Front Matter

Front Matter Page

Research Department

Contents

  • Summary

  • I. Introduction

  • II. Human Capital, the Public Sector, and Growth

    • A. Producing Better Governance

  • III. Public Sectors in Developing Countries: Some Empirical Facts

    • A. First-Generation Civil Service Reform

  • IV. The Consequences of Skill Migration

  • V. Can Technical Assistance Replace Lost Skills?

  • VI. Conclusion: Domestic Talent as an Agency of Restraint

  • Tables

  • 1. Selected Developing Countries: Trends in Real Wages in General Government

  • 2. Selected Developing Countries: Trends in the Ratio of Government to Private Sector Average Wages

  • 3. Indicators of Civil Service Adjustment in Low-Income Countries

  • 4. Estimates of Brain Drain from Sub-Saharan Africa

  • 5. Estimates of Brain Drain from Selected Countries in Sub-Saharan Africa

  • 6. Recommended Highest Salary Payable to Nationals as Percent of Entry Level World Bank Salary

  • Figures

  • 1. Labor Market Equilibrium

  • 2. Real Public Sector Wages and Wage Compression: 1975-85

  • 3. Employment Indicators in Some Developing Countries

  • 4. Migration of Talent

  • 5. Technical Assistance Flows

  • 6. Technical Assistance vs. Return of Skilled Migrants

  • References

Summary

The empirical literature on growth in Africa identifies four factors that explain a large part of the poor economic performance of the African countries: a lack of openness in product markets, a lack of social capital, high investor risk, and poor public services. It argues that Africa has stagnated because its governments have been weak and inefficient, and often times made up of narrow rent-seeking elites who have undermined markets and considered the public sector to be a vehicle for delivering employment patronage. This role of the public sector reduced returns to investments in Africa as well as increased the already high risk in private investments. The natural response on the part of private agents was to engage in capital flight and develop their “social capital into risk-reduction and risk-bearing mechanisms at the expense of social learning.” For the future, it is therefore argued that emphasis has to be placed on openness as well as structural reform to make the government more efficient.

This paper argues that critical in any deep reform of the public sector is the need to put in place incentives for the proper utilization and nurturing of human capital, which the continent has lost in the past three decades through poor wage polices that have prompted migration of talent. It further argues that the growing trend in recent years to use foreign technical assistance to cope with this loss in human capital is not preferable to a policy that seeks to retain local talent. Brain- drain repatriation is likely to be a more efficient policy than technical assistance so long as living in the country of origin is preferable to all. Consequently, what the situation calls for are reforms in the public sector’s employment policies that seek to reduce the incentive to migrate.

The Quality of Governance: “Second-Generation” Civil Service Reform in Africa
Author: International Monetary Fund