Public Disclosure Authorized
Public Disclosure Authorized
Public Disclosure Authorized
HumanResourossDevelopmentand OperationsPolicy
The World Bank
December1993
HROWP18
POPULARPARTICIPATION
IN ECONOMICTHEORY
AND PRACTICE
Public Disclosure Authorized
Philip R. Gerson
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Popular Participation in
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by
Philip R. Gerson
Abstract
Developmentprofessionalshavebegunto emphasizethe importanceof allowingbeneficiaries
of developmentprojects to influencetheir selection,design and implementation. Researchby
econo-nist;and others suggeststhat whilegreater knowledgeof the preferencesof beneficiariesis
imortant, a number of difficultiesmay arise in attemptingto incorporate greater "popular
participation"in developmentprojects. Someof t!iesepitfallshave been observedin participatory
World Bankprojects. A knowledgeof thesepotentialproblemsmay help projectplannersdevelop
mechanisms,which are likely to vary on a case-by-casebasis, to anticipate and avoid their
realization.
Contents
1 INTRODUCTION.
....................................
1
2 PARTICIPATION
IN ECONOMICTHEORY
.................
2.1 Participationin GeneralEquilibriumTheory .......
................
2.2 SocialChoiceTheory ................................
2.3 The Economicsof CollectiveAction.............................
2.4 PublicChoiceTheory ..............................
...
1
2
3
S
6
3 MICRO-LEVELEXPERIENCE .................................
7
4 CONCLUSION ................................
15
REFERENCES.................................
19
1 INTRODUCnON
Over the last quartercenturythe belief that wheneverpracticablethe ultimatebeneficiaries
of a developmentprojectshouldbe givenas much inputinto its designand operationas possiblehas
gone almostfrom heresyto orthodoxyamongdevelopmentprofessionals.Despitenear unanimity
in the beliefthat participationis desirable,however,there remainsconsiderabledisagreementabout
preciselywho shouldspeak for beneficiaries,aboutwhat type of inputthey shouldhave, and about
how developmentinstitutionscan best organizethemselvesto receiveand incorporatethis input.
Perhapsas a resultof thesedisagreements,relativelyfew WorldBankprojectsto datehave
devoted substantial resources to involving beneficiaries in their design, implementationor
management. Recently,however, efforts have been made to move beyondplatitudesabout the
inportanceof popularparticipationand to examinemore preciselythe circumstancesunder which
participationis desirable,howthe projectcycleat theWorldBankandotherdevelopmentinstitutions
can be modifiedto incorporategreaterparticipation,and other difficultbut essentialquestions.
The goal of this paper is to examinehow economictheory can contributeto this debateby
highlightingsome of the likelybenefitsof popularparticipationand some of the pitfallsthat may
make greater beneficiaryinputhard to comeby. For the purposesof this paper, pardclioadonis
defied (followingthe defmitiondevelopedby the core teamof the WorldBank's LearningProcess
on ParticipatoryDevelopment)as "a processby whichpeople- especiallydisadvantagedpeoplecanexerciseinfluenceoverpolicyformulation,designalternatives,investmentchoices,management,
and monitoringof developmentinterventionsin their communities.'I Thus, participationis not a
discrete event that may occur only at a specifiedpoint in a project's history but insteadmay be
realizedover the entire lifecycleof a developmentproject. This paper will thereforeexaminethe
implicationsof economictheoryfor participationboth in the relativelyearly stageof choosingand
designingprojectsas well as in the later stageof projectimplementation.
Section 2 of the paper will look at portions of the economic literaturethat may have
implicationsfor popularparticipation,and will developa handfulof testableimplicationsof the
theory. Section3 will then review a numberof Bank-sponsoredprojectsto attemptto test if the
predictionsof the theory are actuallybeingobserved. Section4 concludes.
2 PARTICIPATIONIN ECONOMICTHEORY
It seems almost fatuousto state that economictheory is concernedwith how individuals
interactwith society. Indeed,economicsis frequentlydefine('as the studyof how a society'sscarce
resourcesare allocatedamongindividuals.Althoughone couldargue that the disciplinehas grown
over recentyears to encompassa widerdomain,distributionalissuesstill constitutea main focusof
economytheory. The goal of this sectionof the paper is to review someof the economicliterature
that may help to explain the experienceof projects seeking to increase the degree of popular
participation,andto developsometestableimplicationsof thistheorythat maybe usedto determine
if the theory reflectsexperience.
Bhatnagar
andWilliams,
p.2.
2
2.1 Paricdpation
in GeneralEquilibrium
Theory
Generalequilibriumtheoryis primarilyconcernedwithansweringtwo questions:underwhat
conditionsis equilibriumpossiblein an economy,andunder what conditionswill an equilibriumbe
2 In a series of papers, KennethArrow and Gerard Debreu [Arrow (195la), Debreu
efficient?
(1951), Arrow and Debreu (1954)]demonstratedthat under fairly general conditionsan efficient
equilibriumwouldoccurin an economysolelythroughthe interactionsof self-motivatedindividuals.
Individual consumers play a fundamentalrole in the Arrow-Debreueconomy: their
preferences, along with the productiontechnologiesavailableto tne economy, determine the
equilibriumprices and output levels of all goods. In generalequ,libriumeach agent needs to be
concernedonly with his own preferencesor profitsandwith prices3 : the marketthen doesthe work
of producingan efficientequilibriumallocation. Moreover,efficiencyof equilibriumby definition
stressesthe role of the individual,sincean equilibriumcannotbe efftcientunless no individualcan
be madebetter off withoutmakinganotherindividualworse off. Of course, an efficientallocation
may not necessarilybe an equitableone. The Arrow-Debreumodel has come to define the
neoclassicalapproachto economics,with its emphasison individualsand its conclusionsaboutthe
efficiencyof unencumberedmarkets.
Generalequilibriumtheoryprovidesa strongmotivationfor the desireto increasethe extent
of popularparticipationin developmentprojects. It also suggeststhat under appropriateconditions
there is one methodof ensuringpopularparticipationin developmentprojectsthat is almostcostless
for developmentinstitutions:the market. Markets allow individualsto expresstheir preferences
aTnongavailableoptionsand under quite general circumstanceswill ensure efficientequilibrium
outcomes. To use some simpleexamples,if a developmentinstitutionis unsure whichof various
potentialeducationprojectswill be most valuablefor beneficiaries,one way to discoveris to ask
beneficiarieshow much they wouldbe willingto pay to participatein each of the programs. The
projectfor whichthe most intendedbeneficiarieswouldpaythe largestamountis clearlythe onethat
is most valuableto them. Similarly,supposethat an institutionis choosingamongvariouspossible
sites for, say, a water treatmentplant and wishesto identifythe locationwherethe costs involved
in displacingthe local populationwill be the smallest. One way to do so is for the development
institution(or the govermene of the countryinvolved)to bid for the various sites through the
market. The site that can be purchasedat the lowest cost is the one where relocationcosts are
lowest. Mloreover,the paymentsmadeto the sellersof the land shouldgenerallybe sufficientto
compensatethem for their loss. 4
2 Typically,an equilibrium
is consideredefficientif it is not possibleto makeanyoneelsebetteroff without
makig someoneelseworseoff.
3
However, individualsneed to haveperfect foresightabout future prices.
I In addition, some of these types of activitieshave been advocatedin the literatureon popularparticipation.
