Governance and Political Economy

Governance and institutions which are the rules and framework that govern the interaction between all agents in an economy and account for the smooth functioning of a well-balanced and coordinated economic system hold an overwhelming importance in predicting the level of economic growth and development within countries. Strong institutions and good governance ensure effective law enforcement, an efficient bureaucratic system, protection of property rights, equitable and appropriate allocation of resources, and a wide range of other norms that influence the structure of economic incentives such as those related to capital accumulation and innovation. Therefore, good quality governance and institutions lay the foundation of a healthy economy and play a crucial role in spurring economic growth and development. Similarly, political economy studies this governance and management of the country through the lens of the political environment and thus examines the interrelationships between the state, markets and public policy. Thus, politics can have a central role in favorably shaping the course of the economy as long as it also maintains a healthy engagement with institutions rather than circumventing or suppressing them.

Taking into account the immense importance of governance and political economy, majority of the work at CREB has been carried out in this regard. Work in this area is diverse – some of it examines aspects related to the delivery of services and assistance to communities through non- governmental organisations. This work attempts to understand the incentive issues that may arise when public spending is channeled through the non-government sector, which reduces state effectiveness in policy delivery and the manner in which public spending through these organisations affects service delivery. Related work tests how each part of a large, complex donor organization responds to new information on performance of recipient community organizations on key performance indicators, and how the responses of both donor and recipients to new information and incentives relate to organizational characteristics of theoretical importance. Similar work investigates how in practice social networks and relationship between local “patrons” and “clients” affect the households’ wellbeing and access to public good and services. Additionally, the government procurement of wheat in Pakistan is explored in which case redistribution created through government interventions may be vulnerable to capture by elite or politically strategic groups, allowing regressive redistribution, as well as a deadweight loss. Furthermore, other work explores an effective way to train prosociality or “effective altruism” – which is critical in contract enforcement, management of commons, public goods provision, establishing effective rule of law, and efficient governance in societies – among adults that can be scaled. In the context of community driven development, work at the centre also assesses if induced mobilization among marginalized groups such as women and the poor can transform local decision making or empower the poor in any enduring way. Using an experiment other work investigates a conflict between social norms and the law of the land in inheritance in Pakistan. Work related to altering the attitudes of civil servants through empathy training tries to determine its causal effects and assess its impact on social preferences, bureaucratic performance, and thought leadership. Also, work tests if targeted training can be used to mitigate the issue of using power for personal gains by making officers aware of the negative effects of power abuse. Related work sheds light on the most basic question which is how prevalent is corruption and what are the effective approaches that can be brought to limit it in public offices. Other work related to the costs of political alignment, investigates how police respond to changesin the politician's ability to exert pressure on them for performance and an increase in the politician's ability to observe the agent's activity, using the rollout of a new crime reports tracking database.