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Wednesday, December 3, 2008

The Fallacy of Best Practice

Michael Ruffner of the United States Department of the Treasury discussed the "Fallacy of Best Practices." Mr. Ruffner described the role of technical assistance from the US Treasury. He pointed out that there is broad agreement for public financial management reform. However, there are different motivation for this agreement. Nevertheless, this creates a virtuous circle in theory that improves economic growth, promotes prosperity, stability and peace.

Mr. Ruffner believes in the "first things first" approach rather than the "big bang". He described how certain reforms and the ways these are sequenced can be much different. He believes that in the case of PFM reforms, governments learn from each other. We need more efficient international learning so that countries can more effectively understand what works and why it worked. He emphasized the need to separate good principles from fads in PFM reform. Successful PFM reforms require a set of enabling conditions.

There is no single model of reform according to Mr. Ruffner. Changes rules and structures do not change behaviour. Understanding the problem defines the range of instruments required for reform. Formulaic reforms are not calibrated to the country context. He warned that behavioural change requires a longer commitment than the donor attention span. He further described how technical assistance can fail to meet government needs.

Mr. Ruffner emphasized that ownership is the most important determinant for success. It is the "buzz word" of the moment. He pointed out that real ownership by the government is the exception. He described the negative consequences of using diagnostic tools like PEFA. He cautioned that technical assistance should be led by practitioners.

Mr. Ruffner introduced a systems view for effective technical assistance that shows the relationship among financial institutions, enforcement, tax administration, budget and debt management.

The best available solution rather than the so-called best practice is the most effective approach according to Mr. Ruffner.
Ruffner Fallacy of Best Practice

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1 comment:

Anonymous said...

A refreshing view. "Best practices" has become a buzz word popular with software vendors and consultants. Governments are modernizing, so any so-called "best" practice will rapidly become dated.