The Internationalization of Public Management: Reinventing the Third World State 1840641819, 9781840641813

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© Willy McCourt and Martin Minogue 2001 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data The internationalization of public management : reinventing the Third World state / edited by Willy McCourt, Martin Minogue. p. cm. — (New horizons in public policy) Includes index. 1. Public administration—Developing countries. 2. Civil service—Developing countries. 3. Developing countries—Economic policy. 4. Local government— Developing countries. I. McCourt, Willy. II. Minogue, Martin. III. Series. JF60.I5827 2001 351.172'4—dc21 00–056176

ISBN 1 84064 181 9 Printed and bound in Great Britain by Bookcraft (Bath) Ltd.

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For Maureen and Sally (Martin Minogue) For Glynnis, Maya, Róisín and Susan (Willy McCourt)

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Contents List of figures List of tables and boxes List of contributors Preface 1 2

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viii ix x xii

The internationalization of new public management Martin Minogue Should flawed models of public management be exported? Issues and practices Martin Minogue Administrative reform in core civil services: application and applicability of the new public management Charles Polidano New public management and development: the case of public service reform in Tanzania and Uganda Jeremy Clarke and David Wood Local government: management or politics? Howard Elcock and Martin Minogue The NPM agenda for service delivery: a suitable model for developing countries? Willy McCourt Reinventing the Third World state: service delivery and the civic realm David Hulme Privatization and regulation in developing countries Paul Cook Human resource management and new public management: two sides of a coin that has a low value in developing countries? Harry Taylor Information systems and public sector reform in the Third World Richard Heeks and David Mundy Moving the public management debate forward: a contingency approach Willy McCourt

Index

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70 90

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129 153

174 196

220 254

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Figures 4.1 Tanzania’s performance improvement model 9.1 A contingency model of public sector reform in LDCs 10.1 The IS-IT-reform relationship 10.2 The ITPOSMO dimensions of change 10.3 Creating hybrids for the public sector

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81 190 199 213 215

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Tables and boxes TABLES 4.1 4.2 4.3 4.4 4.5 7.1 9.1 9.2 10.1 11.1 11.2

Relative size and remuneration of the general government workforce: international comparisons (1995) Uganda: staffing reductions/salary increases Effect of retrenchment on total government employment: Tanzania 1971-98, selected years Service delivery survey: health in Uganda (1995) Sector comparisons of gross pay levels, 1996 Modes of direct service delivery by civic organizations (CO) Key elements of NPM and HRM philosophy compared LDC contexts and NPM/HRM thinking Differences between national and political models of organizations Six tests of three public management models Models of management in Uganda’s civil service reform programme

72 72 73 74 82 139 179 187 207 243 246

BOXES 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 4.1 4.2 4.3 7.1 7.2 7.3

Principal UK privatizations, 1980-94 22 Scale of privatization in OECD countries, 1979-91 23 UK public expenditure as % of GDP 23 UK growth rate comparisons 24 Prior options review results to 1993 26 British executive agencies 29 New Zealand public service restructuring 29 Citizen’s Charter Programme, UK 31 Performance payments in the UK 33 Consultative policy and public services: Uganda 77 Uganda: delegating budgets and enhanced performance reporting 79 Private sector involvement: health sector reforms in Tanzania 87 NGO-government relationships in Kenya 134 Government mechanisms for NGO coordination in Nepal 135 The Bangladesh Rural Advancement Committee (BRAC) 138 ix

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Contributors Howard Elcock is Professor and Honorary Research Fellow at the University of Northumbria. While teaching politics and government at Hull University he was also a serving member of the Humberside County Council. He has published extensively in the area of British local government and public administration, and is author of the respected textbook Local Government (3rd edition, 1994, Routledge). He is currently working on a study of regionalism and strategic planning in England and is about to publish a book on political leadership. Jeremy Clarke and David Wood are Senior Governance Advisers at the UK Department for International Development, and have recently been involved in public sector reform programmes in Tanzania and Uganda. Paul Cook is Reader in Economics at the Institute for Development Policy and Management at the University of Manchester. He has published extensively on comparative privatization policy and practice, most recently (with Colin Kirkpatrick and Fred Nixson, eds) Privatization, Enterprise Development and Economic Reform (Edward Elgar, 1998). He has provided consultancies to many international agencies, including UNDP (United Nations Development Programme), ADB (Asian Development Bank), UNCTAD (United Nations Conference on Trade and Development) and ILO (International Labour Organization). His current interest is in regulatory systems. Richard Heeks ([email protected]) is a senior lecturer in information systems at the University of Manchester in the Institute for Development Policy and Management. His most recently published book is Reinventing Government in the Information Age (Routledge, 1999). He has provided consultancy inputs to public sector organizations worldwide and currently directs a Master’s programme in ‘Management and Information’. His homepage is located at http://www.man.ac.uk/idpm David Hulme ([email protected]) is Professor of Development Studies at the Institute for Development Policy and Management, University of Manchester. He has particular interests in public service provision for the poor in developing countries and in state-voluntary sector relationships. He is author of Governance, Administration and Development: Making the State x

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Work (London: Macmillan, with M. Turner) and NGOs, States and Donors: Too Close for Comfort? (London: Macmillan, with M. Edwards). Willy McCourt ([email protected]) is a Lecturer in human resource management in the Institute for Development Policy and Management at the University of Manchester, having previously worked in British local government and adult education, and in higher education in Nepal. His current research interests are public service reform and human resource management in developing countries. Martin Minogue ([email protected]) is a Senior Research Fellow at the Institute for Development Policy and Management, University of Manchester, and was from 1984 to 1996 Director of the University’s International Development Centre. He has published extensively in the area of comparative public policy and development, and has undertaken consultancies for the UNDP, ADB, British Council, UK Department for International Development, and the Economic and Social Research Council (ESRC-UK). David Mundy ([email protected]) is a Lecturer in information systems for development at the University of Manchester in the Institute for Development Policy and Management. He is a chartered engineer specializing in information systems. He has conducted research and undertaken consultancy assignments in a number of developing countries. Charles Polidano ([email protected]) is currently at the Office of the Prime Minister, Valletta, Malta. Between 1996 and 1999 he was a Lecturer at the Institute for Development Policy and Management, University of Manchester. He has published widely on public management and accountability in journals such as Public Administration, Governance, Public Management and World Development. He is also co-editor of Beyond the New Public Management: Changing Ideas and Practices in Governance (Edward Elgar, 1998). Harry Taylor ([email protected]) is Lecturer in Human Resources at the Institute for Development Policy and Management at the University of Manchester. After a career as an HR manager in the UK he entered the academic world and in his current post has acquired substantial consultancy experience in less developed countries (LDCs) advising governments and donors on many aspects of human resource management (HRM). His research interests are the applicability of HRM concepts to LDC organizations, employee relations, and HRM in the public sector.

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Preface Those who teach, research and advise in the field of development policy and management constantly grapple with key questions of public management reform. What is it exactly? How much of it is ‘new’ and how much merely a restatement of long-established ideas? What is the way ahead for public management in developing and transitional economies? Should governments keep providing most public services, or should they let private and civil society contractors in on the act? Should the centre cling to the reins of power so as to minimize corruption, or should it delegate downwards so as to empower frontline staff and the communities which they serve? Should reformers borrow from the innovations and practices of developed countries or should they seek to devise their own creative responses to the public management problems they face? The aim of this collection is to move the public management reform debate forward by considering the ways in which these and other questions are currently being answered across a range of countries and systems. Many of the issues were raised in a 1997 International Conference at Manchester on Governance for the Twenty-first Century, and many of the contributors (Heeks, McCourt, Minogue, Mundy and Polidano) were more practically involved as advisers to the Presidential Commission on the Transformation of the Public Service in South Africa in 1998. We hope that a little of the enthusiasm, interest and commitment of these undertakings have survived to enhance the contributions to this book. The questions raised rarely produce unproblematic answers, and the complexity of the diverse situations is compounded by the uncertain findings of existing empirical research. We therefore have no wish to insist on particular positions on public management reform, and sympathize with policy-makers who face hard choices and dilemmas. We hope that our contribution will help to clarify these dilemmas and choices, and demonstrate clearly the outlines of the necessary reform agenda on which a properly critical evaluation can be based. We wish to express our great appreciation for the help given to us by Karen Hunt, whose diligent efforts kept us on track to meet a tight deadline. WILLY MCCOURT MARTIN MINOGUE xii

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The internationalization of new public management Martin Minogue

INTRODUCTION The aim of this book is to examine the extent to which an extensive range of public management reforms, generically labelled ‘new public management’ (NPM), has been applied in the government systems of developing and transitional economies. We use the term ‘internationalization’ to describe this process, because NPM reforms originated in, and have been widely adopted by, the developed industrial economies, to such a degree that they seem to represent a reform model capable of transfer across national boundaries. We are concerned, therefore, to consider the modes of transfer; to explore the extent to which public management reforms are adopted wholesale, or are creatively adapted to local conditions; and to judge the effects of such transfers. These aspects are more straightforward than the more difficult task of explanation: why are such extensive attempts at policy transfer in the public management field being conducted at this juncture? A topical answer is offered by those attached to the notion of ‘globalization’, with the argument that globalizing tendencies are producing a convergence of Western and non-Western systems (or alternatively, capitalist and socialist systems) both economically and politically. This raises the prospect of one global model of governance, of which the general dissemination of NPM reforms would be a constituent element. However, this is a disputed conceptualization, and the subject of much scepticism (see Hirst and Thompson, 1996). It has been argued that such tendencies and forces are far from new, and that the label tends to obscure the essential continuity of the long modernization project of the ‘short twentieth century’ (Hobsbawm, 1994). On this ground it could be argued that while NPM currently occupies centre stage, it is no more than the most recent in a long line of policy transfers and modernizing exchanges between North and South in the last half-century. Gray regards the specific project of neoliberalism to create a single world market as a late twentieth-century political project, and one which is unlikely to promote either stability or democracy: ‘it does not meet the needs of a time 1

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in which Western institutions and values are no longer authoritative ... A reform of the world economy is needed that accepts a diversity of cultures, regimes, and market economies as a permanent reality’ (Gray, 1998, p. 20). On this view NPM, as an integral constituent of the neoliberalizing project, is neither inevitable nor desirable. The contributors to this book, by and large, do not prejudge these issues, but set out to make sense of the interface between a somewhat vague but discernible reform model and the rather recalcitrant world of public management practice. The contributions cover the whole range of public management reforms (privatization and regulation, civil service reform, decentralization, contracting and market mechanisms, improved services delivery, human resources management, information technology) and are related to both central and local governance, and to the ‘civic realm’. While the empirical focus is firmly on developing countries, substantial attention is given to developed country experience, and material is also drawn from the transitional economies. The various chapters are summarized in a later section, but this introduction first explores some of the problems and questions which emerge.

ANALYSING THE IDEAS In the study and practice of government, it is a commonplace that definition of terms is obligatory. But this is a particularly slippery slope for the unwary, not least because this field is characterized by changes of nomenclature. This is in part because it is also a field now characterized by substantial processes of change, so that the customary labels soon get cut adrift from their moorings. New coinages drive out tired older currencies, flourish for a time, then are themselves emptied of meaning. This process can have two main consequences. In some cases, particular labels become fashionable, and begin to monopolize conferences, textbooks, even practical agencies. Largely they are futuristic in nature, expressing themselves in terms of a model approach which will eliminate the inadequacies and faults of existing practices and institutions. Examples include such terms as ‘new public management’ or ‘sustainable development’ or ‘good governance’. A second consequence is that some labels are used so widely and indiscriminately as to have no meaning whatever, because they are unthinkingly applied to such a diverse set of situations or phenomena that in themselves they cannot capture the differences of each application. Examples are terms such as ‘management’, ‘democracy’, or ‘accountability’. This is an important issue, because government is a field in which theory and practice, study and application, description and prescription are intimately

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related. On the basis of what we observe we produce descriptions and critiques; these lead to the construction of models; and practitioners are in turn ready to apply new models in practical situations where change, for one reason or another, is being demanded. The terminology we use, the models we construct, are not merely intellectual games; they may well have a highly influential career in the ‘real world’. In short, if we get the description and analysis wrong, we are quite likely to get reform prescriptions wrong, and in turn reform will do more harm than good. The field of interest of this book, the internationalization of new public management, is particularly prone to errors of this sort; not only does it involve the emergence and domination of a specific model of public management in developed economies, but also the clear tendency to attempt the transfer of the model to developing economies. Let us begin, then, by giving some consideration to the terminology we have just used, and which will keep reappearing in the individual contributions.

PUBLIC ADMINISTRATION: THE BUREAUCRATIC MODEL Questions of the role and powers of the state are not new, and indeed were central concerns of philosophers such as Aristotle in ancient Greece, Confucius in ancient China, and Machiavelli in medieval Italy. Some contemporary commentators would argue for the continued relevance of these bodies of political theory (see for example the debate on the relevance of Confucian thought for the understanding of modern East Asian management: Clegg, 1999). But we are also warned of the anachronistic tendency inherent in such an approach (Skinner, 1978). The concept of the activist, interventionist, bureaucratic state is essentially a twentieth-century phenomenon, and its characteristics were set out in 1920 by the German sociologist Max Weber, with strong echoes of earlier writings by the American Woodrow Wilson (see Hughes, 1998, pp. 22-30):

• • • •

there should be a clear separation between politics and administration, and therefore distinct roles for political leaders (normally elected) and state officials (normally appointed); administration should be continuous and predictable, operating on the basis of written, unambiguous rules; administrators should be recruited on the basis of qualifications, and should be trained professionals; organization should reflect a functional division of labour, and a hierarchical arrangement of tasks and people;

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• •

resources should belong to the organization, not to individuals working in the organization; the principal motivation should be a sense of duty, of public interest, which should override organizational or private interests.

The distinctive characteristic of this model, compared with prior state forms, lay in the principles of rational, legal authority which were able to underwrite a more effective and legitimate system of state administration. Further refinement of this model came through the later application of privatesector-based ideas of ‘scientific management’, which introduced efficient operational methods based on standardization of tasks, ‘one best way’ of fitting workers to tasks, and systematic control of tasks, processes and workers (Hughes, 1998, pp. 33-4). These principles were easily adapted to bureaucratic structures. A final addition to the model was the application of the insights of social psychology, in a ‘human relations’ approach which is often contrasted with the scientific management approach, but in practice sought to achieve greater efficiency of performance too, though by paying attention to the need to motivate workers rather than merely to control and direct them (ibid., pp. 35-6). This enhanced bureaucratic model of large-scale organization was held to be superior to other possible alternatives, a view which practice soon seemed to confirm. Historical developments in the twentieth century saw the growth of state power resting on these principles, with the result that state organization looked much the same across different types of political regime or economic system. Revolution was a crucial influence in transforming monarchical systems of government into modern bureaucracies. Two world wars, and the interwar depression, meant that all governments had to plan and coordinate the use of national resources, especially in the management of ravaged economies. This both helped to produce and was sanctioned by the post-1945 ‘Keynesian consensus’, and the related expansion of state responsibility for social provision, the ‘welfare state’. Finally, this period also saw the dismantling of the old colonial empires, and the emergence of new but poor states committed to the economic and social improvement of their societies, the ‘developmental’ state. The most important assumption underlying this activist model of the state was that state intervention was needed to make good the deficiencies and failures of the private market. Levels of state control and intervention varied in practice along a broad spectrum, with total state ownership and allocation of economic and social resources at one end, and mixed provision by state and market at the other. At any point on the spectrum, strong state bureaucracies played a crucial role. Why, then, with such major achievements to its credit, did this activist model of the state come under such fierce attack in the 1980s?

