Conforming Jordan’s Public Sector to Competitive Forces

The Hashemite Kingdom of Jordan is poorer than its neighbors, yet it is generally regarded as a pivotal, well governed country: a strategic geopolitical position, a moderate player in regional and international scenes, along with a professional military and a savvy, tolerant monarchy.

Decades ago, the Government of Jordan had only two to three main governorates to focus on, thus its executive duties were smaller. With the growth in Jordan’s population, things are getting somehow negative from the standpoint of governance: the effect of refugees on its social dynamics, high unemployment rates, a deteriorating infrastructure (especially transport), and a chaotic education system. On top of the list of Jordan’s challenges, however, is the urgency of reforming its public sector.

The following facts give us a snapshot of Jordan’s public sphere (over the period 1999-2016):

  • A monstrous public sector with more than 20 ministries, 3-5 ministers of state (on average), and close to 100 government entities/institutions.
  • A wide spectrum of institutional/organizational structures across the executive branch (ministries, regulatory bodies, commissions, councils, entities, institutions, funds, centers, utilities… you name it!).  One would come up to about 13 organizational schemes/structures with no clear criterion behind classifying each as such.
  • A government ministry/entity having a regulatory, strategic, and planning scope, while others having vague mandates. Thus any policy analyst would not find a clear institutional relationship across the bureaucratic fabric.
  • A prime minister directly responsible for about 30 government entities (excluding the ministries).
  • Some, if not most, of the heads of government entities do not have practical hiring and firing authority over civil servants.

A serious problem in institutional development is the divergence between the goals of the organization/institution and the personal goals of the individuals who comprise it: individuals have personal utility functions that differ from the organization’s utility function. Thus, the larger Jordan is getting (both in terms of its population and the number/size of government entities), the greater the divergence is likely to be. Such divergence is what economists refer to as agency costs—the costs created by the fact that the employees of an organization have their own goals that often conflict with those of their employer.

One aspect of trying to minimize agency costs is to create competition between government agencies. This has led King Abdullah II to institutionalize competitive forces in the public sphere: by directing the executive branch to deal with the King Abdullah II Centre for Excellence (KACE) as a tool to assess and improve performance and accountability; a task which requires commitment from the government to ensure the participation of all public institutions in the KACE’s programs and awards.

On March 23rd and just after presenting the awards to the winning ministries, institutions, and individuals, King Abdullah II posted on Facebook (in Arabic) the following: “Proud and honored to have awarded a group of institutions and individuals that were keen on developing Jordan across different fields… I congratulate all of those who excelled, but it is regrettable to see that many of our institutions still record weak in the reform and development process, paying no attention to citizens’ interests.” That was not the end of the story! The King added, “This year has witnessed a number of winners below our ambition. We hoped achievements would have been greater and programs being adopted for a real process with regard to public sector performance.”

The King’s statement neither applies comparative anthropology nor cyclical historical theories to institutional performance! It was rather a powerful signal; a warning to the executive branch which we exactly find in economic theory: the law of declining marginal productivity. In the public sphere, bureaucracy and government spending are worth their expansion so long as there is social benefit. King Abdullah II is signaling out that the time comes when extra investment in higher public sector complexity would generate no good at all, wherein private benefits would outweigh social benefits, complicating further the agency costs problem.

In a thought provoking book, The Collapse of Complex Societies, Joseph A. Tainter pointed to several cases and explanations behind the collapse of societies which had become too complex to manage effectively. One lesson we draw from Tainter’s cases is that expansion makes governance more complex since it leads to ungovernability. What overall signals the King of Jordan is hinting at to the “market for bureaucrats” in Jordan? It is nothing but what market forces signal to private sector corporations: efficiency or else no more political bailouts; serving citizens’ needs or else the eventual ‘collapse,’ similar to civilizations when they come to an end

Image Courtesy of the Royal Hashemite Court
Image Courtesy of the Royal Hashemite Court


About the Author
Fadi A. Haddadin is a Jordanian economist and policy analyst.
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