For example, Gow and Van Sant (1985) argue for requiringbeneficiarycontributionsto developmentprojects to
reduce the resourcecommitmentrequired from the government,to givebeneficiaries a greater stake in the success
or failureof the project, and to ensure that beneficiariesare 'ronglysupportiveof the aims of the project.
3
Of course, there will be situationswhere the rlarket is unable to produce an efficient
outcome. For example,when a dam can only be constructedat a single location,local property
ownerscanbe expectedto exploittheirmonopolypowerto demandgreaterpaymentsthan are strictly
necessaryto compensatethemfor their losses. In addition,thereare obviouslycircumstanceswhere
popularparticipationis essentialto gain greaterunderstanding
of beneficiaryneedsbeforealternative
or
where
the use of marketmechanismsis
projectdesignscouldbe made availablein the market,
otherwiseinappropriate. Nevertheless,it is importantto bear in mindthat the marketis a simple,
low cost way for beneficiariesto make their needs and desires known to project planners and
designersandthereforecan be an importanttool for thosewho seekto increasethe degreeof popular
participationin developmentefforts.
2.2 Social ChoiceTheory
Genieralequilibriumtheory, suchas the work of Arrowand Debreu, is typicallyconcerned
witi decisionsthat individualconsumersand producersmakeby and forthemselves,ratherthan with
decisionsto be madeby and for societyas a whole. In almostany case in which a societymust
chooseamongalternatives,it is likelyto be the case that some membersof the societywill prefer
one choiceand othermembersof societywillprefera differentone. In suchcases,the societymust
choosehow theseconflictingpreferencescan be reconciledinto a singlesocialchoice. Socialchoice
theoryis concernedwithhow individualpreferencesare aggregatedinto socialpreferences,or how
a societytakesthe preferencesof individualagentsinto accountwhendeterminingits actions. More
generally,social choicetheory looks at how "socialwelfarefunctions"takethe set of preferences
of each memberof a societyand turn them into a singlepreferencefor the entire society.5
In his book Social Choice and Individual Values(195lb) KennethArrow imposed four
conditionsthat any socialwelfarefunctionshouldmeet:
5
3
Independenceof Irrelevant Alternatives. If an individual'spreferencesbetween
choicesC andD change,this shouldhave no impacton the socialpreferencebetween
choicesA and B.
*
Pareto Optimality. If all membersof societyprefer choiceA to choiceB, then the
socialwelfarefunctionshouldchooseA over B.
*
UnrestrictedDomain. The socialwelfarefunctionshouldbe capableof producing
a socialpreferenceno matter what the preferencesof the membersof societyare.
In otherwords,no matterhow dividedthemembersof the societyare abouta choice,
the socialwelfarefunctionshouldbe ableto producea choicefor society.
*
Non-Dictatorship.Thereis no individualin the societysuchthat if he preferschoice
A to choice B then the social welfare functionwill define A as society's choice
regardlessof what the other individualsprefer.
Usually thse preferences are defned in terms of preference 'orderings," where members of a society
confronted with a choice among several differentoptions list these options from first to last according to their
desirability.
4
Arrow's "ImpossibilityTheorem" showsthat if the numberof individualsin a societyis
fmite, if the societyis choosingamongat leastthree alternatives,and if individualsare capableof
expressingpreferencesamongall outcomes(i.e. there is no choiceA versusB wherean individual
cannot say that one outcomeis at least as good as the other) there is ro possiblesocial welfare
function- includingwrajorityrule or consensus- that can satisfy all four of these seemingly
reasonableconditions.
A differentbut relatedissuein socialchoicetheoryconcernsthe problemof "manipulation,"
in whichan individualcan benefitby misrepresentinghis preferencesto society. For example,a
socialwelfare functionis manipulableif an individualwho prefers optionA to B and B to C can
achievea resultthat is morebeneficialto him by reportingthat he prefers B to A or C to B and A.6
Allan Gibbard(1973)and Mark Satterthwaite(1975)establishedthat every non-dictatorialvoting
schemewith at leastthree distinctoutcomesmust be manipulable.
Another importantresult in social Ohoicetheory concerns "cycling,"in which societyis
unableto make a choicebecauseno matterwhichoptionit selectsthere is an alternativeoptior.that
is preferredby a majorityof voters. Considerthe exampleof a societyof three voters who are
choosingamongthreepossibleactions,A, B and C, andwho will let the majorityrule. Supposethat
the first individualprefersA to B and B to C, the secondprefers C to A and A to B, and the third
prefersB to C and C to A. In that case the socialpreferencewill be for A over B (by virtue of the
votesof individuals1 and 2) for B over C (by virtueof the votes of individuals1 and 3) and for C
over A (by virtueof the votes of individuals2 and 3). There is no equilibriumsocialchoiceunder
these circumstances,becausethere is no availableoptihnthat wouldnot be voteddown in favor of
anotherchoice. Not only is cyclingtheoreticallypossiblewhenat leastthree individualsare making
a decisionamongat leastthree optionsunder majorityrule, but the conditionsunder whichcycling
can be ruled out are actuallyquitelimited. In the case of a societychoosingamongthree options,
then if at least one individualprefers A to B and B to C, then cyclingis impossibleonly if every
person who prefers C to A alsoprefers B to A. If even one personwho prefers C to A is at least
indifferentbetweenB andA, cyclingmust be possible. Moreover,McKelvey(1976)demonstrated
that when individualpreferenceswould lead to cycling, when voters express their preferences
truthfully(and do not attemptto manipulatethe system)and whenan individualwho has the power
to determinethe order of voting betweenpairs of options (the "agendasetter") knows voters'
preferences,ther. the agendasetter can lead the votingbody to any outcomehe desires simplyby
manipulatingthe order in which optionsare considered. Even when these conditionsare not met
precisely,it is clearthat the agendasetterhas significantabilityto influencethe socialcho;cein the
directionhe chooses.
The implicationsof socialchoicetheory for popularparticipationare profound. First, the
theory suggeststhat even if plannerswere ableto meetwith every singlebeneficiaryof a proposed
project, there is no mechanismthe plannerscoulduse to turn theseviews into a socialchoicethat
wouldnot violateone of Arrow's conditions. Moreover,there is no reasonto believethat proposed
6 Consider a simple scheme where each individuallists his preferences in order, with the top preference
receivingthree votes, the second two votes and the last one vote, with the option receivingthe highest aggregate
votebeing chosenby society. This mechanismis manipulablebecausean individualwhosepreferenceorder is ABC
may find it optimal to list C higher than B in order to improvethe chancesthat A will be selectedover B.
5
beneficiarieswouldnotmisrepresenttheirpreferencesto try to affectthe du'ion reachedby project
planners. Finally, there is no way that planners can be sure that the preferencesexpressedby
beneficiarieswere notdistortedby the order in whichavailableoptionswerepresentedto them. The
theorythereforesuggestssomereasonswhy effortsto increasepopularparticipationthroughvoting
or other schemesmight not meet with success.