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NEW APPROACHES: PUBLIC MANAGEMENT AND GOOD GOVERNANCE To answer this question, we should first examine the critique of the bureaucratic model, which had become accepted as a traditional model labelled ‘public administration’. The critique of this model is based on a comparison of the ‘ideal’ model of bureaucracy with what happens in real systems of government. The following differences can be identified (for a more detailed account see Minogue, 1997):

• • • • •

in many systems there is no clear separation between policy and administration, either in terms of decision-making processes, or the respective roles of administrators and politicians, which are often fused together; decision-making processes do not, in any case, conform to the rules of technical and economic rationality, but are affected and shaped by processes of conflict, negotiation and exchange between interests both internal and external to the state bureaucracy; hierarchy and centralization combine with a formal, sometimes slavish, adherence to rules and procedures to produce defects (or bureaucratic pathologies) such as delay, inflexibility, unresponsiveness and an arrogant disregard for the interests and concerns of citizens; bureaucracies are characterized therefore by a process of ‘top-down’ implementation which frequently produces inappropriate policies and inadequate results; the range of transactions within the modern system of state administration, both internally and with external organizations and interests, is so extensive that this produces a degree of complexity much greater than the model would suggest.

While the welfare or development state was justified by the need to correct market failure, the prevalence of the characteristics listed above produced critical responses which referred to the need to correct government failure. Various labels are used (see SOAS, 1999):

• • •

the unresponsive but invasive state, whose excessive interventions restrict people’s freedom to manage their own affairs, and create dependency rather than self-reliance; the over-extended state, where governments take on too many responsibilities and are unable to carry these out either efficiently or effectively, while supporting a large bureaucratic elite; the private interest state, where elite and privileged groups exploit the

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opportunities offered by state activities to enhance their own interests and incomes. The combination of these critiques (of the inefficiency of bureaucracy and the flawed nature of activist government) produced a reform model usually designated as ‘new public management’ (see Minogue, Chapter 2, for an account of the origins and application of this model in the UK; and Polidano, Chapter 3, for a critique of the looseness of this terminology in relation to the range of public sector reforms in developing countries). The defining characteristics of the model are its entrepreneurial dynamic, its reinstatement of the market as a potentially more proficient provider of public services than the state, and its proclaimed intention to transform managerial behaviour. Most of the contributions to this book aim to test these claims, and the extent to which their application to public management in developing countries is either feasible or desirable. Their verdicts are considered below. A final link in the chain of ideas is forged by the concept of ‘good governance’. A much-disputed concept and a controversial practice (see Minogue, 1999; Burnell, 1997; Crawford, 1995; Leftwich, 1994; Moore, 1993), good governance is high on the agendas of aid donors, and so is increasingly taking shape in the reform programmes of the beneficiaries of aid. What is of interest for our discussion is that aid donors incorporate elements of public management reform in their definitions (see UNDP, 1998b; DFID, 1997; World Bank, 1994). While the new public management model involves a major realignment of state relations with the market, governance programmes imply a deliberate redirection of aid policies to promote a particular model of state-society relations. Good governance and new public management are regarded as mutually supportive reforms, with greater political and social accountability contributing to the realization of more efficient government. Thus integrated, they provide a new exemplar of state-market relations, incorporating political and economic values which are claimed to be universalist (see Minogue, 1999 for a discussion of the universalist/relativist debate).

IS NEW PUBLIC MANAGEMENT AN EFFECTIVE REFORM MODEL? There is now a substantial literature on the implementation of NPM reforms in developed economies. This literature can be divided into two main categories. First, there is considerable documentation by international organizations such as OECD (Organization for Economic Cooperation and Development), which, for example, has issued booklets on such topics as public management reforms (OECD, 1995), performance auditing (OECD, 1996) and public service ethics

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(OECD, 2000). On developing and transitional economies, the World Bank has produced extensive publications, with its inimitably confident mix of analysis and prescription, over the whole range of governance and public management reforms. The focus of the annual World Development Report has been noticeably upon the state and its management, probably because of the stubborn resistance of many developing-country governments to the cloying embrace of structural adjustment programmes; the World Bank has often been prone to point the finger of blame, not at its own policy errors, but at the managerial and political weaknesses of the recipient countries (World Bank, 1998-99, 1997, 1996, 1995, 1991, 1983). The time-span of these references shows what an enduring characteristic this is. The UNDP (United Nations Development Programme) has been consistently more sensitive to the need for a broader analytical context than the World Bank employs, but also lays considerable emphasis upon the necessity of public management and governance reforms as an underpinning for effective economic and social development policies (UNDP, 1998b, 1995). Finally, many bilateral donors see public management and governance reforms as integral elements in their aid strategies (see, for example, DFID, 1997). Since this is an ‘official’ literature, perhaps we cannot expect too much in the way of a critical perspective on new public management, not least because the orientation of NPM to expenditure reduction and efficiency gains chimes so well with the growing pressures on development aid bodies to demonstrate that aid is cost-effective. The stated or implied intention to cut back wasteful, corrupt government bureaucracies, and to hold accountable undemocratic political leaderships, fits well with the negative images of developing countries characteristic of the political constituencies of aid donors. Awkward questions about the effectiveness of NPM remedies, or the transferability of political values across different cultural boundaries, will rarely be found in the official literature. Failures are largely blamed on the recipients of the failed reform packages; successes are seized on and promoted as examples of the virtuousness of the donors (for example a 1985 World Bank report on Mauritius is entitled Mauritius: Managing Success). In general aid donors employ future-oriented approaches, in which present difficulties are assumed away in favour of a self-evidently desirable model which promises a better future system. Can we hope, then, that a non-official, largely academic literature will be more even-handed, or more realistic, and what verdicts on NPM does this literature offer? It is, of course, difficult to make accurate generalizations across such a substantial set of studies, applied moreover to such a diverse range of economic and political systems. It probably makes sense to distinguish again between the developed country and developing country literatures.

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In relation to developed countries, the secondary literature makes claims both for and against NPM reforms. It is worth noting what these positions are, before attempting any balanced judgement of their respective claims. The arguments in favour of the reform model are:

• • • • • • •

the ‘traditional’ state model has consistently failed to deliver appropriate policies or effective services, so that there is a clear need for an alternative approach; the market, and market mechanisms, offer a more efficient alternative; in several cases there have been clear efficiency gains through the application of NPM principles; public managers now have more autonomy and better incentives to manage well; citizens have been given more choice, and can hold managers directly accountable; overall efficiency gains mean improved restraint on public spending, and the political benefit of low-tax regimes; the public administration has been transformed from a ‘bureaucratic’ culture into an ‘entrepreneurial’ culture.

The arguments critical of NPM reforms are:

• • • • • •

the market remains, as it has always been, a flawed alternative to the state; the evidence on efficiency gains is indecisive and ambiguous; increased managerial autonomy has brought blurred accountability and higher risk; the introduction of competitive principles has turned public organizations into conflictual rather than collaborative bodies; there has been considerable demoralization of public workforces; in several cases public services have manifestly got worse rather than better.

How should we judge between these two positions? Clearly, such a judgement turns on the quality of evidence and information available to us. Disputes continue about the methods we might use to measure the performance of public services, public organizations and public managers. While it is indisputable that the principal NPM reformers are making substantial efforts to pursue performance management and measurement, the validity and use of the information generated commands little agreement and generates much conflict. One of the problems in reaching dispassionate conclusions about NPM is that it is itself an ideological position, opposed by

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those with a different ideological stance. It is some considerable distance from being a neutral set of management principles or tools.

IS NPM A MODEL SUITABLE FOR TRANSFER TO DEVELOPING COUNTRIES? This ideological character, and the indeterminate outcome of the debate on the results of NPM, raises awkward issues in relation to the appropriateness of the model for developing and transitional countries. If we turn to the relevant literature, as noted above, there is no doubt that the principal multilateral and bilateral aid donors are, to greater or lesser degrees, enthusiastic believers in ‘appropriateness’. Market-oriented solutions to government failure figure high in aid programmes and reports: privatization, efficiency reforms, market mechanisms such as contracting (see, for example, World Bank, 1996, entitled From Plan to Market, an explicit statement of intent). Decentralization schemes continue (as in the past) to receive strong support, but now with a new emphasis on the need to replace direct central provision by new partnerships between public and private sector organizations (World Bank, 1997, ch. 7). Public management reforms are, in these agendas, linked to good governance strategies, now increasingly finding realization in donor programmes. A recent focus in this context is the new attention to the development of anti-corruption and public ethics strategies (Langseth and Pope, 1999; UNDP, 1998a). Clearly we have to ask, whose reforms are these? Do they represent the perceptions and solutions identified by recipient countries, or are they no more than the preferences and values of developed countries imposed upon reluctant or perhaps complaisant victims? McCourt explores in the concluding chapter what possibility there can be in these conditions for the invention of an indigenous model of public management. Meanwhile there is not as much as we require in the form of secondary research on which to build confident conclusions. While there are now many examples of NPM reforms being introduced in transitional and developing countries, empirical evaluations are thin on the ground. Even where the reforms appear to be unmistakable, as in Malaysia, for example, we still need evidence of whether real changes in managerial practice have taken place, as opposed to the adoption of a few fashionable but meaningless labels (see Common, 1998). The slipperiness of the concepts of administrative and political culture in relation to developing country governance should warn us that these concepts, and their related practices, are unlikely to transfer easily between western and non-western systems, not least when difficulties arise even in transfers between western countries (see Dolowitz and Marsh, 1998).

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THE INTERNATIONALIZATION OF NPM: REFLECTIONS ON PRACTICE The themes alluded to above keep reappearing at intervals throughout this book as the various contributors seek to locate within the general framework of public management reform their own particular field of interest. Minogue (Chapter 2) pursues the debate on the merits and demerits of NPM by reference to what he considers to be the defining case of the developed country model, that of the United Kingdom, though he also draws on research findings from New Zealand. Both countries have embarked on genuine transformation of their state systems over the past two decades, with substantial privatization, major changes in the management of public expenditure, and fundamental restructuring of their central bureaucracies. These and related reforms have had the expressed objectives of effective public services efficiently delivered, at less cost. What is demonstrated is the astonishing range and depth of the changes introduced over this period. In the British case, this turns out to have been a surprisingly piecemeal process, without any formal strategy or reform document, driven largely by the political will of successive prime ministers, supported by the organizational clout of the Cabinet Office, and informed by the market-oriented perceptions of private sector advisers. New Zealand, by contrast, operated on the basis of a more systematic blueprint and more radical principles. In considering the transferability of such experiences, Minogue is concerned to emphasize the costs and disadvantages of NPM reforms as these emerge, in his view, from the empirical literature. He questions whether the UK model can be regarded as a successful model of public management reform, given the weight and depth of criticism it has attracted, and castigates the aid donors for their tendency to disregard critical literature or adverse experiences. He also illustrates some of the difficulties inherent in attempts to transfer the model across cultural boundaries, whether in developed economies (the case of France) or developing economies (the case of China). Both cases are used to indicate the role of local political cultures in determining the fate of policy transfers of this kind. Polidano (Chapter 3) focuses on reforms to the core civil service, ‘the most important component of the state in the developing world’. He is intent on questioning some of the assumptions which characterize the debate on the application of NPM reforms in developing countries, not least the assumption that NPM is the dominant reform model: ‘while many developing countries have taken up elements of the NPM agenda ... they are simultaneously undertaking reforms that are unrelated or even contrary to that agenda. NPM is only one among a number of contending strands of reform.’ Surveying a ‘record ... [which] ... is patchier than it appears at first sight’,

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Polidano discovers a mixed bag of outcomes, with both successes and failures to ponder, which leads to the thought that perhaps the rhetoric of NPM is outpacing the reality. But a more determinate judgement must take account of the fact that the record in relation to more traditional types of reform (political decentralization, capacity-building, anti-corruption measures) is no better, despite a longer history: ‘the problems of NPM reforms are not more serious than those of the non-NPM alternatives’. Therefore the debate about the ‘appropriateness’ of NPM to developing countries is misplaced. We need rather to look for explanations of the fundamental failures of all administrative reform programmes, which some writers have located in the nature of underdevelopment itself, and others (Schick, 1998 is quoted here) in the predominance of informal behaviour and practices which depart considerably from formal rules and structures. Polidano draws three conclusions. First, he argues that success or failure is clearly determined by local contingencies, both administrative and political. Second, we can draw some lessons from existing outcomes - for example, the crucial role of effective central institutions, which suggests the continuation of longstanding efforts to strengthen central capacity. Third, successful experiences demonstrate the value of the positive political direction of reforms. Given that ‘the evidence on NPM outcomes is perplexingly equivocal’, he enters a plea for critical judgement to be suspended until we have more experience to inform our judgement: to the usual three ‘Es’ of economy, efficiency and effectiveness, we should add a fourth: ‘experimentation’. Clarke and Wood (Chapter 4) present some of the evidence (indeed some of the experimentation) called for by Polidano. Examining the introduction of elements of NPM reform in Tanzania and Uganda (performance management and incentives; autonomous ‘executive’ agencies; and contracting of services), they show that this new approach was driven by the failures of more traditional administrative reforms to produce better provision of public services. Agreement on the overall strategy between political leaders and donors was also an essential factor. Innovations were borrowed from Western menus but always with adaptation to fit local conditions. For example, Tanzania introduced organizational performance targets and incentives, but eschewed individual performance pay, preferring to pursue basic reforms to pay structures. The whole reform programme appears to have as its major objective the improvement of the public finances of both countries. The first agency reforms were to the Revenue Authorities, with dramatic initial results in Uganda (revenue uptake increased from 7 per cent to 11 per cent of GDP), but stagnation thereafter as older practices and problems reasserted themselves. The Uganda Management Institute has been placed on a commercial footing. Tanzania formally went further in establishing an

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executive agency programme based on the British model, and its Revenue Authority, like Uganda’s Management Institute, is judged to be a success. Efforts to create greater private sector involvement and take some weight off public sector shoulders have been less successful. Despite donor pressures, progress with privatization and contracting out has been slow and implementation sporadic, though developments in the health sector look more promising. What we see here is clear evidence of two poor countries trying hard, with donor help, to galvanize a stalled public management reform process, and genuinely attempting to find out what will and will not work in local circumstances. The results may as yet be sparse and judgement provisional, but a clear reform strategy is in place, and both countries are going through a significant learning curve. Clarke and Wood point out that ‘improving public service salaries and organizational efficiency can create the conditions for improving service delivery performance, but there are many other factors that also need to be addressed before services begin to improve’. Many commentators on NPM treat it as though it were only for application to central government institutions, leaving unconsidered the effects on decentralized levels of local and regional government. Elcock and Minogue seek to redress this balance in Chapter 5. Basing their analysis on public sector reforms in the UK, Eastern and Central European transitional economies, and developing countries, they argue that a political model ‘has greater power than a managerial model to capture the significant issues in central-local government across different types of economic and political systems at different levels of development’. In relation to the UK, managerial reforms are seen as weapons in ‘a sustained onslaught on local government’s powers, functions, and areas of discretion’ with the aim of imposing central political and managerial imperatives. This recentralizing approach is a direct contradiction of the decentralizing principle of NPM theory. Whereas management reforms have at least been a significant part of the local government reform agenda in the UK, Elcock and Minogue show that in Eastern Europe ‘management issues have ... had to be subordinated to the resolution of the constitutional and political issues arising from the collapse of Communism’: the construction of viable systems of regional and local government; determination of the powers and autonomy of local authorities; and the development of new structures of political leadership. All this has had to be accomplished in the face of bureaucratic and political resistance from former Communist officials who had contrived to stay in position. Meanwhile the external aid donors were promoting market-oriented management changes when training and support for more traditional bureaucratic virtues such as probity and accountability was the real need. The interaction of political and managerial reforms in developing countries

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is exemplified by Elcock and Minogue through an analysis of decentralization reforms. They acknowledge that decentralization is neither new, nor wholly about management, since in developing countries it always entails the incorporation of central-local political relationships. However, the link to new management reforms is clearly signalled by major aid donors, who hope to meet at the same time, and through the same reformed structures, the requirement of both public management reform and of governance strategies. This approach is expressed directly in the 1997 World Bank Report, chapter 7, ‘Bringing the State Closer to the People’, insisting that this strategy will produce better-managed and more responsive public services. Elcock and Minogue regard this as evidence for their claim overall in this chapter that more attention must be paid to the political context in which public management reforms operate if we are to make accurate judgements about their successes and failures, or their transferability across different political cultures. Many would consider that in the final analysis NPM should be judged by the key question: does it lead to better delivery of improved public services, and can this be achieved simultaneously with reductions in public spending: ‘working better with less’? McCourt seeks to answer this key question in Chapter 6. Reviewing service delivery results in the OECD heartlands of NPM reform, he considers the results of such approaches as performance management, the introduction of competitive mechanisms, and the use of quality-of-service initiatives. Practical evidence is found to be sparse, and the judgements mixed: ‘there is merely anecdotal evidence that any of this has actually improved services’. This qualified scenario, though, has not prevented attempts to apply service delivery innovations in developing countries, and McCourt lists a series of such attempts across a surprisingly wide range of countries and regions. He discerns ‘a familiar process of interaction between an imported model and domestic imperatives’, noting how NPM reforms are sometimes used as a weapon in local power struggles, while the policies and priorities of international donors do not always correspond to local needs and preferences. But there can be no doubt of the urgent need to arrest the decline of public services in many developing countries. McCourt identifies the crucial link between state strength and economic performance as the most likely guarantee that the resources necessary to underpin improved public services provision by a capable and honest state will be found. His final judgement on the contribution which NPM service delivery tools might make is that effective transfer sets demanding conditions - relating to resources, capacity, integrity and will - which are not easy to meet. In their absence, creative experiment with new approaches, NPM or otherwise, might at least supply both essential evidence and examples to promote.

