73444 POVERTY THE WORLD BANK REDUCTION AND ECONOMIC MANAGEMENT NETWORK (PREM) Economic Premise JUN 2012 NOVEMBER 010 • Numbe 95 • Number 18 Can Donors and Nonstate Actors Undermine Citizens’ Legitimating Beliefs? Audrey Sacks Under what conditions is service provision by donors and nonstate actors likely to undermine or strengthen citizens’ legitimating beliefs? A new study assesses associations between donor and nonstate actor service provision and the sense of obligation that these associations produce for citizens to comply with tax authorities, the police, and courts. This note presents the study’s findings, which suggest that the provision of services by donors and nonstate actors is strengthening, rather than undermining, the relationship between citizens and the state. Increasingly, donors and nonstate actors, including nongov- using multilevel analyses of Afrobarometer survey data. Find- ernmental organizations (NGOs), private entrepreneurs and ings yield support for the hypothesis that service provision by companies, religious organizations and communities, are pro- donors and nonstate actors is strengthening, rather than un- viding humanitarian aid and other public goods and services dermining, the relationship between citizens and the state. (Devarajan and Reinikka 2004; Edwards and Hulme 1996). A Model of Legitimating Beliefs and the The growth of donor and nonstate actor service provision Fiscal Contract raises a broad concern about the conditions under which the provision of services by donors and nonstate actors is likely to The concept of legitimacy denotes acceptance of the right of undermine citizens’ legitimating beliefs. governors to rule; its effect is an increased likelihood of quasi- Citizens may be less likely to support the government, voluntary compliance with governmental rules and regula- such as by complying with its laws and regulations, when they tions (Levi 1997). Legitimacy has two components: value- credit nonstate actors or donors for service provision. Service based legitimacy (a sense of obligation or willingness to obey delivery by donors and nonstate actors is likely to prompt citi- authorities) and behavioral-based legitimacy (actual compli- zens to question why they should pay taxes to a government ance with governmental regulations and laws). Theoretically, that is not providing them with anything in exchange. On the value-based legitimacy should translate into behavioral legiti- other hand, if citizens view their government as essential to macy. Empirical work shows that value-based legitimacy is a leveraging and managing these external resources, the provi- function of four antecedent conditions: procedural justice; sion of goods and services by donors and nonstate actors leadership motivations; administrative competence; and gov- might strengthen citizens’ legitimating beliefs and their will- ernment performance (Levi and Sacks 2009). ingness to comply with governmental laws and regulations. A Evidence from key historical works (Levi 1988; Tilly new study (Sacks 2012) assesses these competing hypotheses 1990) and a range of contemporary developed and develop- 1 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise ing countries suggest that governments that rely on broad- ing 30 to 35 percent consisted of direct budget support (Di- based taxes are likely to establish a fiscal contract with citi- John 2010, 19). The President’s Emergency Plan for AIDS zens. The more citizens perceive that government is upholding Relief (PEPFAR), the Global Fund to Fight AIDS, Tuberculo- its end of the fiscal contract with constituents with serious sis and Malaria, Roll Back Malaria, and the Gates Foundation efforts to deliver infrastructure and services, the more likely a channel most of their funding to Zambia off budget or as proj- virtuous cycle of citizen compliance will emerge, leading to ect support (Bartholomew 2009, 17). Qualitative evidence better government and greater compliance (Levi and Sacks suggests that the vast majority of NGOs collaborate very little 2009). with central and local government officials (Sacks 2011). Is Service Provision by Donors and Can Service Provision by Donors and Nonstate Actors Likely to Undermine the Nonstate Actors Strengthen the Fiscal Fiscal Contract? Contract? Knowledge is beginning to accumulate on what government The answer to this question may depend on several support- can do to influence the perception of the relationship be- ing conditions. Many argue that the effect of aid is contingent tween citizens and political authorities. But very little is on the institutional environment in place (Burnside and Dol- known about what happens once nonstate actors mediate lar 2004). Where accountable government institutions are in that relationship. If the fiscal contract rests on the provision place, governments are likely to work with donors, interna- of basic welfare benefits, what happens when actors other tional agencies, and nonstate providers to effectively manage than the state provide these benefits? and deliver aid. Services coproduced by the government and In Zambia, World Vision and other international NGOs communities have many positive impacts, including lower have been providing a substantial number of services for resi- corruption and the formation of social capital (Ostrom dents. From 2008 to 2009, a unique