Person: Khemani, Stuti
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Public economics; political economy; institutions; governance
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Last updated: February 21, 2024
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Stuti Khemani is a Senior Economist in the Development Research Group of the World Bank. She holds a PhD in Economics from the Massachusetts Institute of Technology. Her research on the political economy of public policy choices, and the role of institutions in economic development. is published in leading economics and political science journals. She is the lead author of the Policy Research Report on Governance: "Making Politics Work for Development: Harnessing Transparency and Citizen Engagement". She is currently examining how the role of government has resurged in the 21st century to address problems such as climate change, water scarcity, public health, conflict, and (lack of) fairness in economic systems which fuels social unrest. She applies economic theory to develop innovative policy ideas for how to strengthen state capacity to address these problems and build trust and legitimacy in society. Her research and advisory work span a diverse range of countries, including Benin, China, India, the Philippines, Nigeria, Tanzania and Uganda.
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Now showing 1 - 7 of 7
Publication The Economics of Water Scarcity in the Middle East and North Africa: Institutional Solutions(Washington, DC : World Bank, 2023-04-26) de Waal, Dominick; Khemani, Stuti; Barone, Andrea; Borgomeo, EdoardoDespite massive infrastructure investments, countries in the Middle East and North Africa (MENA) region continue to face unprecedented water scarcity due to climate change, population growth, and socioeconomic development. Current policy regimes for managing water across competing needs are primarily determined by state control of large infrastructure. Policy makers across the region understand the unsustainability of water allocations and that increasing investments in new infrastructure and technologies to increase water supply place a growing financial burden on governments. However, standard solutions for demand management—reallocating water to higher value uses, reducing waste, and increasing tariffs—pose difficult political dilemmas that, more often than not, are left unresolved. Without institutional reform, the region will likely remain in water distress even with increased financing for water sector infrastructure.The Economics of Water Scarcity in the Middle East and North Africa: Institutional Solutions confronts the persistence and severity of water scarcity in MENA. The report draws on the tools of public economics to address two crucial challenges facing states in MENA: lack of legitimacy and trust. Evidence from the World Values Survey shows that people in the region believe that a key role of government is to keep prices down and that governments are reluctant to raise tariffs because of the risk of widespread protests. Instead of avoiding the “politically sensitive” issue of water scarcity, this report argues that reform leaders and their external partners can reform national water institutions and draw on local political contestation to establish a new social contract. The crisis and emotive power of water in the region can be used to bolster legitimacy and trust and build a sustainable, inclusive, thriving economy that is resilient to climate change.Publication The Importance of Political Selection for Bureaucratic Effectiveness (First published: 19 April 2023)(John Wiley and Sons, 2023-08-14) Habyarimana, James; Khemani, Stuti; Scot, ThiagoBureaucratic effectiveness has come to the fore in research as necessary for economic growth and development. This paper contributes empirical evidence to understand the building blocks of bureaucracy by gathering rich survey data in a typical institutional environment of the developing world. The data reveal a robust correlation between the selection of local politicians and bureaucratic effectiveness. In districts in Uganda where locally elected politicians have higher survey-based measures of integrity (or honesty), the bureaucracy is more effective in delivering public heath services. This evidence supports current research, and encourages future research on how the selection of political agents into government is an important determinant of bureaucratic effectiveness.Publication What Is State Capacity?(World Bank, Washington, DC, 2019-02) Khemani, StutiReform leaders who want to pursue technically sound policies are confronted with the problem of getting myriad government agencies, staffed by thousands of bureaucrats and state personnel, to deliver. This paper provides a framework for thinking about the problem as a series of interdependent principal-agent relationships in complex organizations, where one type of actor, the agent, takes actions on behalf of another, the principal. Using this framework to review and forge connections across a large literature, the paper shows how the crux of state capacity is the culture of bureaucracies -- the incentives, beliefs and expectations, or norms, shared among state personnel about how others are behaving. Although this characterization might apply generally to any complex organization, what distinguishes agencies of the state is the fundamental role of politics -- the processes by which the leaders who exercise power over bureaucracies, starting from the lowest village levels, are selected and