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Hulme (Chapter 7) takes the debate about the provision of public services into a wider social framework, which he labels the ‘civic realm’. Whereas the traditional reform model centred on the structures and operations of state agencies, both NPM and ‘good governance’ strategies, as endorsed by the donors, promote the increased use of non-state agencies to deliver public goods and services. This is meant to create a virtuous circle of accountability and efficiency. Hulme elaborates the range of relationships implied by the new interactions of state, market and civic sectors, and draws attention to the contested nature of these categorizations. He points out that there is no ‘optimal’ mix, and that the proliferation of third-sector organizations, far from eliminating the responsibilities of government, brings new requirements of oversight and support. In relation to delivery of public services, civic organizations serve two purposes. First, they act as a supplier of services, either directly providing these on behalf of the state, or plugging the gaps which the state is unable or unwilling to fill. Hulme identifies a newer role, service delivery on behalf of aid donors, ‘the growth industry of the 1980s and 1990s’. An important criticism of this ‘public service contracting’ role is that it bypasses governments, which therefore ‘do not develop their capacities to contract out services in the future’. The clear danger is that large-scale use of civic organizations may weaken state capacity rather than supplement it. On the other hand, the managerial functions and NPM methods being adopted by NGOs (nongovernmental organizations) may have the effect of strengthening national pools of organizational resource. The second function of civic organizations is to channel demands for, and access to, public services. This is a demanding, and often politically sensitive role, but Hulme is able to give several examples of effective advocacy of this type, pointing out that it is a role not recognizable in terms of NPM ideas. He signposts ‘a brave new world’, in which ‘contingency, flexibility and solutions lie in developing existing inter-organizational relationships and creating new relationships’. But he has an anxiety that this agenda might be driven by the preferences and imperatives of Northern agencies rather than those of Southern states, since ‘aid donors commonly function as the principal, NGOs as the agent, and the domestic state functions as a bystander’. There has been some debate, noted in Polidano’s chapter, about whether privatization should properly be included within the scope of NPM. But if the field of enquiry is construed as the whole public sector rather than the more narrowly conceived public service, then privatization can be regarded as firmly at the centre of NPM reforms. After all, it involves decisions to change the public-private boundary of the state, and is a practical step to draw on the perceived advantages of the market and its disciplines. Cook (Chapter 8) reminds us, also, that privatization in developing economies is customarily

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given a very broad definition to include a range of public-private interactions which are given different labels in developed economies. While privatization ‘continues to gain policy momentum ... the scale of privatization in developing countries has been less than originally expected’. Research on economic performance and impact has been scarce and inconclusive, while ‘success or failure with privatization has been predominantly defined by political and ideological priorities’. In this contribution, Cook is primarily concerned to examine the continuing responsibility that the competent state must bear for the regulation of privatized activities, in the interests of the consumers of their services as well as in aid of efficient market structures and behaviour. He does this through case studies of the telecommunications and electricity sectors across a range of countries (Argentina and Venezuela for telecommunications, Argentina and Chile for electricity), and of water services (in Argentina, Guinea and Malaysia). These studies confirm the conclusions of other contributions to this book about adaptiveness, for they ‘reveal a variety of solutions’, and show that the ‘industry structures and systems of regulation that have emerged have been shaped by political considerations, history, technology, resources, and the development of the economy’. Cook maintains that the establishment of effective regulatory institutions and processes is critical to the privatization process, but must come from the state. Where governments lack the capacity to operate an effective regulatory regime, they would be wise to adopt an incremental approach to privatization, since ‘benefits will not be reaped by countries which lack the capacity to ensure contracts are met ... or where unattractive operating environments deter competent private sector investors’. We might add here that such considerations also apply to other NPM reforms such as contracting and public-private partnerships. In all the discussion of systems and models there is a tendency to neglect the people who have to make reforms work. Taylor (Chapter 9) addresses the issues raised by the advent of human resources management (HRM), which he sees as linked to NPM and similarly inspired by the ‘New Right’ agenda of public management reform. HRM seeks to return management to managers through devolved management structures, the use of performance management tools, the individualization of employment relationships, and increasingly fragmented working practices and employment conditions. Taylor’s basic critique of NPM and HRM is that they ‘largely ignore the dynamics of power relations within organizations’, and suffer from the internal contradiction that ‘they aspire to ... a strategic approach to managing resources [but] some of their practices discourage a clear strategic direction’. Claiming universality, they ignore the significance of context. Despite these manifest weaknesses, Taylor argues, they have been promoted so widely

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because they served the self-interest of professional managers and consultants intent on devising ‘a professional strategy that was consistent with the shift to the right in the 1980s’. Turning to the question of transfers of HRM practices, Taylor makes the interesting point that in relation to developing countries a double transfer is involved: from developed state to developing state, and then across the private sector-public sector boundary, since HRM is essentially derived from private sector practice in developed industrial economies. Both types of transfer are problematic, but Taylor is scathing about the sociological naïvety of those (mainly aid donors) who promote HRM practices regardless, or perhaps in ignorance, of the social and political dynamics of public organizations in developing countries, organizations in which ‘an informal social system determines their operation, use of resources, and distribution of rewards’. These organizations are conditioned and governed by ‘a complex informal web of social connection and political influence’. Since even ‘basic compliance is missing ... the prospects for achieving commitment are much reduced’ and further jeopardized by constant retrenchment exercises. Moreover, the existence of low managerial skills and capacity militates against HRM practices which depend on high levels of managerial resource. In these circumstances, Taylor argues for a contingent and flexible approach to NPM/HRM reforms, and sees some signs of a more pragmatic approach as the lessons of failed reform efforts are pondered; he offers some useful guidelines for practitioners, doubtless in the hope that in developing countries at least they may now be less inclined to accept the ‘ready-made recipes’ which have customarily been on donor menus. Those who wish to advance public management reform are prone to place substantial trust in the powerful tool of information technology (IT) (see, for example, Cabinet Office, 1999; World Bank, 1998). Heeks and Mundy (Chapter 10 ) explain this tendency to ‘idolize’ IT, and analyse the extent to which such trust may be justified. Research shows that even in developed economies ‘20 per cent of all IT expenditure is wasted, while a further 30-40 per cent leads to no net benefits accruing’, and there have been extensive ‘partial and sustainability failures’ in developing countries. Like Taylor, Heeks and Mundy endorse a contingency approach: ‘there is an environment to which the information system can be adapted’. A problem arises, though: since the purpose of public sector reform is to change the environment, change and adaptability must be pursued simultaneously (perhaps this explains the sheer messiness of much public management reform, and its uneven outcomes). Effective reform involves estimation of the gap that has to be bridged between present reality and future conception: a ‘reality conception gap’. The wider this gap, the greater the likelihood of failure.

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Heeks and Mundy present three types of ‘gap’ which are ‘particularly likely to make public sector information systems in developing countries more prone to fail’. A rationality-reality gap occurs when political and behavioural factors in organizations are neglected; a private-public gap emerges when flawed and inaccurate models of the public and private sectors are employed; and a country-context gap is evident when cultural and social differences between countries and their public organizations are not taken into account. In sum, ‘all three archetypes are found to apply particularly strongly in developing countries, thus providing an explanation for the widespread failure of IS [information systems] initiatives’. They recommend ways to close these gaps and enter a strong plea for a new ‘hybrid’ professional who can combine IT skills with a broader understanding of change management in the public sector context. In the concluding chapter (11) McCourt considers the lessons that might be gleaned from the varied contributions to this book. He extends the discussion in earlier chapters of the relationship between management and politics. The politicization of administration in developing countries has been firmly established, and McCourt explores what difference might be made by the introduction of modern management methods. Commenting on the claim that the introduction of NPM is part and parcel of the New Right agenda for the public sector, he suggests that management is a broader church than this, so that it is even possible to use the management literature to criticize some of the recent public management innovations. While there is a ‘managerialist’ agenda which may be harmful, this is not inherent in management itself. Having tried to account for the regrettable absence of indigenous developing country models of management, McCourt goes on to identify three viable models of management currently being practised. As well as the traditional public administration model and NPM, both discussed in detail by Minogue and Polidano, he identifies a third, ‘Washington’ model, characterized as the application of the World Bank/IMF philosophy of structural adjustment to public management. He also outlines a further emergent model, that of strategic management, detected in the recent practice of New Zealand and, to a lesser extent, in the UK, and which is beginning to appear in developing countries. Each of the models has strengths and weaknesses, according to McCourt, but he is not concerned to bestow the accolade of ‘best practice’ on any one of them. Rather he suggests (picking up the contingency theme which appears in several contributions) that developing country governments are best served by a selection of models which can be adapted to their particular circumstances. This might return to them some of the crucial ‘room for manoeuvre’ that has been taken away from them over the past 20 years through a combination of economic difficulties and donor impositions.

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It is evident that the current state of knowledge about public management reform is teasingly ambiguous, with too little in the way of empirical studies to allow any certainty in recommendation, but enough evidence of problematic adaptation to warn us against the unthinking endorsement of superficially attractive blueprints. It is ironic that those who finance and promote an NPM model so devoted to concepts of results-oriented management and performance measurement appear to have surprisingly little interest in the critical evaluation of the outcomes of their initiatives. The hope must be that they will soon begin to overcome this reticence, so that any future policy transfers to developing countries can be based on the hard lessons of experience rather than on idealized models.

REFERENCES Burnell, P. (1997), Foreign Aid in a Changing World, Buckingham: Open University Press. Cabinet Office (1999), Modernising Government, White Paper, Cmd 4310, London: Cabinet Office. Clegg, S. (1999), Global Management: Universal Theories and Local Realities, London: Sage. Common, R. (1998), ‘The new public management and policy transfers: the role of international organizations’, in Minogue et al. (1998), pp. 59-75. Crawford, G. (1995), Promoting Democracy, Human Rights, and Good Governance through Development Aid: A Comparative Study of Four Northern Donors, University of Leeds, Centre for Democratisation Studies. DFID (1997), Eliminating World Poverty: A Challenge for the 21st Century, White Paper, Department for International Development, London. Dolowitz, D. and D. Marsh (1998), ‘Policy transfer: a framework for comparative analysis’, in Minogue et al. (1998), pp. 35-58. Gray, J. (1998), False Dawn: The Delusions of Global Capitalism, London: Granta. Hill, M. (ed.) (1997), The Policy Process: A Reader, 2nd edn, Hemel Hempstead: Prentice-Hall. Hirst, P. and G. Thompson (1996), Globalization in Question: The International Economy and the Possibilities of Governance, Cambridge: Polity Press. Hobsbawm, E. (1994), The Age of Extremes: The Short Twentieth Century 1914-1991, London: Michael Joseph. Hughes, O. (1998), Public Management and Administration: An Introduction, 2nd edn, London: Macmillan. Langseth, P. and J. Pope (1999), Building Integrity to Fight Corruption: Learning by Doing, Washington, DC: Economic Development Institute, World Bank. Leftwich, A. (1994), ‘Governance, the state, and the politics of development’, Development and Change, 25 (2), 363-86. Minogue, M. (1997), ‘Theory and practice in the analysis of public policy and administration’, in Hill (1997), pp. 10-29. Minogue, M. (1999), Power to the People? Good Governance and the Reshaping of the State, Public Policy and Management Working Paper No. 14, Institute for Development Policy and Management, University of Manchester.

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Minogue, M., C. Polidano and D. Hulme (eds) (1998), Beyond the New Public Management: Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar. Moore, M. (1993), ‘Declining to learn from the East? The World Bank on governance and development’, IDS Bulletin, 24 (1), 1-6. OECD (1995), Governance in Transition: Public Management Reforms in OECD Countries, Paris: OECD. OECD (1996), Performance Auditing and the Modernization of Government, Paris: OECD. OECD (2000), Ethics in the Public Sector: Challenges and Opportunities for OECD Countries, Paris: OECD. Schick, A. (1998), ‘Why most developing countries should not try New Zealand’s reforms’, World Bank Research Observer, 13 (1), 123-31. Skinner, Q. (1978), The Foundations of Modern Political Thought, Cambridge: Cambridge University Press. SOAS (1999), Public Policy and Management: Perspectives and Issues, School of Oriental and African Studies, University of London. UNDP (1995), Public Sector Management, Governance, and Sustainable Human Development, New York: United Nations Development Programme. UNDP (1998a), Corruption and Integrity: Improvement Initiatives in Developing Countries, New York: United Nations Development Programme. UNDP (1998b), Governance for Sustainable Human Development, New York: United Nations Development Programme. World Bank (1983), World Development Report, Oxford: Oxford University Press. World Bank (1991), The Challenge of Development (World Development Report), Oxford: Oxford University Press. World Bank (1994), Governance: The World Bank Experience, Washington, DC: World Bank. World Bank (1995), Bureaucrats in Business: The Economics and Politics of Government Ownership, World Bank Research Report, Oxford: Oxford University Press. World Bank (1996), From Plan to Market (World Development Report), Oxford: Oxford University Press. World Bank (1997), The State in a Changing World (World Development Report), Oxford: Oxford University Press. World Bank (1998-99), Knowledge for Development (World Development Report), Oxford: Oxford University Press.

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Should flawed models of public management be exported? Issues and practices Martin Minogue1

INTRODUCTION In the past two decades there has been an unprecedented wave of reforms as the traditional model of public administration has come under attack. These reforms originated in developed industrial economies, whose political leaders were under pressure to keep down levels of public taxation and expenditure, while maintaining high levels of welfare and other public services (Manning, 1996). A significant feature of the reforms was the belief that the state had become too large and overcommitted, and that the market offered superior mechanisms for achieving the efficient supply of goods and services (World Bank, 1996, 1997). As the reform movement has spread (through globalizing processes which are considered below), reformers have been faced with a choice between competing concepts of the state; this is often expressed as a choice between ‘old’ public administration and ‘new public management’ (Dunleavy and Hood, 1994) with the additional dimension that the state is also expected to be responsible for the effective management of social and economic development, or ‘development management’ (World Bank, 1997). The applicability of these different models of the state, and the question whether a new global paradigm of public management is emerging, are matters of considerable debate and dispute, which should be no great surprise given the intensely ideological nature of the political choices they represent. The purpose of this chapter is to present a critical account of the origins and nature of ‘new public management’, illustrated from the British system which has been its most committed advocate, with supporting material from other developed economies. An attempt will be made to evaluate the practice of these reforms by reference to British experience. The chapter then ends with a consideration of issues related to efforts to transfer the NPM reform model to developing and transitional economies. 20

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NEW PUBLIC MANAGEMENT: THE BRITISH EXPERIENCE Chapter 1 of this volume set out the constituent parts of what was described as the ‘traditional model of bureaucracy’, and the critiques of that model which emerged in the 1980s. The combination of these critiques (of the inefficiency of bureaucracy and the flawed nature of activist government) produced a reform model usually designated as ‘new public management’. This reform model is driven by the assumptions that large state bureaucracies are inherently defective and wasteful, and that the market is better equipped than the state to provide most goods and services. The radical changes needed to introduce a transformed and entrepreneurial model of public management would have to be established by:

• • • •

restructuring and reducing the public sector, particularly through privatization; reorganizing and slimming down central civil services; introducing competition into remaining public services, especially through internal markets, and the contracting of public services provision to the private sector; improving efficiency and obtaining ‘value for money’ through performance management and auditing.

