like
population where USAID had a leading role. He felt that the Bank was less forthcoming


129
than USAID in making its data available to other researches and pointed our that data
lapses for the household survey initiated by the Bank were taken to Washington, and were
not made available to local researchers even after a lapse of 3 years. (This complaint was
repeated also by some academics and researchers).
46.    The staff of ADB, which also does significant amount of CESW in Pakistan were
positive about the coordination with the Bank. There were no differences on any of the
major issues and broad agreement on prescriptions. The pre-consortium and post-
consortium meetings of donors in the field were seen as useful for this purpose. ADB and
the Bank were active in the same sectors - e.g. agriculture, industry, energy finance but
were pursuing complementary objectives with little duplication. The broad policy agenda
was the same. Occasional differences may emerge but were sorted out. One such matter
was that under their agriculture program loan ADB has insisted that, as a condition
relating to wealth tax in agriculture, passing an ordinance was not enough - the law
needed to be approved by Parliament. The Bank felt on the other hand that an ordinance
was adequate. The ADB staff indicated two steps that would be desirable for strengthen
coordination: (a) the ADB's country program mission which visits the country every year
talks to all the donors. It would be useful if the Bank's country portfolio review mission
were to meet also with ADB staff in the field; (b) the CEM missions in past years used to
visit the ADB field office for discussions, but this practice has been dropped in recent
years. It should be resumed.
47.   Despite the positive picture presented by the ADB staff it was disturbing to find
that the person was not aware of the Bank's sustainable strategy for agriculture report
which was to be discussed at two widely attended seminars within three weeks time;
further, he informed us that the ADB was planning an agriculture sector study of its own
and a mission would be in the field shortly. In this context, his suggestion that there
should be an ex ante sharing of the CESW work program between the two institutions in
the field appeared a sensible step.


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48.   Discussions with the head of OECF field office elicited a similar positive
assessment of coordination. OESF has a total of 300 employees worldwide and does not
engage on CESW on significant scale on its own. For him the division of labour was
between the Fund (macro) and the Bank (Sectors, Budgetary Prospects and the Annual
Development Program). The pre-budget review of the Public Sector Development
Program with the Government is from this year conducted jointly by the Bank, the ADB
and OECF. The report is a joint document. This ensured good coordination and a
resolution of any differences on specific parts of the development program. In his view
the curve of donor coordination has shown an upward trend over time.


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ANNEX 6
AN EXAMPLE OF COLLABORATION AND DISSEMINATION
PAKISTAN
AGRICULTURE SECTOR STUDY1'
CONSULTATIONS WITHIN THE BANK
1.    During the preparation of the report, we organized 13 brown-bag seminars on
selected issues. These seminars proved to be effective instruments for brainstorming on
the key issues covered by the sector study, as well as for collecting information and
deriving knowledge from studies in progress or recently completed.
CONSULTATIONS IN PAKISTAN
2.     We also carried out extensive consultations in Pakistan, from the early stages of
preparation of the report. Before starting the report, we consulted with key officials from
the Planning Commission, Economic Affairs Division, Ministry of Finance, Ministry of
Agriculture, and Ministry of Water and Power about the focus and scope of the proposed
study. We then organized three brainstorming sessions to which we invited a cross-
section of key people from the government, research organizations, and universities to
review the existing knowledge and to determine what should be done next. Local
consultants were used to prepare background papers which were the basis for the second
and third brainstorming sessions. We also shared with selected Pakistanis the first draft of
the report and obtained their feedback.
1 Extracts from a note prepared in the Country Department.