sanctioned. Politics shapes not only the incentives of state personnel, but perhaps more importantly, it coordinates their beliefs and expectations, and thereby the performance of government agencies. Recognizing these roles of politics, the paper offers insights for what reform leaders can do to strengthen state capacity for public goods.Publication Demand and Supply Curves in Political Markets: Understanding the Problem of Public Goods and Why Governments Fail Them(World Bank, Washington, DC, 2017-10) Khemani, StutiThis paper brings the economic tools of demand and supply curves to better understand how political markets shape the selection of government policies. It does so to tackle a problem at the intersection of political science and economics: government failure to pursue policies on the basis of sound technical evidence. Too often, the leaders who wield policy-making power within governments deliberately and knowingly ignore sound technical advice, or are unable to pursue it despite the best of intentions, because of political constraints. The paper shows how the prevailing dominant explanation for suboptimal policies and weak institutions, of special interest and elite capture, can be understood as the selection of a point on the political demand curve by oligopolistic political competition. Further, it shows how elite capture is only one of many possible outcomes, and is endogenous to preferences and beliefs in society. Preferences in society for public goods (or the lack thereof), and beliefs about how others are behaving in the public sector, are the primitive or fundamental elements driving the shapes of political demand and supply curves and thence the selection of public policies and institutions. This framework highlights the need for future research to understand where political preferences and beliefs come from, which is essential to the design of institutions that address problems of public goods.Publication Pitfalls of Participatory Programs: Evidence from a Randomized Evaluation in Education in India(2010) Banerjee, Abhijit V.; Banerji, Rukmini; Duflo, Esther; Glennerster, Rachel; Khemani, StutiParticipation of beneficiaries in the monitoring of public services is increasingly seen as a key to improving their quality. We conducted a randomized evaluation of three interventions to encourage beneficiaries' participation to India: providing information on existing institutions, training community members in a testing tool for children, and training volunteers to hold remedial reading camps. These interventions had no impact on community involvement, teacher effort, or learning outcomes inside the school. However, in the third intervention, youth volunteered to teach camps, and children who attended substantially improved their reading skills. This suggests that citizens face constraints in influencing public services.Publication When Do Legislators Pass on Pork? The Role of Political Parties in Determining Legislator Effort(2009) Keefer, Philip; Khemani, StutiA central challenge in political economy is to identify the conditions under which legislators seek to "bring home the pork" to constituents. We conduct the first systematic analysis of one determinant of constituency service, voter attachment to political parties, holding constant electoral and political institutions. Our analysis takes advantage of data from a unique type of public spending program that is proliferating across developing countries, the constituency development fund (CDF), which offers more precise measures of legislator effort than are common in the literature. Examining the CDF in India, we find that legislator effort is significantly lower in constituencies that are party strongholds. This result, which is robust to controls for alternate explanations, implies that legislators pass on pork when voters are more attached to political parties. It has implications not only for understanding political incentives and the dynamics of party formation, but also for evaluating the impact of CDFs.Publication Participation in a School Incentive Programme in India(2009) Barnhardt, Sharon; Karlan, Dean; Khemani, StutiEducation policy has recently focused on improving accountability and incentives of public providers for actual learning outcomes, often with school-based reward programmes for high performers. The Learning Guarantee Programme in Karnataka, India, is prominent among such efforts, providing cash transfers to government schools that achieve learning at specified high levels. This study examines whether schools that self-selected into the incentive programme are different than those that did not. The answer has important implications for how to evaluate the impact of such a programme. Although we find no significant differences in resources and characteristics, we do find significant and substantial differences in test scores prior to selection into the programme, with better performing schools more likely to opt-in. These findings also provide insight into how incentive-based programmes that focus on levels of (rather than changes in) achievement can exacerbate inequality in education. Failing schools, since they are more likely to opt-out of incentive programmes, are likely to require other targeted programmes in order to improve. In addition, our findings reinforce the value of randomised controlled trials to evaluate incentive programmes since evaluations that rely on matching schools based on resources (if, for instance, pre-programme test scores are unavailable) will be biased if resources poorly predict test scores.