service delivery survey 1999). In these contexts, aid is likely to strengthen rather was conducted throughout the Southern, Eastern and Cop- than undermine the fiscal contract. perbelt provinces. In a ward in the Eastern Province, where Most citizens are likely to have poor information about World Vision is particularly active in service delivery, 49.06 the state’s formal relationship with donors and nonstate ac- percent of respondents believe that public services in their tors and its management of aid and nonstate service provi- community have improved over the past year. Of these respon- sion. Rather, individuals are likely to evaluate the state’s role dents, 56.52 percent credit World Vision, and only 26.09 per- in development activities based on their everyday observation cent credit the government for the improvement. The remain- of and interaction with frontline service providers (Lipsky ing 17.39 percent of respondents credit other NGOs. Of the 1980; Smith and Lipsky 1993; Tendler 1997). When citizens remaining respondents who do not believe that services have observe bureaucrats collaborating with NGO staff in the improved, 88.0 percent blame the government and 12.0 per- field, they are likely to forge a positive impression of the state’s cent blame the community. Not one respondent blamed an role in development and give credit to the state for helping to NGO or donor for the lack of improvement. Respondents leverage external resources. When mechanisms to voice com- were asked if the decision was up to them, to whom would plaints about nonstate actors exist and when bureaucrats are they prefer to pay their taxes. Half of the ward’s respondents able to effectively respond to complaints, citizens are also said that they would prefer to pay their taxes to donors, NGOs likely to credit the state for aid. or other nonstate actors, and the other half would prefer to pay The government of Botswana, for example, has an im- their taxes directly to the government. pressive record of coordinating with donors to ensure that aid Unlike sectarian and rebel movements that tend to is effectively utilized to promote development, which has led flourish when they are able to provide the goods that citizens to a record of sustained economic growth (van de Walle 2001, are not receiving from their own government (Chen 2004; 205–6). In comparing the Haitian government’s regulation Iannaccone and Berman 2006), NGOs and donors do not of aid to the Rwandan government’s, for example, Farmer have aspirations to wrest control from government and are (2011, 7) observes: “the way the Ministry of Health in Rwan- therefore unlikely to replace the state as a source of authori- da is run makes very effective use of a large number of part- ty. Yet, they still pose a threat to states by undermining citi- ners, NGO partners and also pushes forward this strategy that zens’ perceptions that the state is not fulfilling its end of the is really aimed at a similar standard of care in all of the dis- fiscal contract. tricts in Rwanda. We need that in Haiti as well.� Similarly, high levels of off-budget and project aid mean Data, Methods, and Measures that recipient governments exercise very little direct control over donor aid. In Zambia, during 2000–2008, between 65 This assessment of the relationship between external service and 70 percent of aid consisted of project aid, and the remain- provision and citizen compliance with government uses the 2 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise fourth round of Afrobarometer survey data, which were col- separation plot (Greenhill, Ward, and Sacks 2011)—a new, lected in 19 sub-Saharan African countries in 2008 from visual method for assessing the predictive power of the re- 26,513 respondents. Africa is a particularly good place to ex- gression results—was also used to examine whether includ- amine these issues because of the large amount of variation ing measures of donor and nonstate actor service provision both within and across African countries regarding the extent improves the model fit (figure 2). The separation plot in fig- to which nonstate actors, donors, and other states are active in ure 2 suggests that both models perform well in assigning service provision and the extent to which governments are high probabilities to actual cases of accepting the authority relatively effective and fair. This assessment estimates multi- of the tax department and low probability to actual cases of level models with random intercepts for primary sampling rejecting the authority of the tax department. The darker units (PSUs), countries, and ethnic groups. red bands, which represent the high probabilities of the There are three dependent variables in the assessment. Re- event occurring, are wider on the upper deck of the plot spondents were asked whether they agree with the statements: (which consists of the actual events) than in the lower deck i. “The tax department always has the right to make people (which consists of the nonevents). The grey bands, which pay taxes,� correspond to low probabilities of the event, are wider in the ii. “The police always have the right to make people obey the lower deck than they are in the upper deck. law,� and The direction of the relationship between donor and iii. “The courts have the right to make decisions that people nonstate actor service provision and the willingness to pay always have to abide by.