2.3 The Econonics of Collectve Action
The economicsof collectiveactionstudies the behaviorof indiiiduals within a group of
peoplewho share a commongoal. One of the centralproblemsof collectiveactionis the so-called
'free-rider"problem:if all the membersof a groupsharea commoninterest,anyactionthat furthers
that interest benefitseach member,whetier or not he bore any of the costs of the action. The
existenbeof the commoninterestthereforeneed notprovideany incentivefor individualactionthat
would furtherthe aims of the group. In fact, the commoninterestmay make it less likelythat any
memberof the group will participatein a collectiveactionto furtherits aims. If all membersof a
large group benefit from the electionof a politicalcandidate,for example,there is no reasonto
assumethey will join togetherto contributefundsto his campaign. In a largeenoughgroup each
is likely to see the impact of his individualcontributionon the probabilityof election to be
-insignificant,
so that his contributioncostshim moneybut in no wayimproveseitherthe chancethat
he will receive a benefitor the size of the benefithe can expect. Ordinarymarketor voluntary
actionwill fail to obtainthe objectivethe group is seeking(theelectionof the candidate)becausethe
benefitsbeing soughtare not exclusive:they are availableto all membersof thegroup whetherthey
participateactivelyor not.
There are two conditionsunder which collectiveactionby membersof a group sharinga
commoninterestis likely. The first of theseis when the group is small enoughso that the actions
of each member can have an appreciableimpact on the likelihoodof success. Under these
circumstances,membersof thegroup will findit worthwhileto bargainwitheachotherto determine
how mucheffort eachshouldstupplytowardthe commonaim.7 The secondis when somebenefits
of successcanbe madeexclusive,throughwhatOlson(1982)has describedas 'selectiveincentives.'
A selectiveincentivecan be either positiveor negative,dependingon whetherits aim is to reward
those who participateor to punishthose who do not. One simpleexampleof a negativeselective
incentive is the "closed shop," where workers who refuse to join a union are bared from
employment.Withoutsuch a condition,workerswouldhave an incentivenot to join the union, as
they would receive any benefits the union achieved without having to pay dues. Similar
arrangementsexist for lawyers,wheremembershipin a bar associationis typicallya requirementfor
practice.8 Positive selectivebenefits include special insuranceprograms, travel discountsand
journalsavailableonly to membersof an organization.
7 Esmn and Uphoff(1974)make the same point when theyargue that relativelysmalllocal organizationsame
more likely to be effectivethan larger ones because, 'In collectiveventureseveryonewill know who contributes
well and who contributespoorly, with the fomer being awardedwith local esteem and the latter being sanctioned
by social pressures." Cemea (1985)advocates homogenous'small organizationsfor similar reasons.
8 Calavan(1986)notes some non-formalexamles of negativeselectivebenefitsthat can also inducecollective
action, such as gossip, ill-willand social pressure.
6
Again, the implicationsof this theoryfor popularparticipationmay be dramatic,becauseit
suggeststhat local voluntaryorganizationsare unlikelyto reflect broad public opinion. As noted
above, the greater the numberof peoplewho share a commongoal, the less likely they are to
organizethtmselveseffectivelyto achievethat goal. As a result, local organizationsare likelyto
be at the extremesof publicopinion(althoughof coursethey will argueotherwise)ratherthan at the
and to pusn for projectcomponentswhosebenefitsare limitedto a smallgroup rather
mainstreami,
than being availablegenerally. In fact, in this case greaterpopu'ar participationcan actuallyhave
the perverseeffect of allowingsmallinterestgroupsto put their own interestsaheadof thoseof the
majority.
2.4 Public ChoiceTheory
Public choice theory uses the techniquesof c iornic iieory to study questionsusually
addressedby politicalscientists. Traditionally,when economistsstudiedsuch publicpolicy issues
as whetheror not a protectivetariff shouldbe establishedthey operatedfrom the assumptionthat
governmentswere inherentlybenevolentand sought to maximize social welfare. Of course,
economiststypically assume that agents are largely self-motivatedin their actions. The main
contributionof public choice theory, then, is to analyzequestionsof governancerelying on the
assumptionthat electedofficialsand bureaucrats,like voters,act to furthertheir own interestsand
not necessarilyto maximizethe welfareof society.
One of the earliest discoveriesof public choicetheory was that a rationalvoter would not
botherto be verywell-informedaboutthevotesthat he casts, for the reasonsdiscussedin the section
on socialchoiceabove:votersare unlikelyto pay the costsof becomingwell-informedwhen they
kmowthat the likelyeffectof their voteon theirown weifareis trivial.9 Moreover,votersare much
more likelyto be informedabout their specialintereststhan aboutmore general matters. Since
organizedinterestgroupswill make an effort to propagandizevotersaboutthese issues,voters are
thereforelikely not only to have very little informationabout most issues, but also to have only
biasedinformationaboutthe issuesthey do knowabout. Each of theseresultshas been confirmed
by empiricalstudiesof voters.
Public choicetheory views politiciansas people who make their living being electedby
voters, and thus act in waysthat maximizethe likelihoodthat they will be re-elected. In particular,
electedofficialshave a strongmotivationto vote for legislationthat their constituentsfavor rather
than for the legislationthat may be best for their constituents."' Obviously,the cost to the public
of this kind of behaviorcouldbe considerable.
Turning to the bureaucracy,public choice theory argues that the typical bureaucratis
interestedin retaininghis job and gainingpromotion. In a moderncivil servicesystem,of course,
most bureaucratsare effectivelyinsulatedfrom their superiorswith respectboth v being fired and
I Similarargumentsare often used to explainthe extremelylow voter turnoutin electionsin the United States
and other countries: if voters feel that the impact of their individualvotes on electionresults is trivial, they are
unlikelyto be willing to put up with the opportunitycosts of castingtheir ballots.
I Given that their constituientsare likely to be poorly informed,the distinctionbetween legislationthat the
communityfavors and legislationthat is good for the communitymay well be meaningful.
7
to promotion. As such, their motivationfor furtheringthe aims of seniorofficis is minimal. In
fact, the typical bureaucrat has no reaso.. to work hard or to be we0-informedabout his
responsibilities.Thosewho do so are generallythosewho have strongpersonalfeelingsabouthow
the governmentshouldbehave,and tend to act in waysthat furthertheir own beliefs(whichmay or
may not conform to the policies favored by their superiors). Instead, bureaucratsdo have a
motivationto seek to enhancetheir own prestige,whichtypicallyinvolvesexpandingthe scopeof
their activitiesand increasingthe size of their departnents. Thus, bureaucraciestend to grow over
time both in influenceand in sheer numbers.
Inevitably,giventhe financialana other costs of meetingwit, large numbersof potential
beneficiariesof proposedprojects, it will oftenbe necessaryto rely on local elected(formallyor
informaly) officialsas representat;ves. Unfortunately,public choicetheory suggeststhat there is
littlereasonto expectthat meetinu with theseofficialswill yieldmuchunderstandingof the needs
and desiresof beneficiaries.Few votersare likelyto makean effortto informthemselvesaboutthe
Issuesfacingsociety(sincethe marginalimpactof their votes on the policiesthat governmentswill
followis zero), meaningthat electedofficialshave little reasonto learn aboutthe needs of their
constients and insteadare likelyto act in accordancewith their own preferences. Only as new
electionsnear do electedofficialshave an incentiveto learn the wishes of the (poorlyinformed)
medianvoter. The problemis even worsewith a moderncivil service,where bureaucratsare not
dependenton their superiorsfor protectionfrom firingor for promotion,and thereforehave little
reasonto informthemselvesaboutthe needs of citizensor eventhe goalsof electedofficials. Thus,
while some developmentprofessionalsmighthail the birth of democraticmovementsaroundthe.
