ABSTRACT
Where the public administration comprises a large proportion of the modern economy's labor force, as is the case in much of the Middle East and North Africa, this may be politically difficult. One option in these circumstances is to create islands of good performance within the public administration, even among very inefficient organizations, but the sustainability of such organizations without a broader reform of the public service may be problematic. In this chapter, the authors use an approach which focuses on institutional functions, rather than on the definition of institutions themselves. Recently some attention has been directed toward analyzing the impact of institutional capability on growth. This literature relies primarily on cross-country measures of institutional capability, and attempts to use indices of the effectiveness of institutional functions or organizations to explain variations in long run growth or its determinants.