� taxes are positive (figure 3). Respondents who believe that do- Measures of government effectiveness, procedural fair- nors and nonstate actors are helping their country by deliver- ness and administrative competence and honesty, as well as ing essential goods and services are more likely to be willing to donor and nonstate service provision, are included in the comply with the tax department. Service provision by the models. United Nations, followed by China, has the largest relative ef- Results fect on the acceptance of the tax department’s right to make people pay taxes. These findings imply that donor and non- Is the logic of the fiscal contract relevant to developing states? state actor service provision is having a positive spill-over ef- The logic of the fiscal contract is largely based on the state- fect on citizens’ perceptions of the state. building experiences of Europe—but is it relevant to develop- An alternative hypothesis is that the very poor, who have ing countries with very low and idiosyncratic taxation lev- little experience with paying taxes, might not care from els? Across a wide range of African countries, including whom they receive services and goods as long as these goods Liberia, Burkina Faso and South Africa, there is robust evi- and services are welfare enhancing. Interaction terms be- dence that the more competent, honest, and fair a govern- tween sociodemographic indicators and perceptions of the ment is in serving its populace, the more likely it is to produce a virtuous cycle of citizen compliance with Figure 1. Probability of Citizens Complying with Tax Department its extractions, leading to better government and probability greater compliance. Figure 1 graphically illustrates the -.1 -.05 0 .5 .1 .15 .2 point estimates of the first differences of complying government treatment of ethnic group: fair with the tax department. The horizontal bars in the figure indicate 95 percent confidence intervals. Proce- no corruption within tax administration dural fairness, specifically citizens’ perceptions of the government’s treatment of their ethnic group, has the approve government efforts to collect fees largest relative effect on tax compliance, followed by administrative competence and government perfor- government treatment of citizens: fair mance in delivering services. There is little evidence that the presence of infrastructure in neighborhoods food security is linked to legitimating beliefs. approve government efforts to maintain Can donor and nonstate service provision interrupt the water and sewage fiscal contract? approve government efforts to maintain roads Results from multilevel logistic regressions suggest that the relationships between government effective- state enforcement of law among citizens ness, procedural justice, and taxation compliance do -.1 -.05 0 .5 .1 .15 .2 not change after including measures of donor and probability nonstate actor service provision in the model. The Source: Author’s illustration. 3 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise Figure 2. Citizens’ Acceptance of Tax Department Authority Model 1: This model includes perception-based indicators of government service delivery, bureaucratic competence and honesty, and procedural fairness. accept authority of tax department (n = 15,991) probabilities do not accept authority of tax department (n = 8,700) under 0.1 0.1 – .02 0.2 – 0.3 0.3 – 0.4 Model 2: This model also includes perception-based indicators of donor and 0.4 – 0.5 nonstate actor service provision. 0.5 – 0.6 0.6 – 0.7 accept authority of tax department (n = 15,991) 0.7 – 0.8 0.8 – 0.9 over 0.9 do not accept authority of tax department (n = 8,700) Source: Author’s illustration. Figure 3. Effect of Donor and Nonstate Actor Service Provision on amount of influence, compared to those who believe do- Complying with Tax Department nors and nonstate actors exert too little influence over the probability government, are more likely to be willing to comply with -.1 -.05 0 .5 .1 .15 .2 their government. One interpretation of this result is that UN: helps a lot citizens may positively view the influence donors and non- state actors exert over their government. Another inter- China: helps a lot pretation is that citizens who believe that donors and non- international donors/ state actors exert “too much influence� may want to NGOs: helps a lot strengthen the state. By complying with government rules, US: helps a lot citizens might be trying to bolster state capacity to inde- pendently provide public goods. international donors/ NGOs: too much influence Donor and nonstate service provision and respect for police domestic organizations/NGOs: too and courts much influence The analysis demonstrates that perceptions of govern- international businesses: too much influence ment performance, administrative competence and hon- international donors/NGOs: esty, and procedural justice are positively associated with right amount of influence individuals’ willingness to obey the police and courts. The traditional authorities impact of these variables on the willingness to obey the po- responsible for taxes lice and courts is smaller than the impact of these mea- -.1 -.05 0 .5 .1 .15 .2 sures on the willingness to comply with the tax depart- probability ment. Citizens