Aiding institutional reform in developing countries: lessons from the Philippines on what works, what doesn't and why

Research reports and studies
June 2014
There is broad agreement that institutional change is fundamental to development, but it is less clear which institutional challenges can be tackled effectively at which point in a country’s development, and how and by whom. Recent contributions have reminded us that successful change is discovered in a problem-solving, iterative and learning-oriented way. However, there is still little understanding of the processes and people that are capable of sustaining this type of approach under typical conditions. If external support is needed, it must be provided in the right way – well grounded in an understanding of the way political and bureaucratic incentives work in a country – which is not easily achieved. The phrase ‘thinking and working politically’ is increasingly heard in international development agencies, but the evidence base for claims that such an approach can work and be effective remains slim. 

Recent economic and social reforms in Philippines supported by TAF provide an unusually rich fund of relevant experience. This paper examines two completed reforms, one concerning the formalisation of residential land rights, the other taxation and public health. As well as outlining the ‘external story’ of how the reforms were achieved, this paper asks: how was it possible for this to happen on an aid-funded basis, given the difficulties that aid agencies usually have in working in a flexible and adaptive way?