1 publicchoicetheory
globeas a step towardgreaterpopularparticipationin developmentactivities"
(and, for that matter, experiencein western countrieswith relativelylong democratichistories)
suggeststhat participationby electedofficialsor governmentbureaucratsis unlikelyto be an highly
effectivesubstitutefor participationby beneficiaries. Of course, these concernshold even more
stronglyin those countrieswhere the traditionof representativegovernmentis weak or where
governmentsrule by coercionrather than by consent.
3 MICRO-LEVELEXPERIENCE
The review of some aspects of the economicliterature conductedin Section2, above,
suggestsbothwhy greaterpopularparticipationmightleadto greaterprojecteffectivenessin certain
cases, and why efforts to increasethe degree of popularparticipationmight fail in other cases.
Briefly,generalequilibriumtheorysuggeststhat individualagentsexpressingtheir preferencesin a
decentalized environmentmay more easilyachievean efficientoutcomethan can govermnentsor
internationalinstitutionsattemptingto act on theirbehalves. At the sametime, the theory suggests
that problemsare likelyto arisewhenindividualpreferencesmustbe aggregsxdinto a socialchoice.
Severalspecificpredictionscan be drawn from the theory. The first group of p.edictions
concernshow and when popularparticipationwouldbe effectivein particularprojects. ihe second
groupconcernsmoregeneralproblemswithdiscoveringthetrue preferencesof intendedbeneficiaries
and obtaining the cooperationof governmentofficials regardlessof the type of project under
Keans,for example, arguesthat 'people-responsiveleaders - like Havel, Salinasandothers ... will need
newpracticesto identifyanddesignsounddevelopmentprogramsandprojectsthatwill reallyandeconomicallytake
careof the concernsof their people.'
8
consideration. In either category,participationis consideredto be "successful' if it providesa
mechanismfor beneficiarypopulationsto expresstheirviews, or if it otherwiseincreasesthe equity,
efficiencyor sustainabilityof a developmentproject.
A. ProblemsRelatingto ProjectDesign
1. Projectsattemptingto incorporategreater popular participationare more likely to be
successfulwhenparticipationoccursthroughtheuse of marketmechanismsdirectlyinvolving
the ultimatebeneficiaries,suchas contributionsin cash or kind, than whenit occursthrough
consultationswith electedofficialsand voluntaryorganizations,throughtowiimeetings,etc.
("InformationalEfficiency").
2. Popularparticipationis more likelyto be successfulwhenthe benefitsof a projectcan
be restrictedto a particulargroup(as in an irrigationor housingproject)than whenthey are
availableto everyone(as in a flood controlproject).("Free-RiderProblem").
3. In theory, market mechanismsrequiringindividualsto contributetime or money in
exchangefor benefitscan be equallyefficient. However,when individualsdo not have
access to credit, temporal contributionsmay be more efficient than monetary ones.
Moreover,requiringindividualsto contributetheir labor, or even simplyrequiringthem to
wait in a queue, makes participationless expensivefor those who place a lower value on
theirtime (whoalsotend to be poor). Thus, marketmechanismsthat requirea contribution
of time or labormayenhancetheeffectivenessof developmentprojectsnot onlyby avoiding
"free-rider"problemsand exploitingthe informationalefficiencyof the marketbut alsoby
directingthe flow of benefitsto poorer segmentsof the population.
B. ProblemsRelatingto PreferenceRevelation
4. Potentialbeneficiariesof proposedprojectsmay misrepresenttheir true preferencesto
manipulatethe projectdesignprocessand obtain a more favorableresult. ("SocialChoice
Theory").
5. Local voluntaryorganizationsare likelyto hold more extremepositionsthan the general
public, or to push for measureswhosebenefitswill accrueto a relativelysmall fractionof
society,makingthempoor proxiesfor public opinion.("Economicsof CollectiveAction").
6. Even in countrieswith strong traditionsof representativegovernment,public officials
cannotbe assumedto be well-informedaboutthe viewsof the citizensthey represent. Even
when electedofficialsare informed,non-electedcivil servantswho do not sharethe opinions
of their bosseswill feel littlecompulsionto carryout the policiesthey have endorsed. Thus,
electedofficials cannot may not favor project componentsthat their constituentslike or
opposecomponentsthat their constituentsdo not like. Moreover,even whenelectedofficials
do supportpolicies favoredby their constituents,bureaucratsmay prevent their adoption
anyway.("PublicChoiceTheory").
The goal of this sectionof the paper is to examinesome specificWorld Bank projectsto
9
determineif thesepredictionsof the theoryhave actuallybeen observed.
1. InformationalEfficiency. A large numberof Bank-sponsoredprojectshave relied on
interventionsthat are at leastpartly marketbased in an effortto identifythe preferencesof potential
beneficiaries,and there is substantialanecdotalevidencethat this methodhas been more successful
than an approachbased simplyon educatedguessesaboutthe needs of target populations.
For example,the BeneficiaryAssessmentconductedfor the ZambianSocialRecoveryFund
found that subprojectsthat requiredeven very small contributionsfrom beneficiarieswere more
likelyto be successfulthan those requiringno beneficiarycontributions.In the BatungwaWater
Project,financedby the SocialRecoveryFund, a localnun approachedthe Fundto obtainresources
for digging12boreholesto relievethe severewater shortagesthat have plaguedBatungwafor some
time. The local communitywas not requiredto make any contributionto the project. At the time
of the BeneficiaryAssessmentall but two of the boreholeshad brokendown. Beneficiarieswerenot
willingto make repairs, arguingthat the boreholeswere the responsibilityof the Church. Local
authoritiesalsorefusedto makeany repairs,arguingthat if they had been consultedthey wouldnot
have recommendeddiggingboreholes. The BeneficiaryAssessmentconcludesthat prospectsfor
successof this project are minimal.
By contrast,under a pilotprogramlaunchedin Ivory Coast,villagerswere trainedto make
repairs on hand pumpsandthenwere requiredto maintainthemat their ownexpense. The program
resulted in a substantialimprovementin the reliabilityof water servicein rural areas, with the
breakdownrate for pumps falling from 50 percent to just 11 percent. Interestingly,when the
governmentchose to expandthe programto a nationalbasis local chiefswere instructedto forn
village Water Committeesthat would sign repair contracts with the government. Although
committeeswere formedrepresenting94 percent of villagesnationwide,in about 45 percent of
villagesthese committeesbecameinoperable. Basedon a study of 26 of thesevillagesthe primary
factorwas the absenceof a clear demandfor pumpwater. This lackof demandmightnot havebeen
detectedif villagershad not been requiredto contributetime and moneyfor repairs. Similarly,in
the NepalIrrigationSectorProgramvillageswere requiredto formFarmers'IrrigationAssociations
that wouldnegotiatewith the governmentover infrastructureinvestments. However,beneficiaries
were requiredto contribute1 percentof investmentexpensesup front, and 10 to 25 percentof total
project expenses in cash or labor. In the opinionof the Task Manager for the program, the
contributionrequirementservedas an importantcheckon the IrrigationAssociations,ensuringthat
their officersremainedresponsiveto their constituents.
