Institutional analysis and decentralization: Developing an analytical framework for effective third world administrative reform

As we enter the 1990s, scholars and practitioners of development administration in the Third World share a deep concern with its disappointing performance. Looked to as the primary agent of modernization during the optimistic first days of independence, many now blame it for the development stagnation of much of the Third World over the past two decades. Reinforced by the events of 1989 in Eastern Europe, calls for privatization and radical cutbacks in the state are increasing. Indeed, while the causes of Third World development stagnation are undoubtedly multiple and diverse, it is difficult to refute the charge that the hierarchical, bureaucratic, centrally‐led strategy has not achieved what was expected of it. The question which faces responsible and concerned scholars, practitioners and officials today, is what can and should be done about all this? This paper recommends avoiding grand and precipitous changes in organizational strategies: indiscriminate privatization and dismantling the state, it argues, would be just as much an error as the earlier whole‐cloth commitment to centralist‐bureaucratic organization. Instead it argues that theoretical and analytical tools effective in making more subtle and refined choices among institutional alternatives must be developed. It presents a preliminary analysis of one strategy which might offer this, and illustrates how it can be used to design organizations more likely successfully to deliver services and sustain investments in the Third World.