Drivers of effectiveness : Commitment , coordination , and cooperation

Amka and the Three Golden Rules (2014) is a beautifully crafted film about a Mongolian child, Amka, whose life turns into a nightmare after he finds a golden coin and hops onto a path of overspending, abandoning family duties and taking on unmanageable levels of indebtedness. Under pressure to repay his debts, he runs away, through the astounding Mongolian landscape, to settle with an eccentric uncle who teaches him the three golden rules of life. The Mongolian newspaper UB Post noted in 2014 that “the story is in many ways a symbol of how Mongolia must decide its own fate” to manage its growing levels of debt.1 Indeed, as the movie was being released, the country was undergoing a third attempt to establish the rainy-day Future Heritage Fund to manage its windfall from mining revenues (mining is the country’s largest source of revenue). The attempt to transplant the design of a “future generations fund” from international best practices had already failed twice. Experts from around the world had visited Mongolia over the previous decade, providing advice on the best existing rules for the distribution and management of revenues from natural resources. Technical solutions were available, and political will was palpable among several state actors. Yet, since 2007, attempts to establish rules for the use of mining revenues had been thwarted by political pressures. Hardfought parliamentary elections prompted Mongolia’s political parties to promise to increase spending on programs such as cash allowances, untargeted social benefits, and investments in specific regions in order to garner support. However, such promises could be fulfilled only by depleting the resources going into the reserve fund (Chimeddorj 2015). Thus no matter how well policy makers designed the future generations fund, unless the interests of the powerful groups in society were to change, the commitment to a policy of fiscal prudence would continue to fail and the country would remain in debt. The process to reach and sustain agreements among decision makers on these policies had not created the conditions for people to be willing to cooperate and coordinate actions around specific long-term goals. The parallels between Mongolia’s state of affairs and the story portrayed in the movie were not a coincidence. The metaphor in Amka’s tale was a deliberate attempt, supported by opinion leaders and artists, to create awareness in Mongolian society about the importance of prudence in the management of resources (in Amka’s story, the golden coin). The movie was viewed as an instrument to reinforce people’s values of prudential management of wealth in an effort to coordinate support for the pursuit of the long-term goal of fiscal sustainability in Mongolia. As this example illustrates, policy making does not take place in a vacuum. It is the result of a bargaining process among actors, who frequently have diverse and even opposing preferences and interests. More important, the bargaining power of those actors differs, derived from a variety of sources such as the existing formal rules, informal norms, their ability to represent and mobilize other groups in society, or their control over resources. The complex process in which actors bargain over the design and implementation of policies, in a very specific social, historical, and economic context, is what in this Report is called governance. Enhancing governance for development: Why policies fail CHAPTER 2