The drive for greaterpopularparticipationin developmentis motivated,at least in part, by
a beliefthat thepotentialbeneficiariesof a developmentprojectknowtheir ownneedsandaspirations
moreintimatelythan anyoutsideagencylike the Bankever can. Theanecdotalevidencecited above
suggeststhat those livingwithinbeneficiarycommunities,evenwhenwell-intentioned,may also be
unable to fully appreciatethe needs and desires of the other membersof those communities.
Fortunately,the evidencealso suggeststhat requiringpotentialbeneficiariesto contributesome of
the costsof a projectcan be a simple,effectiveand inexpensivemeasureto ensurethat it meetstheir
needs. If potentialbeneficiariesare willingto contributeto a project,theymustbe gettingsomething
from it.
However,it shouldbe rememberedthat the fact that potentialbeneficiariesare willingto
10
contributeto a project simplysuggeststhat the benefitsthey expectto receive exceedtheir costs.
Of course, it does not suggestthat the proposedproject is necessarilythe best possibleuse of
resources,only that it is an acceptableone. For example,the LukuluRuralHealthCenterProject
financedthe extensionof the Centerunder the auspicesof the ZambianSocialRecoveryFund. The
project was initiatedby a former senior clinicalofficerwho was at that time the seci try of the
HealthCenter AdvisoryComnmittee.Althoughmembersof the communitycontributedfundsand
laborto the project,and are generallypleasedwith theresults,the BeneficiaryAssessmentnotesthat
the majorityof beneficiariesinterviewedindicatedthat they wouldhave preferreda new schoolor
post officeto the extensionof the healthfacility. Thus, the projectappearsto be meetinga need of
the community,but perhapsnot the need they find the mostpressing.
2. Free-RiderProblem. The idea of the free-riderproblem is so well established,even
among non-economists,that it shouldnot be surprisingto anyone that problems have arisen in
participatoryprojectswhose benefitscan Dot be restrictedto those who contribute. For example,
in some educationprojectssponsoredby the Zanbian SocialRecoveryFund local Parent Teacher
Associations(whoinitiatedthe projects)were forcedto bar the childrenof parentswho refusedto
make contributionsin order to ensurefullparticipationin theprojects. The BeneficiaryAssessment
for the Fundalsonotedthat projectsconstructingbridges,roadsandculvertswere extremelydifficult
to financebecausethe benefitsof theseprojectswere availableto anyone,regardlessof whetherhe
or she contributedfundsor laborto them. In manycases,benefitsfrom theseprojectswould accrue
to peoplewho were not even membersof the communityaskedto contributeto them.
In Ivory Coast,a privatecompany,SCGECI,was contractedby the governmentto provide
water services. The companyachieveda high qualityof service in urban areas, but the wide
dispersionof the rural systemled to high repair costs. In 1982SODECIwas authorizedby the
governmentto chargeuser fees from rural villagesto help defrayoperatingcosts, but the company
was not authorizedto cut off serviceto villagesthat declinedto pay. Accordingly,villagesnot
payingthe fee wouldhave their water use subsidizedby villagesthat did pay.12 Not surprisingly,
the generalreactionto the plan was negativeand, the MOP for the Water Supplyand Sanitation
Sector AdjustmentProgramnotes, the collectionrate never exceeded40 percent. The result was
deteriorationof the rural water supply system and the introductionof the local repair system
discussedabove.
As a final example,the nearshore fisheriescomponentof the Central Visayas Regional
Project in the Philippinesfinancedthe establishmentof artificialreefs, the replantingof denuded
mangroveareas and the establishmentof coral reef sanctuariesat four subsitesin four provinces.
The draft ProjectCompletionReport for the project notes, however,that implementationof this
componentof the project was hamperedby the inabilityof participantsto adequatelycapturethe
benefits from their labors. MunicipalFishermen'sAssociations,which helped implementthis
component,had no legal right to excludeoutsidersfrom municipalfishinggrounds, artificialreefs
or locally-createdreef sanctuaries.
The previous sectionargued that anecdotalevidencefrom severalprojects suggeststhat
t2 However,this strategyworkedonly untilwater facilitiesin a villagebroke: SODECIwithheldrepair senrvces
from villages that refused to pay their fees.
11
requiringbeneficiariesof a proposedprojectto contributetowardsits costsis an inexpensivemethod
to ensurethat the project addressestheir needs Experiencewith.free-riderproblemsin projects,
however,suggeststhat even when a projectwouldbe valuableto potentialbeneficiariesthey may
neverthelessrefuseto contributeto it if they believethat they can obtainthe benefitswithoutdoing
so, or if they believethat othersmay do so at their expense. Accordingly,althoughwillingnessto
pay for a project can be an importantmeasureof project suitabilityin some cases, the evidence
above confirnz the theoreticalpredictionthat when the benefitsof a proposedproject cannotbe
restrictedto contributorsa lack of willingnessto pay for a projectmay give misleadinginformation
about its value to participants. It may also suggestthat some worthwhileprojects couldbe more
sustainableif financed coercively (for example, through a mandatory tax) than if financed
voluntarily.
3. Efficiencyof In-KindContributions. Thleorysuggeststhat requiringbeneficiariesto
contributetimeor laborto projectsandthen restrictingbenefitsto thosewho makecontributionswill
tend to direct the flow of benefits to the poorest membersof a community. The Beneficiary
Assessmentfor the ZambianSocial RecoveryFund provides some evidencethat bears out this
conclusion:44 percentof urbanprojectsfinancedunderthe Fundcontaineda cashonly contribution,
versusonly 5.6 percent of rural ones. Almost 31 percentof rural projects involvedonly in-kind
contributions,versus 18.2 percentof urban ones. On average,rural areas in Zambiatend to be
poorer than urban ones. In fact, interviewsconductedfor the assessmentindicatedthat in many
urbanprojectsbeneficiarieswere unwillingto contributetheirtime or laborto projectsbecausetheir
high incomesmade it relativelymore expensivefor them to contributetime than money.
However,the BeneficiaryAssessmentdoes note one potentialproblemwhen beneficiaries
contributelabor to a project. Someprojects financedby the Social RecoveryFund paid skilled
workerswhile allowingothers,primarilyunskilled,to maketheir contributionto the projectin the
formof free labor. This tendedto generateresentmentamongthe unpaidworkers(whoapparently
placed a higher value on their own time relativeto that of skilledworkers than did local labor
markets)and reduced the extent of their participation. This suggeststhat when projects allow
beneficiariesto choosebetweencashand in-kindcontributions,organizersshouldtakepainsto ensure
that the methodsfor valuingthose contributionsare as transparentas possible.
4. SocialChoiceTheory. As discussedin Section2.2 of thepaper, Arrow's Theoremstates
that there is no non-dictatorialmethodof aggregatingindividualpreferencesamongmorethan two
choicesinto a social choicethat is not subjectto manipulationby communitymembers,who can
misrepresenttheirtrue preferencesin order to obtaina morefavorableresult. Thispredictionis the
most difficultto test amongall thoseinvestigatedin this section,becausein order to knowwhether
or not an individualis misrepresentinghis preferenceswe mustknowwhathis true preferencesare.
Of course,the fact that it is extremelydifficultfor oneindividualto determinethe preferencesof any
other individualis one of the motivationsfor enhancedpopularparticipationin the first place.