132
3.     Such extensive discussions with Pakistanis had several benefits: (a) they kept the
focus of the report on issues relevant to the country; (b) they reduced the cost of
preparing the report because consultants who were collecting the data did the job at a low
cost (although the papers were prepared by junior consultants, we had the benefit of the
views, suggestions and guidance of senior scholars through brainstorming sessions); and
(c) they helped to create a sense of ownership by the Pakistanis because both senior
officials and well-known scholars were involved throughout preparation. From the
beginning, the Pakistanis have had intimate knowledge about the report's messages and
they appreciated their role in its preparation. Throughout the preparation, the task
manager from the Bank kept informed some key officials who did not take part in the
brainstorming sessions. One of these key officials was the Chairman, Agriculture Task
Force set by the federal government to formulate agricultural policies (see below).
DISSEMINATION OF THE REPORT
4.     To disseminate the report widely, we organized two major workshops: one in
Lahore and the other in Islamabad. We had earlier widely distributed green cover copies
of the report to all relevant officials in both the federal and provincial governments.
Several key officials attended the workshops. The seminar in Islamabad, for example, was
attended by key officials such as Minister for Agriculture, Chairman, Agriculture Task
Force, Secretaries of Agriculture, senior officials of the EAD, Planning Commission ad
leading researchers and a few large farmers, one of them a former Minister of Agriculture.
The workshops had five sessions on each of the five chapters, and each session had a
chairman and a designated discussant.  The observations and comments from the
workshops fall into three groups:
5.    The first group wholeheartedly endorsed the report, complimenting its integrated
treatment of issues and supporting the strategy outlined. This group, which formed the
majority at the Islamabad seminar, agreed with the main message of the report--that past
sources of growth have now weakened and sustaining growth in the future will be possible


133
only with major changes in government policies and role in agriculture. This group also
enthusiastically welcomed our suggestion that the next logical step would be to prepare,
jointly with the Pakistanis, an action program to implement the strategy. The strongest
advocate of this approach was Mr. Shah Mehmood Qureshi, chairman of the Agriculture
Task Force, who is also the chairman of Pakistan Farmers Association. As note, the task
manager liaised closely with Mr. Qureshi during the preparation of the report.
6.     The second group, supported the overall strategy but were concerned about its
implementation, especially the pace and sequence of the proposed reforms. For example,
while this group agreed that ending government intervention in agricultural markets is
needed, it cautioned that a competitive private sector either does not exist or is not fully
developed to step in effectively (though actual experience thus far does not support this).
To the extent that any of these concerns were justified, the pace and sequencing of
reforms in the action program should take them into account. It was also noted that clear
and consistent signals about government withdrawal and provision of level playing field
will be essential if the private sector is to step in.
7.    A small third group, mostly comprising technocrats from agricultural research and
extension organizations, opposed the idea of limiting the government's role in agriculture
to provision of public goods and correcting market failures. According to this point of
view, the government has responsibility for protecting the interests of smallholders and
therefore must continue to plan an active role in output and input markets. This point of
view was strongly rebutted by other participants in the seminar, particularly the Chairman
of the Agriculture Task Force, Mr. Qureshi.
8.    Recently, Mr. Qureshi wrote to the Bank suggesting that this report be widely
disseminated in Pakistan. As the chairman of the Pakistan Farmers Association, he
generated support from the federal government of Pakistan and CIDA to hold three
national workshops where a large number of people from different groups, like farmer
groups, top government officials from provinces and the center (including the President of


134
Pakistan who attended the workshop in Islamabad), private sector actors (such as the
Chamber of Commerce and Industry), the press and donors attended.
9.    The workshops had presentations from the Bank group as well as from the farmers
association. Bank's presentation highlighted the findings of the study in three main areas:
(a) the agricultural sector: its performance prospects and objectives; (b) the influence of
government policy and intervention on agricultural performance; and (c) a strategy for the
future. The Farmers Association of Pakistan presented three topics: (a) the farmer's
perception of the problems, (b) the farmer's expectations, and (c) the farmer's vision and
the Bank's recommendations. This was an important step because various groups,
especially the farmers, strongly supported the vision that is outlined in the Bank study.
This consensus has created a pressure on the government to implement the proposed
reforms--a pressure that will help reform-minded officials and policymakers to overcome
oppositions from some government officials and the vested interests who now benefit from
policy distortions.
LESSONS
10.   The lesson to be learned from all this is that in Pakistan, as elsewhere, influencing
policymakers is not easy. Even an excellent report will have little zero impact if the policy
makers for which it is intended do not focus on its recommendations. Key policymakers
must be involved in report's preparation and follow-up activities (including dissemination),
if they are expected to support and implement its messages. And this is done most
effectively if we have a strong supporter who not only believes in the report, but is ready
to become a spokesperson for it. Such an advocate to the report improves its chances of
influencing policy changes. All changes or reforms would be opposed by the group that
benefits from the existing distortions. Having strong allies and wide dissemination enables
the reform-minded officials with the support of the skeptics (such as the second group) to
overcome the opposition of hard-core opponents, particularly the interest groups that now
benefit from lack of reforms.