Exit, Voice, and Resources: How NGOs Shape State Performance in India

Abstract

How do civil society actors shape the quality and distribution of public services? How has the turn toward direct service provision among NGOs altered the way these non-state actors shape the performance of the state? Using evidence collected during 14 months of fieldwork in rural and semi-urban India, this study presents a comparative case analysis of the effects of education NGOs on government schools in rural Rajasthan and Punjab. Service-provision NGOs may build state capacity by providing demonstration models to the state and stimulating new demand for quality services, or they may erode state capacity by displacing state service provision. Recent empirical scholarship has documented instances of both, but has not offered an explanation for this heterogeneity. I argue that heterogeneity in the effects of NGOs on the quality of state service delivery is driven by micro-level variation in bureaucratic behavior, or the degree of rent-seeking among street- level bureaucrats. Where and when street-level bureaucrats seek quality, NGOs improve public service delivery through a “learning effect.” Where and when street-level bureaucrats seek rents, NGOs have a neutral or negative effect on state performance, depending on the NGO’s model of service provision: in some such cases, resources fail to transfer and NGOs have no effect on the state; in other such cases, NGOs erode public service delivery by stimulating citizen exit, thereby weakening informal mechanisms of accountability. Together, these dynamics strengthen performance in ex-ante higher-performing government schools and weaken performance in ex-ante lower-performing government schools, suggesting that in the aggregate service provision NGOs have a regressive distributive effect on the performance of the welfare state. The study indicates that international flows of aid and philanthropic capital to NGOs in developing countries can better avoid displacing welfare states when we understand patterns of bureaucratic rent-seeking in public service institutions and the politics that constrain bureaucratic reform.