Unfortunately,papersby Bankstaffevaluatingtheexperiencewith participationdo not often
addressthe issueof "strategicbias" amongbeneficiaries. For example,CynthiaCook and Paula
Donnelly-Roark(1992)examinepopularparticipationin 35 EnvironmentalAssessments(EAs) in
Bank-sponsoredprojectsin Africa. Theyfind that the two EAs that focussedon allowingpotential
beneficiariesto influenceprojectdesignachieved"morepositiveresults"than the eight that sought
only to inform affected populations of the details of projects. They cite the Gabon
12
Forestry/Environment
projectas oneexampleof a successfulEA, becauseconsultationswithproject
beneficiariesledto a greateremphasison agro-forestryin the finalplan. Similarly,GordonAppleby
(1992)reviews EAs for Bank projects in a numberof regions and cites severalexampleswhere
consultationshave led to changesin projectdesign. For example,the heightof the Puk Mun dam
in Thailandwas loweredso that fewer peoplewould be resettled,and detailsof the Berkedam in
Turkey were altered after discussionswith affectedpopulationsabout the importanceof various
routestaken to markets. Neitherpaper appearsto considerthe possibilitythat changesin project
designoccurredbecausepotentialbeneficiariesdeliberatelyoverstatedtheir importancein order to
manipulatethe assessmentprocess. Indeed, Cook and Donnelly-Roarknote that they revieweda
numberof reports whereparticipantsin EAs expressedstrong fears or criticismsaboutthe impact
of projects that were evaluatedby EA team membersand found to be improbable. Cook and
Donnelly-Roarkchastise Bank staff for "denjying]the validity of ... locally based views in
comparisonto those of the 'expert' who may or may not be able to predict the outcomemore
successfully." The authorsdo not, however,discussthe possibilitythat EA team memberswere
appropriatelydiscountingextreme statementsby project beneficiarieswho might be seekingto
increasetheir own benefitsat the expenseof anothergroup.
The problemof uncoveringthe true preferencesof communitymembersarises oftenwhen
governmentsmust determinehow muchof a publicgood to supply. In order to knowhow much
public park land to set aside, for example,governmentsmust have some ideahow valuableparks
are to citizens. Onemethodusedto valuedemandfor publicgoodsis contingentvaluation,in which
a sampleof citizensis askedfairlydetailedquestionsabouthow muchthey wouldbe willingto pay
for various public goods. Of course, contingentvaluationsurveysare subjectto strategicbias:
individualswho like the outdoorshave an incentiveto vastlyoverstatethe value of public parks,
whilethosewho wish to minimizetheirtaxes mighthave an incentiveto understatetheir value. On
occasionit is possibleto compareresultsfrom contingentvaluationsurveyswith marketdatato test
for the presenceof strategicbias amongrespondents.For example,a study conductedin Anambra
State, Nigeria [reportedin World Bank WaterDemandResearchTeam (1993)]examineddemand
among householdsfor various potentialimprovementsin water services. Most householdswere
spendingsix to 10 percentof their annualincomesbuyingwater from tankertruck vendors. When
asked how much they were willing to pay per month for access to a public tap or a private
connectionto a pipeddistributionsystem,they indicatedamountssignificantlyless than they were
alreadypayingvendors. For example,30 percentof those surveyedwere alreadypayingvendors
or neighborsabout $7 for water in the dry season,but only two percentof respondentssaid they
wouldbe willingto pay $7 per monthfor a privateconnection. Apparently,manyhouseholdsfelt
that the governmenthad a responsibilityto providethemwith cleanwater, and that understatingits
valuewould reducethe price they wouldbe chargedfor it.
Anotherexamplesomewhatfurtherremovedfrom the Bank'sparticulararea of expertiseis
reportedin Bishopand Heberlein(1986). Theyoffereda randomlyselectedsampleof hunterswho
hadwon a Wisconsinlotteryfor the right to hunt Canadageesevariousdollar amountsto foregothe
right. They also asked a sampleof hunterswho had enteredthe lotterybut had lost to consider
hypotheticallywhether,if they had won, they wouldhave foregonetheir right to hunt in exchange
for variousdollar amounts. The expectedvalueof a permitwas $63 for a cash offer and $101for
a hypotheticalone. When a third sampleof lotterywinnerswas askedto assumethat they had lost
the lotteryand then asked whetherthey would be willingto pay variousamountsfor the right to
hunt, the expectedvalue of a permit was only $21. Clearly, there is a bias in the contingent
13
valuationmethodused in this study:respondentsindicatedthat they wouldrejecthypotheticaloffers
that theywere in fact willingto acceptas cashoffers. In addition,the hypotheticalvalueof a permit
measuredin terms of willingnessto buy was dramaticallylower than the hypotheticalor cash value
of a permitmeasuredas willingnessto sell.
The risk of strategicbias amongsurveyrespondentsis greatestwhenparticipantsbelievethat
their responses will affect the amount provided or the price of goods and services. After
considerableexamination,however,practitionersnow generallyagree that the greatestproblemfor
contingentvaluation arises not from strategicbut from 'hypotheticalbias" [see, for example,
Cummings,Brookshireand Schulze(1986)]. Simplyput, hypotheticalbias occursbecausepeople
have little practical experienceevaluatinghypotheticaloffers and so are more likely to make
'mistakes' whenthey respondto hypotheticaloffersthanwhentheyrespondto cashoffers. Whether
it arisesfromdeliberateattemptsto manipulateresultsor fromdifficultydecidingamonghypothetical
options, however,project designersneed to be aware of the potentialfor biasedresponseswhen
interviewingproject beneficiaries. This does not suggestthat the opinionsof beneficiariesshould
not be solicited,but rather that considerablecare must be taken to designmechanismsfor popular
inputthat minimizepotentialsourcesof bias. It alsosuggeststhat whilebeneficiariesmayknowtheir
preferences,they will not alwaysaccuratelyrelay them, either intentionallyor by accident.
5. Economicsof CollectiveAction. An analysisof the economicsof collectiveaction
suggeststhat becauselarge groupsare moredifficultto organizeeffectivelythan are smallones,the
opinionsof nongovernmentalorganizations(NGOs)and privatevoluntaryorganizations(PVOs)are
unlikelyto reflect those of the majorityof the community. There is substantialanecdotalevidence
amongBank-sponsoredprojectsto supportthis prediction.
For example, in the Ivory CoastWater Supplyand SanitationSector AdjustmentProgram
Bank stafffoundthat generallythe largerthe villagethe moredifficultit was to organizecompeting
interestsinto an effectivewater committee. In a numberof instancesviolencebroke out between
rival ethnic or other groups regardingwho would sit on the water committee. In some villages
conflictalso arose betweenlocalelites and those who had emigratedto urban areasbut maintained
closeties to the village. In abouthalf the villagesthe chiefsimplytookover the processof selecting
the comnmittee
and namedits membershimself.13
In the Philippines,the PhilippineNationalOilCompany'sgeothermalprojectin the Mt. Apo
NatureParkis beingstronglyanduniformlyopposedby variousdomesticand foreignenviromnental
groups. However,opinionamong the indigenouspopulationof the park is muchmore dividedon
the benefitsand costs of the project,particularlybecauseof its employmentaspects:peopleliving
in the park have been promisedpriorityin recruitmentto fill newjobs. Thus, the barangaycaptain
on Ilomavis,the sole remaininglocal villageon the slopes of the park, supportsthe geothermal
project. While NGOscontinueto argue againstthe project, some local populationsappearto have
13 The project deliberatelyprovided villages with no rules for selecting committee members to ensure
compatibilitywith local practices and traditions.
14
4 Consultations with environmental NGOs
worked out a compromise acceptable to themselves."
would therefore not reflect the diversity of opinion regarding the project among the local affected
populations. Similarly, in preparing the community-basedresource management component of the
Integrated Protected Areas System in the Philippines, local NGO consultants were hired to canvass
local opinion and disseminate informationon the proposed project. Bank staff believed, however,
that these consultationswere done poorly and by consultantswho were more sensitiveto biodiversity
protectionthan they were to v . . ncerns of individualsliving in affected areas. Accordingly, Bank
staff organized return visits to , -posed project sites to sanmplelocal opinion, uncovering - among
other things - much greater concern for issues of economic livelihood and development than had
originally been reported by some NGO consultants.
The examples above involved NGOs and PVOs external to the affected populations. Even
when an organization grows out of the indigenouscommunity, however, there is no guarantee that
it will act in the best interests of the local population rather than for the benefit of its own members.
For example, in the Central Visayas Regional Project in the Philippines community-levelforestry
organizations (Forest Output StewardshipAssociations)were used to allow forest residents to legally
manage areas of existing forest and to provide for salvage of dead, standing timber (from forest
fires). The leaders of these Associations were not directly elected by forest residents but were
expected to be responsive to them. The Bureau of Forest Development initially refused to provide
resource access instruments for the Associations, but 18 were finally issued in 1986. Before any
additional instruments could be issued, however, the 18 were canceled following instances of live
tree harvesting, apparently resulting from collusion of Association leaders and lowland timber
merchants.
6. Public Choice Theory. There are numerousexamples of occasionswhere elected officials
or government bureaucrats attempted to block policy changes occurring through Bank-sponsored
projects, even when these new policies were endorsed by political officials at the highest levels. For
example, the Central Visayas Regional Project in the Philippines, which attempted to incorporate
greater popular participationin its various elements,experiencedharassment from central government
officials, from local politicians and from the Commission on Audit, even though (or, perhaps,
because) the project was designed to support the government's policy for the devolution of power
from Manila to regional and local governments. An extreme example of this harassment was the
Commission on Audit's requirement that all mortality among disbursed livestock be explained
through post mortems carried out by veterinarianswith an auditor in attendance. In some cases, goats
were exhumed months after their deaths and autopsied. In the Ivory Coast, even though the
President publicly advocated the program shifting water pump maintenanceaway from the private
14 The compromiseseemsto be consistentwith Coase's Theory, an economictheory that argues that so long
as rightsare well-defined,efficientmarketsolutionsexist for a varietyof problemsformerlybelievedto be solvable
only through government intervention. Consider, for example, the situation facing a homeownerwho lives
downstreamfrom a polluter. It has often been argued that because the costs of pollutionare borne not by the
polluterbut by his downstreamneighbor,no market solutionexiststo preventthe pollution. Coase arguedthat so
long as there was a well-definedright to pollute, or to pollution-freewater, the polluter and his neighborcan
negotiatean agreementthat providesadequatecompensationfor the neighbor(if he has a right to clean water but
the agreementinvolvescontinuedpollution)or the polluter (if he has a right to pollute but the agreementinvolves
no pollution). In this case, the solution appears to be that the local communityhas traded certain environmental
rights for greater employmentopportunities.
15
water companyto villages,someelementsof the Ministryof PublicWorksopposedthe changeand
attemptedto blockthe plan. Similarly,althoughofficialgovernmentpolicyin Nepalsupportedlocal
rehabilitationand constructionof irrigationsystems,vestedinterestsin the governmentopposedthe
policy shift. In both casesthesebureaucraticeffortsto derailreformswere defeatedonlythoughthe
deterrninationand interventionof officialsat the very highestlevelsof the government.
The ZambianSocialRecoveryFundprovidesnumerousexamplesof the difficultiesthat can
arise when local governmentofficialsare put in chargeof project management,even when these
officials are elected and thus theoreticallyresponsiveto the interestsof their constituents. For
example, the BeneficiaryAssessmentnotes that projects run by local district councils almost
of fundsoccurredwhen
invariablylack accountability,and that the few cases of misappropriation
project monies were channelledthrough district councils. Even when outright fraud was not a
problem, the priorities of elected officials were not always those of the communitiesthey
represented. For example,the Mpika District Councildesignedthe plans for the Lukulu Rural
HealthCenterdiscussedin point 1, above,even thoughthe majorityof the localpopulationlatertold
the BeneficiaryAssessmentstaff that they wouldhave preferreda new schoolor post office.
Projectsrun by local politicianstendedto involveminimalcommunityparticipationand to
be identifiedwith the ruling UNIPparty. This becamea particularlyseriousliabilitywhen UNIP
lostthe 1991generalelection:communitymembershad little incentiveto takeover managementof
the projects themselves,while newly electedofficials sought to distance themselvesfrom their
politicalopponents. Indeed,the identificationof many projects with the governmentbecame a
seriousproblemevenbeforethe generalelection,whensomeoppositionMMDcandidatesstatedthat
the party wouldsuspendall self-helpprojectsand providegovernmentfundingfor theircompletion.
These statementsof coursediscouragedparticipantsfrom makingfurther contributionsof time or
labor to many projects. For thesereasonsthe BeneficiaryAssessmentrecommendedthat District
Councilsand politiciansno longerbe used as implementingagencies.
4 CONCLUSION
Ibis paper began by describingsome of the statisticalstudies of the effects of popular
participationin developmentprojects. It then reviewedthe economic literature to see what
contributionseconomictheory couldmaketo understandingthe likelyeffectsof enhancedpopular
participation. Somesimplepredictionsaboutparticipationwere made, and in the last sectionof the
paper severalWorld Bankprojectswere examinedto determinethe extentto whichthe predictions
of the theorywere actuallyrealized. For the mostpart, the predictionsof the theorywere supported
by the evidence:projectsrequiringbeneficiarycontributionsof time or moneydo seemto have been
more effective than those requiringneither; free-riderproblems have arisen in projects whose
benefitscannoteasily be limitedto contributors;potentialbeneficiariesof projectshave sometimes
of theirattitudes;localvoluntaryorganizationshavesometimes
engagedin strategicmisrepresentation
held more extremeopinionsthan the populationsthey claimto represent;and electedofficialsand
especiallybureaucratswere at timesout of touchwith the needs and interestsof their constituents,
or even activelyhostileto local initiatives. Of course, it is dangerousto generalizebroadlyfrom a
small sample, and even more so from a samplethat is not randomlyselected,but the projects
examinedin the previoussectiondo providesome illustrativeexamplesof the kinds of problems
predictedby the theory of Section2.
16
The implicationsof economic theory for popular participation may appear to be
overwhelminglynegative. However,it shouldbe rememberedthat as pointedout in Section2.1,
above, neoclassicaleconomictheory is deeply sympatheticto the ideas underlyingthe drive for
greaterpopularparticipation.One of the mostpowerfulimplicationsof generalequilibriumtheory
is that whenself-motivatedagentsare ableto expresstheirneedsand desiresthroughthe marketthey
will achievean efficientequilibrium.No outsideagencyattemptingto act on behalfof theseagents
could, withoutan intimateknowledgeof all of their preferences,obtain an efficientequilibrium
exceptby chance. Thus, the predictionsof economictheory examinedin Section3 of this paper
shouldbe notbe interpretedas reasonsto avoidgreaterpopularparticipationbut ratheras indications
of the types of pitfallsthat may faceparticipatoryprojectsandof the need to exerciseconsiderable
care in designingthe componentsof theseprojects.
Perhapsthe most importantresult developedfrom the analysisis that no uniformapproach
can exist for incorporatinggreaterpopularparticipationin developmentprojects. Instead,whether
and how to enhancepopularparticipationwill depend on the particularproblemsaddressedby a
project. Projects;aquiring contributionsof money or time may work well when the goal is to
constructa school (so long as the childrenof those who fail to contributewill be barred from
attendance)but are less likelyto be successfulwhenthe benefitsof a projectcannotbe restrictedto
participants,for examplein the constructionof a culvert. In thesecircumstancesit mightbe more
efficientto ask membersof a communityif they arewillingto approvea compulsorytax that charges
each family its share of the project costs, eliminatingthe risk of free-riders. Of course, this
approachwill only work so long as votersunderstandthat if they fail to approvethe tax the project
will not be constructed,as they may otherwisebelievethat by votingdownthe tax they will cause
the governmentor some other agencyto financethe project at no cost to beneficiaries. When
potentialbeneficiariesbelievethat the projectto whichthey are beingasked to contributemightbe
paid for by someoneelse, they are unlikelyto cooperateeven if the benefitsof the project would
exceedtheir contribution.The particularform that participationshouldtake will thereforedepend
criticallyon individualprojectcircumstances.
Moregenerally,the paper suggeststhat from the viewpointof economictheorythe question
of how to ensure a greater degree of popularparticipationin developmentprojects is somewhat
misspecified. Economictheory suggeststhat the market is a simpletool to obtain the benefitsof
popularparticipation. For example,if you wish to knowwhethera target populationwould prefer
a newpost ofriceto an additionalhealthclinic, ask themto contributefundsto each. The one they
are willingto pay more for is typicallythe one they want more. The problemis overcomingthe
kinds of obstaclesto efficient functioningof the market that are highlightedin Section2 and
documentedin Section3 of thepaper. Viewedfromthis perspective,the difficultpart of increasing
the degree of popularparticipationin developmentprojects is not creatinggrand mechanismsto
divinethe opinionsof beneficiariesbutrather designingmethods,whichare likelyto vary according
to the socialand politicalconventionsof beneficiaries,to eliminatefree-riderproblemsand reduce
the inc^-itivesfor strategicmanipulation. Sociologists,anthropologistsand economistscan all
contributeto these efforts.
Considerableattentionneeds to be devotedto definingthe appropriaterole for outside
technicalexpertsin projectevaluationanddesign. Whilethese expertsmust be sensitiveand open
to the opinionsof beneficiarypopulations,they need to do morethan simplyfacilitatethe flow of
informationbetweenbeneficiariesandBankstaff. Instead,technicalexpertsneedto serveas sources
17
and filters of information. First, in order to capture the greatest possiblebenefit from popular
participationit is essentialthat potentialbeneficiariesbe awareof all the possiblealternativesopen
to them."' The technicalexpert therefore needs not only to seek out the opinionsof potential
projectbeneficiariesbut also to ensure that they are well-informedof the benefitsand costs of all
conceivableoptions:beneficiaries,after all, have expert knowledgeof their own goals and desires
but not of all possiblemethodsof meetingthem. Second,whilethe experthas an obligationto be
to considertheextentto whichthese
receptiveto theopinionsof beneficiaries,he has a responsibility
opinions are based on accurate assessmentsof the costs and benefits of the project for all
beneficiaries.As notedabove,NGOSand PVOscan anddo tendto reflectthe beliefsof a relatively
narrowsegmentof thepopulation.Whilethe opinionsof thesegroupsshouldbe solicitedandtreated
with respect, it is essentialthat the outside expert evaluatethe extentto whichthey are based on
likely,or even possible,eventsand consequences.Listeningto and agreeingwith the opinionso.
special interest groups claimingto representbeneficiariesare two separate actions. Enhanced
popularparticipationdemandsthe first of thembut not necessarilythe second.
Thepaperdiscussthe hostilitythatparticipatoryprojectsmayencounterfromelectedofficials
and bureaucratsbut offers no easy solutionsfor the problem. In Ivory Coast, Nepal and Egypt
(where the Social Fund faced considerableoppositionfrom lower and middle level government
officials) efforts to derail participatoryprojects were defeated only by the support for popular
participationexpressedat the very highest levels of government. This experiencehighlightsthe
essentialrole that centralgovernmentsmustplay in enhancingpopularparticipation,an issuethat is
not often discussedin the literatureon popularparticipation. Simplyput, oppositionwithinthe
governmentto local initiativescan makeotherwisewell-designedparticipatoryprojectsfutile,while
strong supportfor participationat the ministerial(or higher)level can lendtheseprojectssufficient
prestigeand visibilityto overcomebureaucraticobstacles. The implicationis that Bank staff need
to work collaborativelywith membergovernmentsat the highest levelsto developamong senior
officialsan appreciationof the benefitsthat can accruefrom greater popularparticipationbefore
attemptingto design and implementparticipatoryprojects. Ministersneed to be boostersfor the
participatoryapproach,as mere toleranceof participatoryprojectsis unlikelyto be sufficientto
defeat the hostilitybureaucratsand local elected officialsmay feel. (An alternativeapproach,
creatingnew governmentagencieswith sole authorityfor participatoryprojects, only createsnew
bureaucraciesthat may in timedeveloptheirown inertiaand self-interests,andthus is at best a shortterm solution).
Thispaperhas madeno attemptto answerbroadquestionslike "Isparticipationworthwhile?"
or "Howmuchparticipationis enough?" Participationby projectbeneficiariesis essential,and, of
course,alreadyoccursto a limitedextentin manyWorldBankprojects,particularlythose benefitting
from good cost-benefitanalysis. A more appropriatequestionthan 'Is participationworthwhile?"
is 'How can popular participationbest be enhanced in the context of a particular project?"
Judgmentsaboutthe appropriateextentand form of popularparticipationin a projectare best made
on a case-by-casebasis by individualsfamiliarwith local customsand conditions(whichis very
muchthe argumentfor popularparticipationby projectbeneficiariesin the first place). Insteadof
dictatinga blanket solution,this paperhas attemptedto identifysome of the possiblebenefitsand
1- Recallfrom Section2.1, above, that market allocationscannot be assumedto be efficient if, among other
things, agents do not have perfect informationabout goods availableto them and their prices.
18
costs of participation,to assist project staff in making decisions appropriateto the particular
circumstancesof each case.
Finally,becauseeconomicsis the study of the allocationof scarce resources, it would be
inanpropriateto concludethis paper withoutpointingout that participationis itself a scarce and
sometimescostly commodity. Developingmethodsto overcomethe difficultiesidentifiedin this
paper will requireadditionalfundsand time, and may not alwaysyield benefitssufficientto justify
their costs. In the frictionlessworld of generalequilibriumtheorypopularparticipationis ideal,but
in the second-bestworld in whichdevelopmentinstitutions(andthe rest of us) operatesomesort of
implicitcost-benefitanalysismustbe applied,andtheoreticallysecond-bestsolutionsmustsometimes
be applied.
19
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