Programs are limited in time and resources. They require the active participation of the government (even if implementation is contracted out to the private sector), and when the funding terminates, the program ends. In contrast, policies are permanent, at least until a new policy regime is designed and put into effect. They do not always require government expenditures. A law eliminating import restrictions, for example, does not require expenditures or a staff to implement it, and it is permanent unless in the future new limitations to free trade are legislated. Although policies may not represent a cost to government, they often imply costs for users of public services, producers in general, marketing agents, consumers and other groups in the economy. Part of the art of policy making is balancing these costs with the benefits conferred by new policies.
Programs consist of directly managed activities (usually with sizeable staffs), involving face-to-face interaction with farmers, financial institutions and other private economic agents. Many policies, by contrast, exercise their influence indirectly and consist of definitions of economic rules of the game, through laws, decrees and regulations; in principle, many of them can be put into effect with the aid of a handful of specialists on a ministerial staff.3
Projects, like programs, are limited in time and are staff-intensive. They usually involve a significant investment component. They utilize the government's capital account budget, whereas
3. It should be noted that the word program is sometimes used in another sense, that of a policy program or a set of interrelated policies.
programs utilize the current account budget. However, some programs also contain investment expenditures, and so the distinction between programs and projects is not always clear-cut. This is particularly true in the area of training (human capital formation), where current outlays are used to create capital.
Frequently, both programs and projects are required to implement the policies in a strategy. If they are not derived directly from a sector-wide or sub-sectoral strategy, they should be made consistent with it. In the hierarchy of governmental decisions, programs and projects normally are subordinate to and derived from policies, and the latter, in turn, often are developed within the framework of a strategy. In the real world of decision making with multiple and conflicting interests and actors, things do not work out so neatly, but the attempt to co-ordinate policies, programs and projects can make them all more effective. An irrigation investment is more productive if it is accompanied by legislation that facilitates the formation and operation of water users' associations (Chapter 6). A livestock investment gives greater returns to farmers if rural financial systems are strengthened so that future funding is available on a continuous basis for adequate herd management (Chapter 7). A community development program can be more effective if a policy decision has been made to decentralize agricultural research and make research and extension more participatory (Chapter 8).
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