The purpose of this paper is to provide an overview of the institutional reforms in the World Bank's sector adjustment operations (SECALs) and to assess the Bank's experience in implementing them. The review covers institutional reforms in 55 of the 65 SECALs approved by the Bank during fiscal 1983 - 1987. They include SECALs in agriculture, trade, and industry, but exclude those pertaining to education and public enterprises. Institutional reforms stand a greater chance of succeeding when there is adequate institutional diagnosis and design, including assessment of the interest groups affected and the ability of top leaders to mobilize support for reform. A good case can be made for bringing the key players together in a process approach to diagnosis, so that diagnosis becomes an early stage of consensus building among those who will be affected by the reforms.

This report seeks to assess the progress to date in implementing the World Bank's strategy for governance and public sector reform. It also highlights specific challenges and approaches of individual regions, the Development Research Group and the World Bank Institute.

Specific divestiture dates and institutional public enterprise reform should probably not be a matter of hard conditionality for sectoral adjustment lending. One alternative is to establish institutional development projects that parallel adjustment operations. Another is to establish "primary conditions, " nonfulfillment of which would bring an operation to a halt, and "secondary conditions, " (including most institutional and public enterprise reforms), nonfulfillment of which would evoke sanctions but not end operations.

Developing countries commonly adopt reforms to improve their governments yet they usually fail to produce more functional and effective governments. Andrews argues that reforms often fail to make governments better because they are introduced as signals to gain short-term support. These signals introduce unrealistic best practices that do not fit developing country contexts and are not considered relevant by implementing agents. The result is a set of new forms that do not function. However, there are realistic solutions emerging from institutional reforms in some developing countries. Lessons from these experiences suggest that reform limits, although challenging to adopt, can be overcome by focusing change on problem solving through an incremental process that involves multiple agents.

The effectiveness and efficiency of a country's public sector is vital to the success of development activities, including those the World Bank supports. Sound financial management, an efficient civil service and administrative policy, efficient and fair collection of taxes, and transparent operations that are relatively free of corruption all contribute to good delivery of public services. The Bank has devoted an increasing share of its lending and advisory support to the reform of central governments, so it is important to understand what is working, what needs improvement, and what is missing. IEG has examined lending and other kinds of Bank support in 1999-2006 for public sector reform in four areas: public financial management, administrative and civil service, revenue administration, and anticorruption and transparency. Although a majority of countries that borrowed to support public sector reform experienced improved performance in some dimensions, there were shortcomings in important areas and in overall coordination. . The frequency of improvement was higher among IBRD borrowers than among IDA borrowers. . Performance usually improved for public financial management, tax administration, and transparency, but did not usually with respect to civil service.

This book reviews the theoretical perspectives on institutional development (ID) and third world city management. It considers the practice of ID in city management by reviewing two related cases; on organizational strengthening and building a planning capability - both in local government. The synthesizing chapters offer some guidelines on, and tests for, ID in city management practice. The book therefore seeks to identify some general principles to guide the ID process in relation to third world city management.

World Bank Discussion Paper No. 290. Draws on the lessons of experience of developing countries in decentralizing infrastructure and provides new empirical evidence on the quantitative and qualitative effects of decentralization. This collection of five papers highlights the lessons of the World Bank's research and experience on the linkages between infrastructure and decentralization. The paper provides: - A summary of the lessons from World Bank experience, giving a general review of the importance of the decentralization of infrastructure - A review of the institutional aspects of decentralization and their implications for policy design - An empirical assessment of the consequences of decentralization for expenditure levels and performance in infrastructure - An outline for a research agenda on decentralization in light of recent developments in the theory of the firm. - The authors conclude that some degree of decentralization will improve performance in certain areas of infrastructure such as roads and electricity.

This book draws on country case studies to focus on the environmental implications of economywide policy reforms undertaken at the sectoral or macroeconomic level. Although the emphasis is upon economic policies, other noneconomic measures are also relevant, such as social, institutional, and legal actions. The main feature of most policy reforms directed at various levels of economic decisionmaking are price changes designed to promote efficiency and reduce waste. This report reinforces the view that policies that address price-related distortions can contribute to both economic and environmental goals (win-win policy reforms). A recurring theme in the case studies is that the potential for achieving parallel gains in conventional economic, social, and environmental goals is often present when economywide reforms attempt to improve macroeconomic stability, increase efficiency, and alleviate poverty. However, in important cases these potential gains cannot be realized unless complementary environmental and social measures are carried out. Of related interest: The Greening of Economic Policy Reform: Volume I: Principles (ISBN 0-8213-3477-8) Stock no. 13477; Volume II: Case Studies (ISBN 0-8213-3797-1) Stock no. 13797.