who believe that donors and nonstate Source: Author’s illustration. actors exert too much influence, rather than too little in- fluence, are more likely to be willing to obey the courts helpfulness of donors and nonstate actors for the country are and police. No relationship was found between individu- not statistically significant. als’ perceptions of the helpfulness of donors and nonstate ac- The analysis shows that citizens who believe that donors tors and their willingness to obey the courts and police. Re- and nonstate actors exert too much influence or just the right spondents who believe that traditional authorities or their 4 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise communities, rather than the state, are responsible for pro- Farmer, Paul. 2011. “Paul Farmer Examines Haiti ‘after the viding law and order are less likely to be willing to obey the Earthquake.’� National Public Radio (NPR), http://www.npr. police. org/2011/07/12/137762573/paul-farmer- examines-haiti-after- the-earthquake. Concluding Remarks Greenhill, Brian, Michael Ward, and Audrey Sacks. 2011. “The Separation Plot: A New Visual Method for Evaluating the Fit This note offers preliminary answers as to whether donors of Binary Models.� American Journal of Political Science 55 (4): and nonstate actors are undermining or strengthening citi- 991–1002. zens’ legitimating beliefs. The absence of subnational indica- Iannaccone, Laurence R., and Eli Berman. 2006. “Religious Extrem- tors on donor and nonstate actor service provision, as well as ism: The Good, the Bad, and the Deadly.� Public Choice 128 behavioral and longitudinal data on compliance, limits the (1–2): 109–29. conclusions that can be drawn from this study. Little is known Joshi, Anuradha, and Mick Moore. 2004. “Institutionalized Co-Pro- about how citizens’ reported willingness to comply with tax- duction: Unorthodox Public Service Delivery in Challenging Environment.� Journal of Development Studies 40 (4): 31–49. es, police, and the courts corresponds to their actual compli- Levi, Margaret. 1988. Of Rule and Revenue. Berkeley: University of ance behavior. There is also very little known about how California Press. changes in service delivery over time affect citizens’ legitimat- ———. 1997. Consent, Dissent and Patriotism. New York: Cambridge ing beliefs. And finally, this analysis was also unable to mea- University Press. sure the quality of governments’ management of foreign aid Levi, Margaret, and Audrey Sacks. 2009. “Legitimating Beliefs: and nonstate actor resources. Concepts and Indicators.� Regulation and Governance 3 (4): 311–33. About the Author Levi, Margaret, Audrey Sacks, and Tom R. Tyler. 2009. “Conceptu- Audrey Sacks is an extended term consultant in the World alizing Legitimacy, Measuring Legitimating Beliefs.� American Bank Institute’s Governance Practice currently focusing on po- Behavioral Scientist 53 (3): 354–75. litical economy, procurement reform, and anticorruption. Lipsky, Michael. 1980. Street-Level Bureaucracy: Dilemmas of the Indi- vidual in Public Services. New York: Russell Sage Foundation. References Ostrom, Elinor. 1999. “Crossing the Great Divide: Coproduc- tion, Synergy, and Development.� World Development 24 (6): Bartholomew, Ann. 2009. Sector Budget Support in Practice Case 1073–87. Study: Health Sector in Zambia. London and Oxford: Overseas Development Institute and Mokoro. Sacks, Audrey. 2011. “Can Donor and Non-State Actor Service Pro- vision Strengthen Legitimating Beliefs?� Unpublished Manu- Burnside, Craig, and David Dollar. 2004. “Aid, Policies, and script, Department of Sociology, University of Washington. Growth: Reply.� American Economic Review 94 (3): 781–85. ———. 2012. “Can Donors and Non-State Actors Undermine Chen, Daniel L. 2004. “Club Goods and Group Identity: Evidence Citizens’ Legitimating Beliefs.� World Bank Policy Research from Islamic Resurgence during the Indonesian Financial Cri- Working Paper Series 6158, Washington, DC. sis.� Department of Economics, MIT. Smith, Steven Rathgeb, and Michael Lipsky. 1993. Nonprofits for Devarajan, Shantayanan, and Ritva Reinikka. 2004. Making Services Hire: The Welfare State in the Age of Contracting. Cambridge, Work for Poor People. New York: Oxford University for the World Bank. Mass; London, England: Harvard University Press. DiJohn, Jonathan. 2010. “The Political Economy of Taxation and Tendler, Judith. 1997. Good Government in the Tropics. Baltimore State Resilience in Zambia Since 1990.� Crisis States Work- and London: The Johns Hopkins University Press. ing Papers Series No. 2, Crisis State Research Centre, London Tilly, Charles. 1990. Capital, Coercion, and European States, A.D. School of Economics. 990–1992. Oxford, UK: Basil Blackwell. Edwards, Michael, and David Hulme. 1996. “Too Close for van de Walle, Nicolas. 2001. African Economies and the Politics of Comfort? The Impact of Official Aid on Nongovernmental Permanent Crisis, 1979–1999. Cambridge, UK: Cambridge Organizations.� World Development 24 (6): 961–73. University Press. The Economic Premise note series is intended to summarize good practices and key policy findings on topics related to economic policy. They are produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank. The notes are available at: www.worldbank.org/economicpremise. 5 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise