Evaluation of IRIS [institutional reform and informal sector] advisory programs

The project is being implemented by the University of Maryland"s Institutional Reform and the Informal Sector (IRIS) Center. The evaluation covered the period 9/90-10/93. The IRIS Center has attracted a large team of first-rate researchers who have produced generally very high quality output (as witnessed by increasing publication in refereed journals) and have placed IRIS at the forefront of the effort to expand the knowledge base on the relationship between institutions and economic growth. Topics investigated have included, inter alia, the strategic role of institutions in economic growth, the transition from socialism to market economies, political institutions and democratic constitutions, land markets, financial institutions, fiscal policy, and retail and international trade. The Center"s field programs have achieved substantial progress in Poland, Nepal, Mongolia, and, to a lesser extent, Chad. New programs are underway in India, Madagascar, and Russia. In Poland, where evaluators were asked to focus most attention, the Center has promoted improved laws and regulations and increased international awareness of the role of institutions in economic development; outreach and dissemination efforts have been particularly effective. The Center has promoted reform in banking collateral law, in bankruptcy law, and in intellectual property law (particularly as it affects technology commercialization). In Mongolia, the Center has conducted workshops for senior public and private sector personnel on key legal and economic issues related to the transition to a market economy, e.g., competition law. Success seems due to the fairly large and high-quality staff assigned to the project under the terms of the Mission buy-in. Much of the research conducted in Mongolia should be helpful in shaping future A.I.D. programs in other Southeast Asian countries. Efforts in Nepal have been impressive, though the rudimentary nature of the private sector indicates a need for substantial long-term TA. To date, the Center has helped to reduce notably the time required for registering a new business (a major hurdle to privatization) and has provided valuable analytical support in the areas of company law; fertilizer, airline, and petroleum deregulation; foreign exchange convertibility; off-shore banking; and stock market planning. Success has been due in part to the excellent work of the long-term advisor. Also, as in Poland, the use of universities as a base has blunted the perception of inappropriate foreign government intervention in local affairs. While satisfactory, the Center"s experience in Chad has lacked continuity, though this should change with the placement of a long-term advisor. In Madagascar, the Center and the Mission have wisely decided to focus on the investment environment, including financial and banking system reform. The success of democratization and economic liberalization in Madagascar could have significant spill-over effects in other very poor nations of southeastern, sub-Saharan Africa. In India, the Center is in the process of implementing a program to deal with the free-market developments that have taken place over the last 2 years. The core of the program will be collaborative research conducted with a small number of Indian research institutes. In the western hemisphere, the Center appears to have had a limited impact on the democratic and economic transformations occurring in major countries, such as Mexico, Chile, Argentina, and Brazil. Nor has it had a significant effect on democratic and economic developments in smaller and poorer countries such as Haiti, Nicaragua, and Bolivia. In the case of the larger countries, the Center has been behind the curve of democratization and privatization. In the case of some of the smaller countries, there have been military and political constraints, though some of these appear to be lifting. More effort in this region is recommended. In regard to program administration, staff have been of high caliber, but the program is facing some problems in cost-effectiveness due to heavy burdens imposed by A.I.D. administrative requirements. It is recommended that A.I.D. support for the IRIS Center be extended beyond the 2 years remaining under the contract. Recommendations for the individual country programs are provided.