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In this paper, the authors use the lab to test a series of policy proposals designed to constrain rent-seeking behaviour in a policymaking context. The baseline governance game is conducted in the following way: subjects are randomly assigned to groups of four, with one subject randomly selected to be the "policymaker", while the other three are the "citizens". Citizens are informed that they can use their endowments to contribute to a group account. Any amount contributed to the group account are doubled. Once citizens have made their contribution decisions, the policymaker observes the contribution decisions of each citizen, and the total amount in the group account. The policymaker formulates a distribution "policy" to distribute the tokens among all four group members. The game is repeated for 20 rounds. With this basic framework, the authors implement and test the effect of three institutions designed to constrain policymaker rent-seeking behaviour: voting, policy commitment, and punishment. The results show that voting and enforced commitment are the most effective policy mechanisms to constrain rent-seeking, and improve citizen welfare. The authors find policymaker punishment regimes to be largely ineffective, both in reducing rent-seeking and improving welfare of citizens.

Finance --- Game theory --- Governance --- National Governance --- Politics and Government --- Voting

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The World Bank has been collaborating with finance, budget, and public accounts committees in the Western Balkans as part of a knowledge partnership focusing on strengthening financial oversight practices. Despite some gains in external auditing performance, the region continues to underperform when it comes to legislative scrutiny of audit reports. Therefore, the knowledge partnership includes a focus on how finance, budget, and public accounts committees discharge their responsibilities to scrutinize government performance using the audit reports produced by Supreme Audit Institutions (SAIs) in the region. The network of the SAIs of European Union (EU) candidate countries and potential candidates and the European court of auditors has identified the working relationship between SAIs and parliaments as a critical component for effective external audit. This discussion note is intended as a primer for dialogue between parliaments, SAIs, and practitioners on how to better define and strengthen the relationship between the external audit and legislative scrutiny stakeholders. It outlines the context and challenges, and also frames some questions that can help stakeholders reflect on the existing and aspirational nature of the relationship. The discussion note proceeds in five parts. First, the context for the discussion is outlined. Second, the accountability relationship between SAIs and parliaments is explored. Third, the main challenges for effective external audit and financial oversight is reviewed. Fourth, global and regional external audit benchmarks will be detailed. Finally, the challenges for the Parliament-SAI relationship in the Western Balkans will be examined and discussion questions framed around three areas of mutual interest for SAIs and parliaments - SAI independence; examination of the audit reports by the parliament; and follow-up on recommendations based on the audit reports.

Democratic Government --- Governance --- National Governance --- Parliamentary Government --- Public Sector Development

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The Botswana Mining Investment and Governance Review (MInGov) collects and shares information on mining sector governance, its attractiveness to investors and how its activities affect national development. It reviews sector performance from the perspective of three main stakeholder groups - government, investors in the mining value chain and civil society - and identifies gaps between declared and actual government policy and practice. The reviews findings are: Performance across the minerals value chain is better in the latter stages related to investment, accumulation, and expenditure of mineral revenue. The mining policy and legal framework are largely sound. The environmental protection legislation is quite current and mostly based on 'good practice' except for access to Environmental Impact Assessments. Land use issues, including resettlement and compensation, require a more inclusive process and stronger legislated framework. A local content policy for the mining industry should be developed with mining sector participation to ensure that both the needs of government and industry are met. Institutions are for the most part staffed with trained, qualified people although sometimes there are not sufficient numbers of staff with the required experience. The top shared priority by all three stakeholder groups is Sector Management and Intragovernmental Coordination. MInGov's methodology focuses on the status of governance and investment conditions in the mining sector from the perspective of stakeholders, and as reportedin primary and secondary sources.

Energy --- Governance --- Industry --- Macroeconomics and Economic Growth --- National Governance

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Although research has established the importance of state capacity in economic development, less is known about how to build that capacity and the role of external partners in the process. This paper estimates the impact of a typical development project designed to build state capacity in a low-income country. Specifically, it evaluates a multilateral development bank project in Tanzania, which incentivized investments in local state capacity by offering grants conditional on institutional performance scores. The paper uses a difference-in-differences methodology to estimate the project impact, comparing outcomes between 18 project and 22 non-project local governments over 2016-18. Outcomes were measured through two rounds of primary surveys of nearly 500 local government officials and nearly 3,000 households. Over the course of the project, measured state capacity improved in project areas, but due to comparable gains in non-project areas, the project's value-added to change in state capacity is estimated to be zero across all the dozens of relevant variables in the surveys. The data suggest that state capacity is evolving in Tanzania through endogenous changes in trust and legitimacy in the country rather than from financial incentives offered by external partners.

Decentralization --- Governance --- National Governance --- Performance-Based Financing --- Public Sector Development --- State Capacity

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Public procurement of a country is a crucial component of good governance and sustainable economies with inclusive growth and one of the key elements to the effective and efficient functioning of the public sector and service delivery. It underpins the performance of all sectors in public services delivery at different levels of government and thus to the development of the country. Government expenditure on public procurement accounts for a sizeable part of economic activity. Governments around the world spend approximately USD 9.5 trillion in public contracts every year, which could constitute 12-20 percent of a country's GDP. 1 In Rwanda, the share of government spending as a percentage of gross domestic product (GDP), in 2017, accounts to 15.22 percent2 (Source: The World Bank, TheGlobalEconomy.com). With GDP of USD 9.1 billio.

Accountability --- Governance --- National Governance --- Public Procurement --- Public Sector Development --- Public Sector Management and Reform --- Transparency