This model claims to transform the traditional public administration into a new species of public management, characterized by:

• • • • •

a separation of strategic policy from operational management; a concern with results rather than process and procedure an orientation to the needs of citizens rather than the interests of the organization or bureaucrats; a withdrawal from direct service provision in favour of a steering or enabling role; a changed, entrepreneurial management culture.

Not all of this is new. The privatization debate has been with us throughout the postwar period, in the British case under the labels of ‘nationalization’ and ‘denationalization’. Contracting has a long history in British local government, and also in developing countries (Brazil, for example). Efforts to reform central civil services have been continuous, in both developed and developing states. But what is new is the combination and application in a particularly focused and intensive form of the principles of market-oriented reform of state structures and practices as set out above, to the extent that it is

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reasonable to characterize these changes as the application of a new model of public management. British public sector reforms in the past two decades represent the earliest, most comprehensive and politically committed attempt to realize this transformative, ‘new public management’ model (Gray and Jenkins, 1995; Dunleavy and Hood, 1994). This section will present the main elements of the British reform experience, with some references to other developed countries which took forward the same ideas (mainly New Zealand and Canada), and will consider the impact of the reforms. Privatization While the constant see-saw between nationalizing Labour governments and denationalizing Conservative governments had been a pervasive feature of public policy in the postwar period, this picture changed dramatically with the election of four successive Conservative administrations under Margaret Thatcher and John Major (1979, 1983, 1987 and 1992-97). This period brought a substantial restructuring of the public sector under a strategy of ‘privatization’, applied to the publicly owned industries, the major utilities and the services sector (see Box 2.1).

BOX 2.1

PRINCIPAL UK PRIVATIZATIONS, 1980-94

Utilities Oil Telecommunications Gas Water Electricity Coal Transportation Road haulage Buses Authorities Railways Airports and airport authorities Shipbuilding Steel Industry Cars

1982 1984 1986 1989 1991 1994 1982 1986 1987 1994-95 1987 1986 1988 1988

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BOX 2.2 SCALE OF PRIVATIZATION IN OECD COUNTRIES, 1979-91 Country

Period

Privatization proceeds as % of average annual GDP

New Zealand UK Japan France Italy Holland

87-91 79-91 86-88 83-91 83-91 87-91

14.0 11.9 3.1 1.5 1.4 1.0

Source: Stevens (1992).

Only New Zealand can claim a more extensive commitment to privatization (see Box 2.2), and the steady flow of activities from the public to the private sector took some 650 000 employees out of the public sector between 1979 and 1995 (Rhodes, 1997, p. 43). For a slightly different period (1981-94) estimated reduction in the public sector was 26.4 per cent, breaking down as reductions of 49.8 per cent in central government, 23.2 per cent in public corporations, and 8.9 per cent in local government (Blundell and Murdock, 1997, p. 23). But the political claim that privatization would slim down and render more efficient a high-spending state are not supported by the statistics on public expenditure. Box 2.3 shows that government spending as a proportion of GDP was not significantly lower when Mrs Thatcher left office than it had been when she arrived in 1979. In real terms public spending rose

BOX 2.3 GDP

UK PUBLIC EXPENDITURE AS % OF

1970-71 1978-79 Thatcher elected 1982-83 End Thatcher 1 1986-87 End Thatcher 2 Mean levels 1970-79 1980-89

40.6 43.3 46.7 43.5

43.7 43.8

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in the same period by approximately 50 per cent (Jamieson, 1998, p. 167). The figures in Box 2.4 also do damage to the claim that there is an association between privatization and the general performance of the economy, since again, economic growth rates under privatizing governments turn out to be almost identical to those before privatization. The most striking comparison is that growth rates appear to be unaffected by electoral changes, suggesting that external influences count for more than domestic policies. In the UK, as in general, evidence for the superiority of private over public enterprise is mixed and inconclusive, the real issue being monopoly and its associated inefficiencies rather than ownership (Cook, 1998; Cook and Kirkpatrick, 1995). A survey of UK privatization experiences in the main period of activity, the 1980s, concluded that it was impossible to attribute variations in economic performance between public and privatized bodies to ownership (Bishop and Kay, 1989). It is also doubtful whether the claim can be justified that privatization will bring improvements in the quality of goods and services. For example, in an analysis of the water industry which demonstrates that privatization is mainly to the benefit of the new owners, Shaoul writes: The industry was not transformed by privatization: consumers found that prices rose by more than 50 per cent; some of these customers who could not pay their bills had their water supply cut off; sales revenue but not sales volume rose; the promised efficiency did not materialize; the rate of profit did not change; workers lost their jobs; and the Government, meaning tax payers past and present, in effect made a huge loss on the sale and gained almost nothing from tax revenues despite the profits. (Shaoul, 1995, pp. 23-4)

According to Gray and Jenkins (1998, p. 350), claims about efficiency and services improvements were less important than the fact that ‘what

BOX 2.4

UK GROWTH RATE COMPARISONS

Averages 1970-79 (pre-Thatcher) 1980-89 1990-93

% 2.2 2.2 1.0

By political administration 1965-70 (Labour) 1971-74 (Conservative) 1974-79 (Labour) 1980-89 (Conservative)

2.7 2.6 2.0 2.2

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brought specific organizations up for sale was the more immediate prospect of cash flows to ease government borrowing’, a process described by a former Conservative prime minister, Harold Macmillan, as akin to ‘selling off the family silver’. While the UK has been a flagship for privatization, the benefits to the UK economy and society have not been selfevident. Efficiency Reforms Privatization was a straightforward change in the relationship between the public and private domains, but other reforms showed what a complex and confusing relationship this was becoming, as several initiatives sought to increase the efficiency with which government managed and delivered public goods and services. The guiding spirit is well caught in the 1991 White Paper Competing for Quality, which stated ‘Public services will increasingly move to a culture where relationships are contractual rather than bureaucratic.’ This represented ‘an extension of privatization in that discrete activities provided by a government organization should be tested for cost and effectiveness by subjecting the in-house provision [to] competitive bids from outside’ (Gray and Jenkins, 1998, p. 353). This process was known as ‘market testing’ in relation to central government, but took the form of compulsory competitive tendering (established by a series of legislation) in the local government sector (see pp. 27-8 and 93-4 below). In turn these initiatives were complemented in the civil service by a series of efficiency scrutinies and financial management reforms, intended to make officials more directly accountable for the effective management of their own little bits of administrative empire. These changes led on to and were complemented by the creation of executive (or ‘next steps’) agencies. Before considering market-type mechanisms and agency creation, it is worth examining the process by which the managers of these changes, located principally in the Cabinet Office and what became designated as the Office for Public Service, arrived at decisions about these fundamental reorganizations of central government work. The key procedure here was known as the ‘prior options review’, under which all ministries were required to consider all activities and ask:

• • • •

Is the work necessary? If not, abolish it. Must government be responsible for it? If not, privatize it. Should government provide it directly? If not, contract it out to the private sector. If provided directly, decentralize it to executive or other nondepartmental agency.

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In all cases, the principles of competition and increased efficiency should be applied. Some data on these reviews are given in Box 2.5.

BOX 2.5 1993

PRIOR OPTIONS REVIEW RESULTS TO

937 activities reviewed Abolition Privatization Contracted out Market-tested Internal restructuring

47 4 241 498 147

{

external supplier internal supplier

153 345

Source: Cabinet Office (1997).

On the basis of such reforms, government claimed in 1996 to have made a 20 per cent saving (£720m.) on a total of £3.6bn of work reviewed. The private sector had been awarded £1.3bn of work. Where competitive bids were sought, on £728m. of work, government teams had won 71 per cent, or £519m. of work. Further savings were made through generic scrutinies: for example, a process of rationalization and reduction of forms in the National Health Service brought savings of £40m. per year, and changes in the criminal justice system were estimated to save £30m. per year (Cabinet Office, 1997). Contracting Under this type of arrangement, a private contractor assumes responsibility under a contract for providing a specified level and quality of public services for a fee. The objective is to obtain the most cost-effective delivery of the service over a defined period of time. The contract will normally be awarded, and renewed, on the basis of competitive tenders, invited from both the existing public service organization and from potential private contractors. Constitutional and legal authority, and political responsibility for a service, remain with the public agency, but responsibility for managing and providing the service rests with the winner of the contract bid. While contracting is not new, pre-dating new public management in many countries (particularly in the USA and Latin America), it has increased significantly and been given sharper focus in the context of market-oriented reforms to public management. Particular initiatives have been implemented

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over the past decade in the UK (described in parts of the literature as a ‘contract state’: Kirkpatrick and Martinez Lucio, 1996). The main application has been through local government provision. In New Zealand, between 1989 and 1994, delivery of local government services by contract increased from 22 per cent to 48 per cent of total provision (Commonwealth Secretariat, 1996). In the UK, legislation in the 1980s and early 1990s extended the principle of compulsory competitive tendering (CCT) to a range of services, including waste collection, street cleaning, schools cleaning and catering services, legal services, computer services, personnel services, leisure management and housing management. Estimated cost savings were claimed by government as 7 per cent on average (Kane, 1996, p. 56). Contracting was also applied internally, with one part of government purchasing services from another (for example training, printing) and through the ‘internal market’ mechanism such as obtained in the National Health Service, for example doctors purchasing patient services from public hospitals under a specified and costed contract. The advantages of contracting are clear: it offers, through competition, to cut costs and contain public expenditure; to set enforceable standards of performance and quality; and to strengthen both policy-makers and managers by drawing a clear distinction between the determination of services and their delivery. Does UK experience justify such claims? The growing literature generally supplies more negative than positive judgements. Kirkpatrick and Martinez Lucio (1996) not only argue that ‘the introduction of contract relations has been uneven and contested’ but that ‘new problems and contradictions are emerging as a consequence of managing public services through contracts’ (p. 5). The reality of contracted public services provision rarely lived up to the classic contract model, and the market (external or internal) was frequently unable to provide the anticipated competition (Bennett and Ferlie, 1996); by 1994 62 per cent of local government contracts remained in house, and these accounted for 82 per cent of total contract value (Kane, 1996, p. 56). The claimed efficiency gains are demonstrated to be unsupportable by evidence (Boyne, 1998), or are offset by countervailing damage to relations of trust and collaboration (Coulson, 1998; Walsh et al., 1997; Deakin and Walsh, 1996) or by reduced morale in workforces (Cutler and Waine, 1994). The latter also argue that it is impossible to arrive at a rational and rigorous evaluation of contracting because the values which drive or resist it are principally political (ibid., ch. 4). In short, the outcome of contracting reforms is as contested and uneven as their introduction. It is unsurprising to find that the 1997 Labour government does not intend to pursue compulsory contracting (and appears to have quietly shelved earlier forms of market testing), replacing this approach with a policy of ‘best value’ and continuous improvement through benchmarking of best practice (Cabinet

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Office, 1999). But the principle of competition is retained as part of the ‘best value’ process so that the contract culture is likely to be modified rather than abandoned (Boyne, 1998). Restructuring the Civil Service The ‘new public management’ view of modern government is that it should be mission-driven, decentralized and entrepreneurial. The structural characteristic of this model is that, compared with the traditional government bureaucracy, it should have a smaller policy core, overseeing a flatter, less hierarchical, more fragmented implementing periphery. This has been described as the ‘hollowing out’ of government. The British experience with this kind of restructuring has resulted in the creation of ‘next steps’ (or executive) agencies. This is a dramatic example of the substantial changes involved in the introduction into the public service of a model of this kind (Greer, 1994), and of the high degree of political commitment needed to drive through such changes against bureaucratic and labour union resistance. Essentially, agency creation has resulted from the ‘prior options’ review process described earlier. Typically a ministry will:

• • • • •

identify a coherent, specific set of activities which will be the basis for an autonomous agency; appoint a chief executive to manage the agency, appointed on a competitive basis, with competition often open to candidates from outside government; establish a Framework Agreement, which operates over a five-year period, setting out in a Strategic Plan objectives and responsibilities; annually set out in a Business Plan key financial, service, and quality targets; establish a performance measurement and reward system to support the Business Plan.

The staff of executive agencies continue to be classified as civil servants, but chief executives have day-to-day control over all personnel matters. In turn, the chief executive continues to have relations of accountability to the sponsoring minister and senior ministry officials at a policy level, but at the operational level enjoys considerable independence (but see critique, below, p. 30). British progress with executive agencies is summarized in Box 2.6. In the New Zealand case, an even more fundamental transformation took place, as indicated in outline in Box 2.7. It is clear that these two examples entail a direct attack on the traditional

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BOX 2.6

BRITISH EXECUTIVE AGENCIES

138 agencies employ 386 000 civil servants, some 75 per cent of the total 90 agency chief executives have been recruited by open competition 25 per cent of appointments have been external candidates 6 chief executives are women Examples of executive agencies include: Prisons Agency Benefits Agency Civil Service College Court Service Office for National Statistics Source: Cabinet Office (1998b).

BOX 2.7 NEW ZEALAND PUBLIC SERVICE RESTRUCTURING

• • • • • •

Budgetary appropriation on the basis of the outputs the department plans to provide, specified as to number, quality and cost Permanent secretaries redesignated as ‘chief executives’ with responsibility for the delivery of the specified outputs, and wide powers over staff numbers, remuneration and deployment Ministerial direction of chief executives by means of annual performance agreements and ‘purchase’ agreements A set of cross-departmental policy objectives called Strategic Results Areas A set of medium-term departmental commitments called Key Results Areas, incorporated in the chief executive performance agreement Management of the chief executives through limited term employment contracts with the State Services Commissioner, including annual performance assessment and performancebased rewards

Source: Matheson (1998).

29

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notion of a unified civil service: government is regarded as too big to be managed as a single coherent institution and instead becomes a series of interrelated but separately functioning businesses, strongly oriented to output budgeting and results-based management performance. The prize claimed is efficiency gains and more effective provision of the services the public wants, at an acceptable financial cost. However, concerns have been expressed about UK agencies in practice:

• • • • •

blurred lines of accountability, because of the reduction of formal political control and the increase in managerial autonomy; but at the same time, day-to-day ministerial interventions may restrict such autonomy (Polidano, 1999; O’Toole and Jordan, 1995); relations between agency chiefs and senior ministry staff lack clarity (Trosa, 1994); leads to fragmented and disconnected organization, which then requires more attention to coordination and ‘joined-up’ government (Cabinet Office, 1999); a model driven too much by the wish to reduce civil service numbers and public expenditure, rather than services improvement (O’Toole and Jordan, 1995); may be used as a halfway house to privatization (though Gains, 1999, shows that this has rarely occurred, and refers to agencies being ‘reform weary and resentful of centralizing pressures for change’ [p. 718]).

Improving the Quality of Public Services The drive for efficiency has two fundamental purposes: to avoid wastefulness in public expenditure and to increase the productivity of public sector workforces. But a related (some would say primary) purpose is to improve the quality of services provided by the state to the citizen: thus one test of public management is the degree of satisfaction or dissatisfaction with what the organization provides. Correspondingly, managers become more directly accountable through a commitment to supply a particular level or quality of service to users (the emphasis here is on the citizen as customer or consumer). The creation of a standard quality of service at a high level should motivate those who work in the organization. This requires a match between expectations of the service and its actual delivery. This can be the basis, along with an appreciation of available resources, of a realistic standard of service provision to which the organization commits itself (see Blundell and Murdock, 1997, chs 7 and 8). It is this thinking that lay behind the UK initiative in introducing a Citizen’s Charter Programme; initially received with scepticism, it is now regarded as a

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‘success story’ and an example of ‘best practice’ (Commonwealth Secretariat, 1996). It is summarized in Box 2.8.

Box 2.8

Citizen’s Charter Programme, UK

Established in 1991, it encouraged public organizations to draw up, publish and work to a clear set of service standards. A Charter should follow six principles:

• • • • • •

set standards of performance and assess actual performance against these standards provide clear information about services, including actual performance against targets undertake consultation with service users treat customers with courtesy and helpfulness be ready to put things right when they go wrong, including the payment of financial compensation ensure value for money

Source: Cabinet Office (1997).

The system was guided by a Citizen’s Charter Unit in the Cabinet Office. By 1998 the results were (Cabinet Office, 1997, 1998b):

• • • • • •

42 main Charters had been established for key public services and privatized utilities (for example a Patient’s Charter, a Taxpayer’s Charter, a Passenger’s Charter); 10 000 local Charters had been established, for example for doctors, fire services, police; 913 agencies held the Charter Mark Award for high standards, or innovations; performance tables are published so that users can compare the performance of ‘their’ agency with that of similar agencies (for example schools, hospitals); a Citizen’s Charter Complaints Task Force has recommended standard complaints procedures and remedies for every public organization; in July 1998 the new government retained the system, but renamed it Service First, and incorporated a People’s Panel which regularly surveys a focus group of 5000; some charters, for example the Patient’s Charter, are to be redrawn to make them more rigorous and effective.

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This is all part of what has been described as ‘administration as service, the public as client’. The traditional model certainly did not perceive or treat citizens as customers. The concept of accountability to clients challenges some fundamental principles of government, not least the idea that accountability between citizen and state can only operate through the political or legal system: in this responsive model, public managers account directly to users for the quality of services provided to them, and individual public managers are required to focus on client relations as a major part of their job. But there may be problems in securing the advantages of client-oriented service systems where targets are set at existing or inadequate levels, creating ‘façade’ achievements; or where financial and organizational resources are scarce, rendering service targets unviable (Gray and Jenkins, 1998; Wilson, 1996; Cutler and Waine, 1994). A critical assessment of the impact of ‘charterism’ suggests that British citizens have responded with ‘indifference’ (Wilson, 1996, p. 60) and that there is ‘no reliable or synoptic picture of ... impact’ (Pollitt, 1994, p. 113). The Blair government appears to recognize the need to tighten up the charter process, and recent Cabinet Office documentation refers to the likely impact of the provisions in the draft Freedom of Information legislation, which will require public authorities to publish their service targets and the results achieved against those targets. This approach raises issues of performance management and measurement. Performance Management All the reforms reviewed above depend for successful outcomes on the application of performance management systems, to measure both organizational and individual efficiency. New management reforms insist that one part of the package of increased managerial autonomy should include delegation to specific departments and agencies of responsibility for hiring, rewarding and firing staff; for removing poor performers and rewarding good performers; and for establishing a link between managerial performance and effective results. Box 2.9 shows how this works in the UK. All this may require a major cultural shift for public service employees, and there are serious problems with establishing adequate performance indicators and measurement (Cutler and Waine, 1994; Stewart and Walsh, 1994):

• •

there are different methods of measurement which in turn depend on different measures of what constitutes ‘successful’ performance; measuring quality involves establishing appropriate levels of consumer satisfaction, standards of service, or conformity to external criteria through benchmarking;

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BOX 2.9

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PERFORMANCE PAYMENTS IN THE UK

Performance awards are now made to most public service staff, including:

• • • • •

NHS doctors for meeting a range of medical targets NHS managers for meeting performance targets, for example reduced waiting lists heads of schools and ‘good’ schoolteachers most civil servants chief executives of executive agencies

Source: Commonwealth Secretariat (1996).

•

measuring ‘value added’ involves separating out the contributions of individuals, units, or the whole organization to overall outcomes.

All of these areas are complex, information-hungry and frequently disputed, not least by staffs, so that establishing a workable performance management system is a long-term project, yet one which is now regarded as essential to the achievement of improved efficiency and effectiveness in public services management (Boyett and Currie, 1999). The Modernising Government White Paper (Cabinet Office, 1999) gives substantial attention to these issues, as does the preceding White Paper on local government (Cabinet Office, 1998a). The ‘best value’ process envisaged in these documents requires a thorough review of activities, costs, resources and service outputs, all to be published, monitored and continuously reviewed. Several local authorities have already published performance plans of this type, with detailed sets of indicators of performance. In the British system at least, performance management, both as a managerial tool and as a mechanism of central direction of the public management reform process, will be a crucial feature of public management in the next decade. Creating Partnerships In line with the drive to reduce the direct provision by government of public services, and to decentralize the management of such services, there has emerged a tendency to create new hybrid forms of public-private partnership, which may bring into collaboration any combination of central government, local government, non-government organizations and private sector groups. The argument is that such partnerships may relieve overstretched central

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agencies, or substitute for weak or non-existent public provision, supplying additional financial and human resources. Two innovations in the UK illustrate this development. The Urban Regeneration initiative brings together as partners in area-based programmes central government agencies, local government agencies, community organizations and private sector companies. The Private Finance Initiative has stimulated the private financing of new public facilities, including transport projects, roads, prisons, hospitals and museums. The best-known example is the Channel Tunnel. By March 1996 £4.8bn of new investment had been agreed with the Treasury, with up to a further £7.2bn projected by March 1999. The attractions to governments with scarce resources for capital investment are obvious, though Gray and Jenkins comment that it ‘might be thought unacceptable as a public policy, not least for its implication that the government is abandoning its traditional role as guardian of the public infrastructure’ (Gray and Jenkins, 1998, p. 353). Progress in the UK has been slow in practice, but this is another area of bipartisan agreement, with the new Labour government committed to expansion of public-private partnerships of this type (Cabinet Office, 1998a, 1999).

CAN AND SHOULD THE NPM MODEL BE TRANSFERRED? If we take the case of UK public sector reforms as reasonably representative of the model of new public management, it is clear that substantial elements of this model have been copied and applied elsewhere (see Minogue et al., 1998). New Zealand has, if anything, pursued these reforms even more enthusiastically than the UK (Matheson, 1998; Halligan, 1997; Boston et al., 1996; Schick, 1996; Holmes and Shand, 1995), and many OECD countries are adopting elements of the reform model, especially privatization, contracting, executive agency, and efficiency and quality improvement reforms (OECD, 1995, 1996a). It is not easy to establish how these processes of transfer take place, though Common (1998) argues that major aid donors have played an important role with the direct sponsorship of NPM-type reforms through their aid programmes, and related conditionalities. Dunleavy and Hood (1994) suggest the possibility that globalization processes are influencing common responses to problems of governance, though they insist that national cultures may resist absorption into a global model. Meanwhile, political and bureaucratic leaders in developing and transitional economies are searching for solutions to the problems of the overloaded, expensive, inefficient and unresponsive state which produced NPM reforms in the first place, so that it is

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scarcely surprising if they seize on initiatives already attempted in developed economies. There are two major problems here. First of all, as Dolowitz and Marsh make clear, ‘policy transfer’ is a tricky and complex process which operates with long lead times (Dolowitz and Marsh, 1998). National administrative cultures are unique and distinctive, and in various ways resistant to the application of ‘one best model’ or blueprint. This is so even in developed countries, and is interestingly illustrated by the case of France. France, like other OECD countries, was impelled by fiscal, economic and bureaucratic crisis to attempt the introduction of modernizing reforms (mainly privatization and decentralization initiatives, and increased contractualism). While a group of managers outside the centre benefited from the ‘territorial’ decentralization of public service funding and delivery, the general reform effort met strong resistance both at the elite (grands corps) level, and at the lower, heavily unionized levels of the public sector. The resistance of these entrenched interests, and the centrality of the state in French political and administrative culture, stymied the intentions of reforming politicians. Far from solving bureaucratic problems, the reforms exacerbated them, creating ‘a two-speed civil service, a modernizing periphery and a traditional centre’, but with ‘little prospect of changing the underlying organization culture of the civil service’ (Clark, 1998, p. 108). Moreover, French users of public services saw little result from a decade of reform initiatives because the procedural nature of the system, rooted in administrative law, was largely undisturbed. An overall judgement was that ‘it is particularly difficult to assess the whole process of modernization and the various governments may wonder whether the benefits are worth the social costs’ (Rouban, 1997, p. 153). The strength of French public attitudes to the state shows itself in Rouban’s otherwise detached analysis: ‘it is socially unthinkable to decide on real reductions in staff while social policies ... constitute priorities for successive governments’ (ibid., p. 144). This perspective is reinforced by Guyomarch (1999): in an analysis of the French institutional reforms he found that ‘the patterns and conventions of politics, administrative arrangements and the civil service labour market all encouraged interpretations which respected active state interventionism and bureaucratic values’ (p. 189). The reforms ‘reflected the continuing intellectual hegemony of the interventionist welfare state model’, giving little room to ‘ideas ... viewed as irrelevant, quaint obsessions of foreign intellectuals’ (p. 191). This highlights a more general political dilemma entailed by the application of NPM ideas: ‘the moment every citizen demands his particular blend of services, majority decisions regarding policy output become increasingly difficult’ (De Guzman and Reforma, 1994, p. 169). A quite different problem of cultural transfer is illustrated by the example

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of China, where the concept of merit-based bureaucracy runs into specific ‘Chinese characteristics’. These include the value of loyalty to the Communist Party, and recent efforts at civil service reform demonstrate an uneasy tension between movement towards a professionalized bureaucracy and the continuance of a political cadre system (Tong et al., 1999; Zhou, 1995). A more traditional characteristic of the Chinese system is the attachment to personal networks of reciprocal obligation, which erects a clear barrier to merit-based recruitment and promotion, as well as being in conflict with the socialist principle of equity (Aufrecht and Bun, 1995). A third value is the drive for development and modernization. These shifting values are reflected in shifting power relations, so that ‘transition in China is characterized by a partial reform process in which planning and market, the party state, and an emerging civil society coexist and compete’ (Zhou, 1995, p. 448). These problems of cultural variation mean that there needs to be substantial adaptation of generic reforms. Without such flexible adaptation to local conditions, reforms will not become rooted, and will create empty, façade reforms which will be ineffectual, and do little more than create new bureaucratic layers. Sometimes this is recognized by the large aid donors: see, for example, Nunberg’s dismissal of the appropriateness for developing countries of such NPM reforms as executive agencies and performance management systems (Nunberg, 1995). But more often, reforms drawn from developed country experience continue to be espoused even in the face of substantial evidence that they are not working. Clear examples here are the continued support for privatization in transitional economies (World Bank, 1996) and for decentralization reforms in developing countries (World Bank, 1997, 1999-2000). At the same time, the leaders of poor countries find it difficult to resist inappropriate policy packages because of their need for the financial support which comes with these packages. A second major problem has been less acknowledged in the development management literature - that is, the question whether NPM reforms are even appropriate and effective in the originating countries. There is perhaps a problem of disciplinary divisions here. In the UK, management schools, management textbooks and many practitioner organizations have enthusiastically and uncritically embraced the NPM model of reform, despite its clear ideological provenance in neoliberal thinking. They either ignore, or are unaware of, an extensive critical literature produced by public policy specialists and political scientists. Specialists in public management, and indeed practitioners themselves, seem to fall into both camps. Ultimately this is a debate to be resolved within UK political and public cultures, but what is striking is the failure of those who wish to see NPM reforms extended to developing and transitional economies to take account of the very mixed results of these reforms where they have been fully

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applied. The literature on privatization and market-type mechanisms such as contracting makes it clear that there is no hard evidence of real efficiency gains (Cook, 1998; Parker, 1998; Gray and Jenkins, 1998; Bennett, 1997; Walsh et al., 1996; Heald, 1988). The literature on civil service reform and executive agency restructuring suggests that the only clear result so far, other than a substantial reduction in numbers employed in the public sector, has been a serious loss of public accountability (Polidano, 1999; O’Toole and Jordan, 1995). The literature on the application of NPM reforms to local government has been fiercely critical of increased ‘democratic deficit’ and the emasculation of local authority autonomy (Elcock, 1994, and Chapter 5 of this book; Walsh, 1995; Stewart and Stoker, 1995). It is virtually impossible to find rigorous evidence or evaluation of the impact (for better or worse) on public services, despite the emphasis of the reform model upon this aspect. Moreover, ‘whilst the call for a wide ranging evaluation seems obvious enough ... evidence suggests the reality is that there is a resistance to such an endeavour’ (Broadbent and Laughlin, 1997, p. 490). Even those commentators who refer to a transformation of the public service culture also note what has been lost in the process: in ‘deconstructing broad swathes of the public institutions that delivered services in the UK, the edifice of public sector ethics was also deconstructed’ (Brereton and Temple, 1999, p. 468). Analysis of other developed country reform programmes has produced a mixed set of judgements. For New Zealand, Schick, a committed participant, maintains that ‘there is near universal agreement that New Zealand is much better managed now than before’ (Schick, 1996, quoted in Halligan, 1997, p. 30). But Halligan, while acknowledging the radical and transformative nature of the New Zealand reform, with a 60 per cent reduction in the size of the public service, is more critical. Noting the difficulties of evaluating achievements against objectives with any precision, and that, for example, health management reforms ‘are reported by key figures in the reform process as problematic’, he suggests that ‘While management practice and discourse have been transformed, the perennial questions of public administration remain as challenges which cannot be defined out of consideration by principles which separate roles or seek to leave matters to the market’ (ibid., p. 43). Holmes and Shand (1995, p. 570) judge that the New Zealand model ‘seemed to lose sight of the multitude of factors which underpin sound strategic policymaking’. Most damaging of all, Halligan points to the public response to 15 years of fundamental reforms: ‘a voter revolt and rejection of the political system’ (Halligan, 1997, p. 41). It is tempting to speculate that the massive rejection of the UK Conservative government in 1997 was also driven by anxieties about the effects of new public management reforms on public services. Meanwhile, Schick himself, so upbeat about the New

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Zealand reforms, has argued strongly that reforms of this type are inappropriate to the political and administrative cultures of developing countries (Schick 1998). A similar mismatch between the perceptions of elite reformers and those of the target groups is implied by an account of Canadian reforms which observes that while ‘the litany of reorganization ... has exacted a heavy toll ... citizens and public servants find such multifaceted change bewildering’ (Lindquist, 1997, pp. 57-8), and criticizes ‘the failure of Canadian governments to convey adequately the financial, human, and other costs of restructuring’ (ibid., p. 60). There is often a contradiction between language and intention in the reform movement: An unintended consequence of the New Public Management is the use of the language of experiment, devolution, decentralization, and catalyzing public, private, and voluntary sectors to mask an increase in authority, control, and alienation ... the contradictions abound as the subtext of control, enforced downsizing, and cutbacks invariably break through the agendas of reform. (Green, 1998, pp. 548-9)

Perhaps the most disturbing critique of all is the view, based on research by OECD (1996b), that ‘despite differences between different countries, there is a growing convergence in terms of a concern that fundamental values associated with public services organizations are being undermined by the reforms’ (Lawton, 1998, p. 20). These are summarized as follows (ibid.):

• • • • • •

working with ever more limited resources may demoralize managers; direct citizen demands may lead to conflicts between individual interests and wider public interests; fragmentation raises concerns over accountability and responsibility; a devolved and discretionary management environment may erode a service-wide ethic; increased managerial discretion may increase risk-taking, and produce more mistakes and ethical conflicts; an expanded public-private interface may produce relations with contractors which lead to an erosion of ethical standards.

The tensions involved here are succinctly presented in a series of oppositions by Mastronardi (1995, quoted in Schedler, 1997, p. 127):

•

if clear standards of competence are to be relinquished in favour of flexible contractual relationships, then legal protection of the citizens must be guaranteed to the same extent as in traditional organization of the public administration;

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• • •

39

if control by effectiveness and efficiency is to replace democratic control, control instruments must be transparent; where politically relevant decisions are made in the managerial area, politics must not be excluded; extended discretion in the managerial field must be balanced by guarantees of equity for claims to state services.

CONCLUSION Existing commentaries on public management reform in developing countries give little sign of being aware of the problematic nature of the NPM model. The Commonwealth Secretariat guide to good practices is notably silent on the disputed character of the reform model, and on the critiques mentioned above of primary exemplars such as the UK (Commonwealth Secretariat, 1996). The World Bank annual report for 1996, reviewing experiences with privatization and market-oriented reforms in transitional economies, has relatively little to say about the mixed record of such approaches in developed economies, and appears to ignore critical literature on practice in transitional economies, particularly in respect of the need to integrate privatization more closely with general transformative strategies (Rapacki in Bennett, 1997; World Bank, 1996). While the World Bank annual report for 1997 appears in its overview to move away from the more extreme interpretations of NPM, especially in rehabilitating the idea of the necessary developmental state, it is still closely wedded in the body of the report to NPM strategies (IDS, 1998). On the other hand, more specialized World Bank studies acknowledge the problematic nature of implementation (World Bank, 1995, on the political obstacles to privatization; Nunberg, 1995, on the difficulty of applying to developing country governance administrative reform strategies which are rooted in the different cultures and superior resources of developed countries). More surprisingly, some academically based reports such as those of CAPAM are less critical of transfer issues than might have been expected, again failing to reflect the critical literatures in developed countries (CAPAM, 1994, 1996). The failure of the development management literature to produce a more evidentially based critique of new public management is disturbing, for it leaves us without the informed debate which the future importance of public management reform in developing and transitional countries requires.

NOTE 1.

I am grateful to Willy McCourt for helpful comments on this chapter.

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Dunleavy, P. and C. Hood (1994), ‘From old public administration to new public management’, Public Money and Management, 14 (3), 9-16. Elcock, H. (1994), Local Government, 3rd edn, London: Routledge. Gains, F. (1999), ‘Implementing privatisation policies in “Next Steps” agencies’, Public Administration, 77 (4), 713-30. Gray, W. and W. Jenkins (1995), ‘From public administration to public management: reassessing a revolution’, Public Administration, 73, 75-99. Gray, A. and W. Jenkins (1998), ‘The management of central government services’, in Jones et al. (1998), pp. 348-66. Green, S. (1998), ‘Strategic management initiatives in the civil service: a cross-cultural comparison’, International Journal of Public Sector Management, 11 (7), 536-52. Greer, P. (1994), Transforming Central Government: The Next Steps Initiative, Buckingham: Open University Press. Guyomarch, A. (1999), ‘ “Public service”, “Public management”, and the “modernization” of French public administration’, Public Administration, 77 (1), 171-93. Halligan, J. (1997), ‘New public sector models: reform in Australia and New Zealand’, in Lane (1997), pp. 17-46. Heald, D. (1988), ‘The United Kingdom, privatization, and its political context’, West European Politics, 11 (4), 31-48. Hill, M. (ed.) (1997), The Policy Process: A Reader, 2nd edn, Hemel Hempstead: Prentice-Hall. Holmes, M. and Shand, D. (1995), ‘Management reform: some practitioner perspectives on the past ten years’, Governance, 8 (4), 551-78. Hughes, O. (1998), Public Management and Administration: An Introduction, 2nd edn, London: Macmillan. IDS (1998), Special Issue on World Development Report 1997, IDS Bulletin, 29 (2). Jamieson, W. (1998), An Illustrated Guide to the British Economy, London: Duckworth. Jones, B., A. Gray, D. Kavanagh, M. Moran, P. Norton and A. Seldon (eds) (1998), Politics UK, 3rd edn, Hemel Hempstead: Prentice-Hall. Kane, M. (1996), ‘The nature of competition in British local government’, Public Policy and Administration, 11 (3), 51-66. Kickert, W.J.M. (ed.) (1997), Public Management and Administrative Reform in Western Europe, Cheltenham, UK and Northampton, USA: Edward Elgar. Kirkpatrick, I. and M. Martinez Lucio (1996), ‘Introduction: the contract state and the future of public management’, Public Administration, 74, Spring, 1-8. Lane, J.-E. (ed.) (1997), Public Sector Reform: Rationale, Trends and Problems, London: Sage. Lawton, A. (1998), Ethical Management for the Public Services, Buckingham: Open University Press. Lindquist, A. (1997), ‘The bewildering pace of public sector reform in Canada’, in Lane (1997), pp. 47-63. Manning, N. (1996), ‘Improving the public service’, unpublished paper, London: Commonwealth Secretariat. Mastronardi, P. (1995), ‘Staatsrecht und Verwaltungsorganisation: Reflexionen am Beispiel des New Public Managements’, Aktuelle Juristische Praxis, 12, 1541-53. Matheson, A. (1998), ‘Governing strategically: the New Zealand experience’, Public Administration and Development, 18 (4), 349-64.

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Minogue, M. (1997), ‘Theory and practice in the analysis of public policy and administration’, in Hill (1997), pp. 10-29. Minogue, M., C. Polidano and D. Hulme (eds) (1998), Beyond the New Public Management: Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar. Nagel, S. (ed.) (1994), Asian Development and Public Policy, London: St Martin’s Press. Nunberg, B. (1995), Managing the Civil Service: Reform Lessons from Advanced Industrialised Countries, Washington, DC: World Bank, Discussion Paper 204. OECD (1995), Governance in Transition: Public Management Reforms in OECD Countries, Paris: OECD. OECD (1996a), Performance Auditing and the Modernization of Government, Paris: OECD. OECD (1996b), Ethics in the Public Service: Current Issues and Practice, Paris: OECD. O’Toole, B.J. and G. Jordan (eds) (1995), Next Steps: Improving Management in Government?, Aldershot: Dartmouth. Parker, D. (ed.) (1998), Privatization in the European Union: Theory and Policy Perspectives, London: Routledge. Polidano, C. (1999), ‘The bureaucrat who fell under a bus: ministerial responsibility, executive agencies, and the Lewis affair in Britain’, Governance, 12 (2), 201-29. Pollitt, C. (1994), ‘The Citizen’s Charter: a preliminary analysis’, Public Money and Management, 14 (2), 9-14. Rhodes, R. (1997), ‘Reinventing Whitehall, 1979-95’, in Kickert (1997). Rouban, L. (1997), ‘The administrative modernization policy in France’, in Kickert (1997). Schedler, K. (1997), ‘The state of public management reforms in Switzerland’, in Kickert (1997). Schick, A. (1996), The Spirit of Reform: Managing the New Zealand State Sector in a Time of Change, Wellington: Treasury. Schick, A. (1998), ‘Why most developing countries should not try New Zealand’s reforms’, World Bank Research Observer, 13 (1), 123-31. Shaoul, J. (1995), ‘The best of all possible worlds? Ownership change and the water industry’, unpublished paper, University of Manchester, Department of Accounting. Stevens, B. (1992), ‘Prospects for privatization in OECD countries’, National Westminster Bank Quarterly Review, August, 2-22. Stewart, J. and G. Stoker (1995), Local Government in the 1990s, London: Macmillan. Stewart, J. and K. Walsh (1994), ‘Performance measurement: when performance can never be finally defined’, Public Money and Management, 14, 45-9. Tong, C.H., J.D. Straussman and W.D. Broadnax (1999), ‘Civil service reform in the People’s Republic of China: case studies of early implementation’, Public Administration and Development, 19, 193-206. Trosa, S. (1994), Next Steps: Moving On, London: Cabinet Office. Walsh, K. (1995), Public Services and Market Mechanisms, London: Macmillan. Walsh, K., N. Deakin, P. Smith and N. Thomas (1997), Contracting for Change: Contracts in Health, Social Care and Other Local Government Services, Oxford: Oxford University Press. Wilson, J. (1996), ‘Citizen Major? The rationale and impact of the Citizen’s Charter’, Public Policy and Administration, 11 (1), 45-62.

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World Bank (1995), Bureaucrats in Business: the Economics and Politics of Government Ownership, World Bank Research Report, Oxford: Oxford University Press. World Bank (1996), From Plan to Market (World Development Report), Oxford: Oxford University Press. World Bank (1997), The State in a Changing World (World Development Report), Oxford: Oxford University Press. World Bank (1999-2000), Entering the 21st Century (World Development Report), Oxford: Oxford University Press. Zhou, X. (1995), ‘Partial reform and the Chinese bureaucracy in the post Mao era’, Comparative Social Studies, 28 (3), 440-68.

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Administrative reform in core civil services: application and applicability of the new public management Charles Polidano

The new public management has come to dominate thinking about public sector reform by practitioners and academics alike. Some have hailed it as a new paradigm (Osborne and Gaebler, 1992; Borins, 1994; Hughes, 1998). New public management reforms, it is said, are a common response to common pressures - public hostility to government, shrinking budgets and the imperatives of globalization. Countries are becoming more alike in their style of public management, just as they are becoming more alike in other ways. There are differing interpretations of what that common response consists of. But there is general agreement that key components include the deregulation of line management; the conversion of civil service departments into free-standing agencies or enterprises; performance-based accountability, particularly through contracts; and competitive mechanisms such as contracting out and internal markets (Aucoin, 1990; Hood, 1991). Various authors also include privatization and downsizing as part of the package (Ingraham, 1996; Minogue, 1998). There has been a long-drawn-out, ideologically charged debate about the merits and demerits of the new public management, or NPM as it is commonly known. The debate tends to focus on the desirability or otherwise of NPM reforms in principle. Advocates and critics alike often accept the assumption that the new public management is universal, notwithstanding that this is disputed by a growing body of work.l The universality assumption is encouraged by the undoubted fact that NPM catch-phrases feature prominently in the vocabulary of civil service reform all around the world (Thomas, 1996). Now as always, the generals of administrative reform prefer to march into action behind a protective advance guard of rhetoric. Now as always, that rhetoric draws on whatever ideas are internationally fashionable. But has the ‘new paradigm’ gone beyond rhetoric? This is the question I shall try to answer in relation to developing countries. 44

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To what extent are developing countries applying the new public management model in their administrative reform efforts? I shall focus mainly on the core civil service rather than public corporations, authorities or parastatals. The boundaries between these two elements of the public sector are blurring, thanks in part to NPM reforms themselves; but it is fair to say that the civil service remains the most important component of the central state in the developing world. Its ambit is broader than observers from English-speaking industrialized countries would expect: teachers, health professionals and even local government employees are part of the civil service in many developing nations (Schiavo-Campo et al., 1997). Researchers investigating the take-up of NPM reforms in developing countries, or indeed anywhere, must watch out for what we might call the ‘seek and thou shalt find’ pitfall of comparative research. This is the not uncommon problem of one’s research question predetermining one’s findings. We are almost bound to conclude that the new public management is a dominant paradigm if all we do is look for evidence of NPM-style reforms. But NPM initiatives may be little more than a minor strand of reform, the froth at the top of the glass. Other reforms, unrelated or even contrary to the tenets of the new public management, may outweigh it in importance. So to be more certain of reaching a balanced conclusion, we must ask four questions in all. First, are developing countries committing themselves to NPM-style reforms? This question is the necessary and obvious starting-point, but it can be no more than that for the reason just outlined. Second, are such reforms being undertaken as part of the worldwide quest for greater efficiency and cost-savings which is said to be the driving force of the new public management (see Minogue, 1998), or for reasons specific to the country concerned? This question might lead to our qualifying the universality assumption even where ostensibly NPM-style reforms are being undertaken. Third, are the reforms actually being implemented, or are we being misled by the rhetoric of political leaders (and senior bureaucrats)? As I have already mentioned, the rhetoric of reform tends to outpace the reality in any country. Statements of intent can be misleading. Fourth, are reforms simultaneously being undertaken that are unrelated to the new public management, or indeed run counter to its principles? This question helps us put any evidence of NPM-style initiatives in its proper perspective. I shall deal with each of these questions in turn. My conclusion is that while many developing countries have taken up elements of the NPM agenda, they have not adopted anything close to the entire package. Moreover, they are simultaneously undertaking reforms that are unrelated or even contrary to that

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agenda. The new public management is only one among a number of contending strands of reform in the developing world. The evidence gathered in this chapter also sheds light on a closely related issue: the appropriateness of NPM reforms in developing countries. This represents a fifth question which I shall take up towards the end of the chapter. Can the new public management work in the developing world? Many would respond with a flat ‘no’. But this conclusion is usually reached through a priori reasoning on the basis of what are deemed to be particular characteristics of the developing world (for example, Nunberg, 1995; Schick, 1998). There is little examination of the outcomes of such NPM reforms as have been tried in developing countries. The evidence so far accumulated on reform outcomes does not support any blanket conclusions either for or against the transferability of NPM to developing countries. There are success stories as well as failures. As we shall see, localized contingency factors - ones that vary from situation to situation even within the same country - play a predominant role in determining whether or not NPM measures can work. Different circumstances can call for radically different responses. Reformers’ watchwords must be openmindedness and eclecticism.

TAKE-UP OF THE NEW PUBLIC MANAGEMENT To begin with the first of our five questions, there is no doubt that many developing countries are experimenting with new public management reforms. There are some well-known examples: Malaysia’s experiments with total quality management (Common, 1999); the results-oriented management initiative in Uganda (Langseth, 1995); and the wholesale restructuring of Chilean education along internal market lines, a far more radical change than anything tried in the UK (Parry, 1997). But do these cases represent a general trend? The difficulty in answering this question is that in reality there is no such thing as a standard, unitary new public management model which countries must adopt in its totality or not at all. The take-up rate varies according to which particular element of it we are considering. In so far as we can generalize, two of the more commonly adopted elements of the NPM agenda are privatization and downsizing (or retrenchment, as it is known in Africa).2 Such initiatives are part and parcel of the economic structural adjustment programmes which the majority of countries throughout the developing world have undertaken at some point in time; they are often the first stage of public sector reform. Both privatization and retrenchment are dealt with elsewhere in this volume

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(by Cook and Taylor respectively), so I will say little about them except to note that even here the record is patchier than it appears at first sight. Hitherto, a few countries have made most of the running with privatization whereas many others have hardly moved. This pattern now appears to be changing. But the volume of privatizations in developing countries remains too small to have made a substantial dent in the overall share of the public sector in the economy (Cook and Kirkpatrick 1997; Ramamurti, 1999). Likewise, while retrenchment has had a few star performers - Uganda, for example, cut its civil service by more than half in the early 1990s - many other countries have been laggards. The easy part of retrenchment is ridding the payroll of ‘ghosts’, or names that should not be there (though keeping them out for good may be another matter altogether). Numbers can be brought down substantially in this way. Beyond this, things become more difficult. It is partly a matter of ‘political will’, partly a question of administrative difficulty: civil services have many entry points and governments can find it difficult to plug them all (McCourt, 1998b). Many developing countries are also experimenting with other items on the new public management menu. The most common initiative apart from privatization and retrenchment - indeed, perhaps the most common, given the patchy implementation of these other two elements - is that of corporatization (converting civil service departments into free-standing agencies or enterprises, whether within the civil service or outside it altogether). This is perhaps the best-known element of civil service reform in the UK and New Zealand, two pioneers of the new public management. In developing countries corporatization appears to be going on at an increasingly rapid pace, even as an earlier generation of state-owned enterprises is being put on the auctioneer’s block. A number of countries are experimenting with UK-style executive agencies, including Jamaica, Singapore, Ghana and Tanzania (Brown, 1999; Common, 1999; Dodoo, 1997; Mollel, 1998). Tanzania’s programme appears particularly close to the UK model, with 12 agencies created in 1996 and another 60 candidates waiting in the wings. Likewise Jamaica, though this country is moving more cautiously. One notable application of corporatization in Latin America has been the creation of social funds - bodies designed to fund job creation and poverty alleviation initiatives in deprived regions. These have usually been set up outside the civil service, drawing staff from the private as well as the public sector, and they have been allowed plenty of management autonomy. This model was first applied in Bolivia during the 1980s and it has since been widely exported throughout the region (Turner and Hulme, 1997, p. 128). An equally noteworthy trend in Africa is the merger of customs and income tax departments into corporatized national revenue authorities. Much as with

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Latin American social funds, corporatization has allowed revenue authorities to raise salaries, shed poor performers, hire better-qualified staff, offer bonuses linked to revenue targets, and operate on a self-financing basis (Chand and Moene, 1999). This model has been adopted in Ghana, Kenya, Malawi, Tanzania, Uganda and Rwanda. It is also being exported outside Africa, notably to Pakistan.3 Some African countries, notably Ghana but also including Kenya, Uganda, Zambia, South Africa, Malawi and Zimbabwe, are also in the process of corporatizing their health sectors (Larbi, 1998; Mills, 1997; Russell et al., 1999; Chimphamba, 1999). This generally involves converting hospitals into free-standing bodies run by their own boards of directors, as well as (at least in Ghana’s case) hiving off the entire service delivery arm of the ministry of health into a separate health service on UK lines. Corporatization initiatives have had a mixed outcome. Latin American social funds have enjoyed considerable success. The classic case is Bolivia’s Emergency Social Fund, a three-year programme to fund employmentcreating projects in poor areas. The Fund was first set up as a civil service department in 1985, but it achieved little in its first year. A new head was subsequently brought in from the private sector. He raised salaries and offered staff quick promotions according to performance, as well as incentives to get out of the capital city and into rural areas where most funds would be disbursed. After two and a half years the Fund had disbursed nearly $200 million through 2500 projects and created huge numbers of jobs, for an administrative cost per dollar disbursed of less than 4 per cent (Klitgaard, 1991, pp. 146-52; 1997a, p. 1967). Revenue authorities in some African countries have yielded equally impressive results. Ghana’s National Revenue Service, for example, brought revenue intakes up from 4.5 to 17 per cent of GDP between 1983 and 1994, notwithstanding cuts in tax rates (Chand and Moene, 1999, p. 1137). The Uganda Revenue Authority increased its tax intake by around 17 per cent per year in real terms between 1991 and 1995, its first five years in operation (Livingstone and Charlton, 1998, p. 510). On the other hand, health reforms in Africa appear to have produced few visible benefits. In Ghana the new structures have made little difference in practice. Hospitals have received only a limited degree of management autonomy. Although there is provision to set performance targets for hospitals, the government may simply not have the capacity to do so. Information systems are too rudimentary to serve as a reliable basis for effective performance monitoring (Larbi, 1998). Many African health systems are seriously underfunded (Robinson and White, 1998, pp. 232-3), and this is probably a fundamental constraint on what can be achieved through organizational change. Efficiency gains alone

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would be unlikely to bridge the wide gap between resource need and availability. In other words, government budgetary decisions rather than management reforms will continue to be the primary determinant of the quality of service delivery. Britain’s well-known internal market reforms may have yielded disappointing results for similar reasons.4

DIVERSE MOTIVES FOR NPM-STYLE REFORM Thus far we have assumed that corporatization, wherever it happens, is evidence of NPM-style reform. This is not necessarily the case. We need to distinguish between two varieties of corporatization, and this brings us to the second of our five questions - the diversity of motives behind ostensibly new public management initiatives. Corporatization can take place as a means to achieve greater efficiency, cost-savings or service quality improvements, in which case it is accompanied by the setting of performance targets along the lines of executive agencies in the UK or state-owned enterprises in New Zealand. This is the kind we have just reviewed. But it can also take place simply for convenience, a way of freeing a particular public function from the constraints of civil service red tape. The first is a clear example of the new public management in action; the second, much less so. There are no data to indicate with any certainty which of these two varieties of corporatization is predominant. There is no doubt, however, that the second variety is very important in its own right in many developing countries. Civil service departments in all kinds of fields are being converted to authorities, institutes, corporations, companies and other free-standing public bodies, even in countries which have no systematic programme of corporatization along British or New Zealand lines (see Hirschmann, 1999, p. 299). There are two reasons behind this trend. First, developing countries have been converting government departments to parastatal bodies for decades: there is little new about this, save that the trend may have accelerated in recent years. And second, the management constraints which newly corporatized bodies are being set up to escape can be very severe. In many African and Latin American countries such constraints go beyond the procedural red tape which those familiar with government in industrialized countries would expect to find. They can extend to, among other things, public-private pay gaps that are so wide after years of restraint compounded by galloping inflation that it becomes impossible to recruit and retain qualified staff (Cohen, 1995; Colclough, 1997a; Klitgaard, 1997b). Governments obviously lack the wherewithal to raise salaries across the board by more than token amounts. Selective pay increases in key areas are the

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inescapable alternative, even if this creates very substantial problems of its own (Polidano et al., 1998; Hirschmann, 1999). But rigid service-wide pay structures make it very difficult to grant differential pay awards within the civil service. The only option for critical functions that depend on highly qualified personnel becomes to hive them off. In this case corporatization is less a means of improving efficiency than a defensive measure aimed at maintaining basic operational viability. Even where corporatization is accompanied by performance targets à la NPM, the driving motive may go beyond straightforward efficiency gains. Controlling corruption is a case in point. Transparency International, a nongovernment organization concerned with this issue, has suggested that governments should concentrate their anti-corruption efforts on priority areas such as revenue collection or law enforcement. Such functions would be set up as ‘enclaves’ - autonomously managed bodies which would be turned into islands of integrity within government. The aim would be to gradually expand the islands into archipelagos (Pope, 1995). The establishment of revenue authorities in Africa is partly a reflection of this strategy. In Ghana, the creation of the National Revenue Service was an opportunity to weed out staff from the old customs and inland revenue services who were thought to be corrupt. One of the reasons why remaining staff had their pay increased was to reduce the temptation to take bribes. Other anti-corruption mechanisms were also put into place, including a public complaints facility (Chand and Moene, 1999; De Merode and Thomas, 1994, p. 166). Likewise in Tanzania: customs and tax officials who appeared to be living beyond their legitimate means were not taken on by the new revenue authority.5 Reforms that are, on the face of it, similar to those initiated in the ‘Old Commonwealth’ heartland of the new public management here reveal themselves to be a response to very different concerns. This is not to say that corruption is a concern only in developing countries (though nor will I pretend that the problem is equally severe everywhere). But controlling corruption is not normally put forward as a reason why the pioneers of the new public management embarked on their reforms. On the contrary, NPM reforms are at times blamed for facilitating ethical misconduct and corruption in industrialized countries such as the UK (Greenaway, 1995; Doig, 1997).6 Yet in some developing countries similar initiatives have been introduced in response to precisely this problem.

THE RHETORIC AND REALITY OF REFORM Our third question concerns the extent to which the rhetoric of reform can outpace the reality. This problem appears particularly to afflict another

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major strand of NPM reform: the introduction of performance-based accountability. Performance management systems can be applied at the organizational or the individual level. We have already discussed the former. The latter is perhaps the level at which the gap between rhetoric and reality is most glaring. The most common performance management initiative at the individual level is the introduction of modern performance-oriented staff appraisal systems. The introduction of such systems is a fairly straightforward (though labour- and resource-intensive) exercise. The difficulty comes afterwards, in linking appraisals to career rewards and sanctions. Individual performance bonuses are often put forward as a means to achieve this, but governments have shown a marked reluctance to go down this road.7 Malaysia is one of the few countries that have implemented such a scheme service-wide (Kaul, 1996). Other countries appear not to have gone beyond minor experimental schemes (see Klitgaard, 1997b). Nunberg (1995) is sceptical of the value of performance-pay schemes, arguing that it is much more important to link promotions to performance. But in many African, Asian and Latin American countries, promotions continue to be tied to seniority or examinations. Having brought in new staff appraisal systems, usually with a great deal of fanfare, and having instructed managers to appraise their staff carefully and impartially, governments then balk at relying on the judgement of those managers in promoting and rewarding people. In Zimbabwe, for instance, it is feared that the delegation of staffing powers to senior officials could ‘easily be abused to create “personal empires”, “regional cliques”, and even “ethnic enclaves” which could be used as effective weapons for the self-preservation of the senior public servants’ (Makumbe, 1997, p. 10). Uganda is a good illustration of the inconsistencies in this field. One of the most progressive public service reformers in Africa, Uganda has laid a lot of emphasis on what it calls results-oriented management (catchily abbreviated as ROM) since the early 1990s. ROM was announced as a major plank of reform; yet when an action plan for the implementation of reform was drawn up in 1992, ROM seemed to all but disappear from the agenda (see Langseth, 1995, p. 373). It appears to have yielded little beyond customer surveys and the old fallback of staff training. It may seem strange that reforms intended to introduce results-oriented management themselves turn out to be long on rhetoric and short on results. But this component of the new public management is perhaps the hardest to implement, involving as it does radical changes to structures of accountability and, ultimately, to the very culture of government. Not many countries besides Uganda have taken up the challenge in a serious way. Those that have, Ghana, Malta and Trinidad and Tobago among others, may have attracted a lot of

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international attention in the process; but the results have fallen well short of expectations (Dodoo, 1997, pp. 120-21; Polidano, 1996; Bissessar, 1998).

NON-NPM REFORMS Reforms that Run Counter to the New Public Management An essential concomitant of the development of results-based accountability is the removal or at least relaxation of procedural controls over line management. The idea is, in NPM-speak, to move from accountability for inputs (obeying the rules on spending and staffing) to accountability for outputs (performance). As we have already seen, however, governments have been reluctant to give line managers greater discretion over staff promotions and pay. Some countries have gone further than this: they have tightened up existing central controls within the civil service and introduced new ones. This has often happened in response to the need to bring staff numbers down. Notwithstanding its proclaimed goal of introducing results-oriented management, Uganda actually recentralized the recruitment of temporary and non-pensionable staff because this ‘had been open to wide abuse’ (Wangolo, 1995, p. 150) when it was in the hands of departments themselves. Until then the government simply had no idea how many people were employed in the civil service. In an effort to control recruitment, other countries have required departmental heads to gain central clearance not only to create new positions but also to fill vacancies in the already approved complement. More generally, a major thrust of public sector reform throughout Africa and Latin America has been to strengthen and rationalize functions such as budgeting, financial control, staff classification and complement control. Proper execution of these functions is taken for granted in most industrialized countries, which are devolving some of them to line agencies. But these functions remain weak in many developing countries. The World Bank regularly encounters problems such as poor expenditure control and inadequate accounting systems in its client countries (Beschel, 1995, p. 21); while Holmes (1992, p. 474) notes that ‘many middle-income countries see standardization in the wage and salary area ... as a prerequisite to improving performance’. Strengthening such functions invariably means centralization. Zambia and Jamaica are among the many countries trying to get a grip on public spending by building up the capacity of the central budgetary institutions of government (Beschel, 1995; Harrigan, 1998). Honduras, Panama and the Philippines among others have set up strong central personnel bodies in an effort to depoliticize civil service recruitment (Klingner, 1996; Varela, 1992). This

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‘professionalization’ of staffing, particularly at senior management levels, is given plenty of emphasis throughout Latin America (Reid and Scott, 1994; CLAD, 1998). We are thus left with the paradox of governments retaining a high degree of centralization in the civil service while simultaneously corporatizing many functions to escape the constraints of that centralization. Moreover, there are other major strands of public service reform in developing countries which are entirely unrelated to the new public management. These include capacity-building, controlling corruption, and political decentralization or devolution. I have already touched on the first two in passing. I deal with all three more directly below. Capacity-building ‘Capacity-building’ is a term very commonly heard in relation to governments in the developing world. In a sense all administrative reforms the world over are concerned with capacity-building. But the term is given particular emphasis in developing countries because many of them suffer from severe capacity limitations. We have already come across some of the symptoms: ‘ghosts’ in the payroll; the inability to establish clear control over spending and staffing, and the drive for centrally imposed standardization in these areas; and, in the case of countries such as Ghana, the failure of new structures to have a tangible impact on operations. If we have seen evidence of the symptoms of low capacity, we have also come across a major cause: low pay levels. It is worth saying a little more about this. Under the crushing pressure of economic crisis, real public sector pay levels fell by 30 per cent on average in Latin America during the 1980s. The fall was even higher in Africa (Klitgaard, 1997b). Many countries have suffered a steady drain of talent from the public sector, especially the core civil service, to foreign corporations, non-government organizations and even those very aid agencies that are supposed to be helping governments rebuild their capacity (Wuyts, 1996). It can be very difficult to close the public-private pay gap, even when economic conditions become more favourable, because of the expense involved. Uganda has yet to achieve its proclaimed objective of a minimum living wage - that is, paying civil servants enough to survive on - after nearly a decade of reform,8 and this in spite of cutting civil service employment by more than half. Low pay is not the only factor limiting administrative capacity. Administrative structures are weakly institutionalized, making the public sector prone to ‘penetration’ by party politics and leading to politicization at all levels in the organizational hierarchy. This applies even to countries in the Westminster tradition of civil service neutrality, though there are exceptions,

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such as Botswana and Mauritius (Goldsmith, 1999). Writing in the context of Kenya, Cohen and Wheeler (1997) include politicization as one of a number of ‘push factors’ which demoralize public servants and impair their effectiveness, eventually leading many to leave. Cohen (1995) sets out a framework for capacity-building in developing countries which seeks to address the various constraints in a holistic way. The result is a huge, and hugely impractical, agenda ranging from the improvement of salaries to the upgrading of training institutions. But the very breadth of Cohen’s agenda illustrates the scale of the problems which many developing countries face. In practice, as Cohen notes, most capacity-building interventions are limited to training. Many development practitioners take the two terms as synonymous. Cohen’s own framework does have the merit of showing what an inadequate response training is on its own given the scale of the problems. Yet training is convenient to both developing-country governments and the aid donors who finance much of it. To governments, it is politically painless; to donors, it is a conflict-free measure which is easy to deliver (see Schacter, 1995, p. 334). And so, say Tumer and Hulme, ‘Evaluation [of training] may be overlooked or found impossible to undertake because of non-evaluable goals which studiously avoid specific targets’ (1997, p. 118). Controlling Corruption Low pay contributes to another manifestation of low administrative capacity: poor organizational discipline and an inability to enforce rules. Always a problem in many developing countries, this grew to crisis proportions in those that were hit by sharp economic downturns. Colclough (1997b) shows how a dramatic decline in real pay levels in Zambia during the 1980s recession led public employees to adopt all kinds of survival strategies to make ends meet: ‘daylighting’ (doing a second job during office hours); private trading at work, effectively turning offices into marketplaces; and, of course, corruption. Organizational discipline and cohesion went out of the window in the process. In many countries all kinds of public transactions, major or minor, are subject to the payment of bribes. Some areas - policing, public works, customs administration - are generally more lucrative to staff than others. Once a problem that used to be pushed under the carpet by scholars and practitioners alike, corruption has become a major item on the agenda of public sector reform in developing countries (Klitgaard, 1997b). We have already looked at one approach to dealing with the problem: that of concentrating anti-corruption efforts on autonomous enclaves. Another very common measure, one completely unrelated to the new public

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management agenda, is to set up an anti-corruption commission empowered to receive and investigate public complaints or allegations about corruption. In Hong Kong and Singapore, such commissions are claimed to have all but eradicated corruption over the years since their creation. But they were large, well resourced, endowed with strong legal powers, and protected from political interference. Elsewhere, anti-corruption commissions tend to be under-resourced and short of both investigative powers and independence from government (Langseth and Pope, 1999, pp. 44-5). Even where commissions have the necessary powers and resources, they must still rely on the normal judicial machinery of the state when bringing cases to trial. The effectiveness of an anti-corruption commission ultimately depends on the integrity and efficiency of the prosecutor’s office and the courts. Weaknesses in these areas risk destroying the commission’s public credibility, even though they are beyond its control (Polidano and Hulme, 1997). Decentralization The third major strand of public sector reform that falls outside the new public management is decentralization. The reader may find this puzzling: is not decentralization a major component of NPM reform? But the term means different things to different people. To scholars and practitioners of the new public management, decentralization means giving line managers in government departments and agencies greater managerial authority and responsibility. We have already discussed the pursuit (or rather, partial non-pursuit) of this aspect of reform. In many developing countries, however, decentralization is usually taken to mean the devolution of political power to lower levels of government, generally elected local authorities. We can refer to these two types of decentralization as management decentralization and political decentralization respectively. Political decentralization is dealt with in detail by Elcock and Minogue elsewhere in this volume (Chapter 5). All that needs to be said here is that it is currently of major importance in public sector reform efforts, particularly in Africa and Latin America. But for all that, the results have been limited. Local governments suffer from the same or worse capacity constraints as the central government. In general, capacity-building efforts have not been any more successful at the local than at the national level (Crook and Manor, 1998; Smith, 1998). Political decentralization is not normally thought of as part of public management reform in industrialized countries. In Britain, for example, the Conservative government of 1979-97 curtailed the powers of local authorities at the same time as it pushed through a programme of NPM-style reforms that

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extended to local as well as central government (Weir and Beetham, 1999). But the distinction is often absent in the developing world. Political decentralization is often seen as an integral part of civil service reform because it entails the transfer of large numbers of civil servants to local authorities and the radical restructuring of central departments of health and education, among others. Enquiries about NPM-style decentralization in developing countries risk being shunted on to the wrong set of rails unless the different meanings of the term are appreciated. Round-up: the Lack of Universality of the New Public Management It is evident that for all the assumptions of universality, the new public management is only part of the story of current public sector reform in developing countries. There is substantial take-up of NPM reforms, but it is invariably selective. The failure rate of such reforms at the implementation stage is high. The very same countries that have sampled items from the NPM agenda have taken other measures which run directly counter to NPM tenets. And there are entire areas of reform which are simply unrelated to the new public management. Whether or not the new public management can be justly described as a dominant paradigm in industrialized countries, it certainly does not deserve the label in the developing world.

IS THE NEW PUBLIC MANAGEMENT APPROPRIATE FOR DEVELOPING COUNTRIES? Having reviewed the evidence concerning the take-up of the new public management in developing countries, we can now turn our attention to the question of its appropriateness. At first sight the failure rate of NPM reforms might seem enough to lead us to a negative conclusion. But it would be a mistake to look at the new public management in isolation. Our brief survey of non-NPM reforms shows that these have done no better. Administrative reform has always had a high failure rate, in both developed and developing countries (Caiden, 1991; Kiggundu, 1998). If one is to argue that NPM reforms are inappropriate for developing countries on the basis of their poor record of implementation, one may as well say the same for any kind of administrative reform. The real test of the appropriateness of NPM is not at the output stage of reform (implementation, where most reforms currently fail), but at the outcomes stage (end results of changes that have been properly put into effect). In other words, even if some means were found to overcome the implementation hurdle, and even if it were possible to ensure that changes were not

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blocked or kept cosmetic, would NPM-style initiatives yield their expected benefits in a developing-country environment? Or would they not, perhaps even generating perverse outcomes? Broadly speaking, we can identify three closely interrelated arguments along such lines. Let us look at them in turn. The first argument may be labelled the ‘stages of development’ thesis, variant one. The lack of expertise and the unreliability of information systems in developing countries, so this argument goes, means that it is not viable to develop complex structures such as internal markets or sophisticated performance-monitoring systems. Such mechanisms would be unreliable at best, unworkable at worst. On the contrary, developing countries should concentrate on strengthening central control over functions such as staffing or finance and building management capacity in line organizations. This is the precursor of any eventual delegation (Holmes, 1992; Nunberg, 1995). Our earlier example of attempted corporatization in Ghana’s Ministry of Health is partly a case of implementation failure, but also (in so far as the inability to set targets and monitor performance is concerned) partly a practical instance of the kind of outcome predicted by this argument. Variant two of the stages of development thesis relates to the deregulation of line management. Public administration in developing countries, runs this argument, is already afflicted by corruption and nepotism. Central controls and procedures are the only safeguard against further proliferation of such practices. In time, the norms of probity which are embodied in central controls may become internalized and the controls could then be gradually lifted. But premature removal of procedural safeguards would open the floodgates to an even greater abuse of power. This argument draws on the historical record of developed countries. In the UK, for instance, there was a gap of more than one hundred years between the Northcote-Trevelyan reforms, which led to the gradual creation of a unified, centralized civil service from the mid-nineteenth century on, and the contemporary ‘next steps’ agency movement which has effectively dismantled that legacy (Hennessy, 1989). The Northcote-Trevelyan reforms were intended to rationalize departmental management and put an end to nepotism in staffing. The implicit assumption is that most developing countries are still at the Northcote-Trevelyan stage of development. This viewpoint finds plenty of adherents among developing-country officials themselves, as McCourt (1998c, pp. 20, 24) discovers in the case of Nepal and Tanzania. There is also Latin America’s widespread preoccupation with the professionalization of staffing, for reasons similar to those behind Northcote-Trevelyan in Britain over a century ago. Schick (1998) supports this view, backing it up with a third argument relating to the introduction of performance-based mechanisms of

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accountability. He points to the existence of a sharp dichotomy between formal and informal rules of the game in developing countries, and the predominance of the informal realm. The rules of behaviour that people actually follow can be very different from those that are written down. Contractual mechanisms of accountability would have little impact because they would remain trapped within the formal realm. Contracts would be drawn up and people would go through the motions, but things would continue much as before. As with the other two arguments, this one is to some extent founded in reality. A classic example of informality subverting contractual mechanisms comes from Ghana’s attempt to improve the performance of its state-owned enterprises by setting targets tied to incentives and penalties. According to Christiansen, performance incentives have proved too weak to have much impact. And the State Enterprise Commission is highly constrained in applying penalties owing to ‘close political and personal ties between ... [public enterprise] managers and the government’ (1998, p. 286).9 These arguments sound compelling. But there are a number of important qualifications to be made. First of all, the stages of development thesis is somewhat misleading. The problem in many developing countries is not an absence of centralized rules and procedures. Rules and procedures are there aplenty, with all the disadvantages that adherents of the new public management would point to - rigidity, delays, duplication, bottlenecks, and so on. Selection procedures lasting a year or more are not uncommon. Centralization is no panacea for governments in developing countries. The problem is, rather, that those who want to get round the rules for the wrong reasons are able to do so somehow, while well-intentioned managers can find themselves bound hand and foot in red tape. Developing countries incur all the disadvantages of central controls while seemingly gaining few of the benefits (Polidano et al., 1998, p. 286). This leaves plenty of room for argument over what to do about the shortcomings of central controls. One can argue that they should be strengthened, as do Nunberg and others; or one can argue that they may as well be lifted because they serve little useful purpose. Interestingly enough, a document put out by the Latin American Centre for Development Administration (CLAD), a body representing Latin American governments, directly addresses the stages of development thesis and rejects it. The document endorses the drive towards professionalization of staffing, but does not see this as incompatible with a programme of NPM-style reform. It gives three reasons for this: first, there is no single historical path towards a professionalized bureaucracy; second, the traditional Weberian model of bureaucracy has no mechanisms to increase efficiency, a pressing concern to Latin American governments; third, it is too rigid and inward-looking to

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respond to citizen demands for more participation and better governance (CLAD, 1998). Moreover, though many continue to believe in central controls as a check on abuse of power by government officials, we have already seen that NPMstyle reforms have been used not only to make efficiency gains or escape management constraints, but also precisely to combat corruption - as with the corporatization of the Ghanaian and Tanzanian revenue services. Pope (1995, p. 285) argues that it is too simple to equate management decentralization with corruption. Quite apart from the ease with which central controls can be circumvented in many countries, Pope says that centralization could generate its own pressures for corruption as people seek to get round delays and bottlenecks. This leads to a final point in relation to Schick’s formal-informal dichotomy. It is evident that in so far as it exists, this dichotomy affects traditional procedural accountability as much as it does NPM-style performance-based contractual mechanisms. In a comparison of local government administration in Bangladesh and the Indian state of Karnataka, Crook and Manor (1998, p. 103) found more abuse of power in the Bangladeshi system despite the fact that it was more regulated than that of Karnataka. ‘It is useful to remember this’, they say, ‘when considering the frequent assertions ... that the solutions to problems that afflict these institutions lie in devising tighter or more elaborate sets of laws and administrative rules.’ Adding new rules might even contribute to the proliferation of corruption and abuse of power. Olivier de Sardan (1999, p. 33) calls this the ‘driving licence formula’: In almost all African countries, a driving licence can be bought from the examiner, during the test. Attempts have been made, from time to time, to take firm measures in order to put an end to these practices: in Niger a policeman is in attendance during the test. The obvious result is that one has to bribe the policeman as well as the examiner.

In other words, Schick’s formality-informality thesis can be accused of failing the same test we applied earlier to the question of the implementation record of the new public management. Schick does not show that the problems of NPM reforms are any more serious than those of the non-NPM alternatives. This might be taken as wishing the problems away, or making them disappear by sleight of hand. It is certainly not offering a solution. But it is only logical to compare the new public management with the alternatives if we are arguing that it is inappropriate for developing countries. There is no point in looking at it in isolation.

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So should developing countries go down the NPM route, or should they not? The reader will rightly complain that I have not answered the question. I have merely pointed out that the negative case is only one side of the coin. But I do not believe that any answer, positive or negative, can be had from the sort of generalized a priori arguments we have reviewed here. Earlier I argued that the appropriateness of NPM in developing countries should be considered with reference to reform outcomes. I will now go a step further. In so far as the issue can be decided at all, it should be on the basis of actual rather than theoretical or potential outcomes. Experience should be the arbiter. Evidence on NPM reform outcomes is very limited as yet: we have reviewed much of it in this chapter. What does it tell us? The final section of this chapter addresses this question, also drawing in some important additional material which we have yet to consider. As we will see, the applicability of NPM depends on localized circumstances which vary from situation to situation even within the same country. It is impossible to draw any hard-andfast rules.

CONCLUSION: LOCALIZED CONTINGENCIES AND THE NEED FOR ECLECTICISM The evidence on NPM reform outcomes is perplexingly equivocal. On the one hand there is the relative failure of managerial reform in the health and state enterprise sectors in Ghana. On the other hand there are the positive examples of Bolivia’s Emergency Social Fund and African revenue authorities. The achievements of revenue authorities in Ghana and Uganda are little short of spectacular. For all the fears about the consequences of NPM-style management deregulation in developing countries, there is little doubt that it played a major role in these cases. We even have a counterfactual of sorts to prove this in Ghana’s case. In 1991, Ghana’s National Revenue Service was delivered into the bureaucratic clutches of the Ministry of Finance. The ministry traditionally had direct control over tax collection, but lost it when the revenue service was set up in 1984. The ministry bided its time and eventually regained its powers. Among other things, the ministry then stripped the service of its self-financing status and killed its staff bonus scheme. The result, say Chand and Moene (1999), has been a decline in performance coupled with some resurgence in corruption. The government of Ghana is now planning to revert to the autonomous model. In an unrelated study, Grindle (1997) looks at a sample of successful public organizations in developing countries and concludes that autonomy from civil service controls is a significant contributing factor to good performance. The

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example of Ghana’s revenue service offers powerful support to this argument. And yet we have already seen how health and state enterprise reform in Ghana itself failed to bear fruit. It seems that the effect of managerial autonomy on the performance of public organizations is highly contingent: it works in some situations but not in others. The notion of contingency is reinforced by another success story of Third World public sector management - that of Ceará, a northeastern Brazilian state, as reported by Tendler (1997). Ceará used to be better known for inefficiency and clientelism than good government. Yet a drought in the mid-1980s sparked off a series of innovative poverty alleviation initiatives which brought about a turnaround and gained the state international acclaim. What appears to have made the difference, among other things, was a judicious blend of old-fashioned centralization and NPM-style decentralization. The best example is that of preventive health. Starting from 1987, the government of Ceará embarked on an ambitious programme to improve the health of the rural population - a programme that involved, among other things, the recruitment of 7300 health assistants to serve in localities throughout the state. Given the clientelism that existed in local authorities, says Tendler, this should have been a ‘rent-seeking nightmare’. But the state government averted the danger by keeping tight central control over recruitment, notwithstanding that mayors were nominally responsible for their local health teams. Yet once the health teams were up and running, the government gave them plenty of leeway to shape their work. This was crucial: it gave the teams a sense of empowerment and allowed them to respond flexibly to local requirements, thereby gaining the trust of the local communities. The government also set and publicized basic performance standards - staff had to live in the locality they served, they had to visit each household once a month, and they had to refrain from canvassing in local elections - and invited ordinary members of the public to report those who broke these rules. The public thus had a yardstick by which to judge their local health team, and the means to hold them accountable. So successful was this programme that in the space of five years it brought about a dramatic turnaround in public health. Among other things, infant mortality fell by over a third. Vaccination coverage for measles and polio went from 25 to 90 per cent of the population (Tendler, 1997, pp. 21-2). Tendler herself is rather dismissive of the new public management. Yet she explains the success of Ceará’s preventive health programme partly in terms of what she calls the ‘industrial performance and workplace transformation’ literature, which deals with delegation and employee empowerment. As she recognizes, NPM writers such as Osborne and Gaebler (1992) draw on this

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literature. Indeed it is usually seen as part of the new public management agenda. For all that, there is a crucial difference between this case and those we have reviewed earlier. Our other success stories enjoyed a considerable measure of management autonomy, and this undoubtedly helped them perform well. But in Ceará the state government kept a firm grip on crucial matters of management such as the recruitment of the 7300 health assistants. And this was equally a factor in the success of the preventive health programme. This points very clearly towards the mediating influence of contingent factors. What sort of factors might have made the difference? Answering this question comprehensively would require new field research, and there is the added complication that different countries are involved. But one factor stands out from the evidence we have: the character of the various public bodies involved in each reform initiative. Which organizations are dynamically reformist, and which are passive and moribund? In particular, what is the respective orientation of centre and line? In many countries, for instance, centralized recruitment is the province of public service commissions which tend to take a rather passive and procedureoriented approach to their work.10 Larbi (1998) indicates that such is the case also in Ghana. On the other hand, the National Revenue Service was a reforming body under vigorous leadership (De Merode and Thomas, 1994, p. 166). We need no grand theory of management decentralization to tell us that it makes sense to delegate staffing powers in such circumstances. In Ceará the pattern was reversed. Line organizations (local authorities) were patronage-ridden mayoral fiefs, whereas the centre (the state government) was playing the part of dynamic reformer. The state government’s vigour could be seen in the way it handled the recruitment of health assistants. This did not follow the usual passive, procedure-bound pattern, for all that it was a centralized exercise. A health department team travelled the length and breadth of the state to recruit staff on the spot in each locality, ensuring that suitable, genuinely local people were chosen, and impressing on recruits the importance attached to the programme by the government. Centralization thus made a great deal of sense given the respective orientations of centre and line in Ceará. But let us suppose for a moment that the opposite applied: that there were reformist mayors contending with a moribund central health department. In this case centralized staffing would have been a recipe for failure. The respective level of competence and commitment to task of centre and line is a major factor in determining whether centralization or decentralization is appropriate. If we relax our focus on outcomes and allow ourselves to consider implementation, a further contingency factor makes itself evident: the degree of political backing for reform. Direct political support can be vital in ensuring

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that an initiative is put into effect. De Merode and Thomas tell us that the head of Ghana’s revenue service during its early years was a highly capable individual who was close to the president and had his support. Klitgaard (1997a, p. 1967) outlines a remarkably similar pattern in the case of Bolivia’s Emergency Social Fund. By contrast, it does not appear from Larbi’s account of health sector reforms in Ghana that they had any such close attention from the top. Even in the case of the revenue service, it would seem that presidential support did not prove long-lasting. In Ceará, as we have seen, the preventive health care initiative was introduced by a strongly reformist government which was determined to make a break with the past. This political conjunction of the planets was crucial to the successful implementation of the programme. Unfortunately, Tendler does not go into the circumstances which brought about the election of such a government. There are at least two lessons in contingency here. First, political and indeed administrative leadership makes a big difference in ensuring that reforms overcome the implementation hurdle. Second, to secure the desired outcomes - in our particular case, better organizational performance as a result of improved staffing - reform initiatives have to be adapted to prevailing local circumstances. These conclusions, one might object, are not exactly striking in their originality. True. But this is precisely the point. The success or failure of new public management initiatives depends on the same fundamental determinants identified by researchers in relation to previous generations of reforms. We have lost sight of this in the great debate over whether the new public management is ‘good’ or ‘bad’. In a sense we are coming full circle. It is also important to note that our contingency factors are both as capable of variation within the same country (sectorally and over time) as they are across different countries. Yet those preoccupied with the transferability of NPM to developing countries tend to argue their case on what they often present as immutable national characteristics. Factors such as corruption or poor administrative capacity obviously do affect the performance of government. They may be responsible for the poor record of implementation of reform, even as they make reform more urgent. But all kinds of change initiatives are so affected - old public administration, new public management or otherwise. Whether or not NPM-style measures make sense in a given situation is a different question altogether, and how it is answered depends on highly localized factors. Different situations can call forth responses that are diametrically opposed to one another. The tendency to draw generalized, once-and-for-all conclusions about the workability of NPM reforms in developing countries on the basis of nationwide traits is simply misplaced.

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We have seen that the new public management is by no means a dominant paradigm of administrative reform in developing countries. But that is not to say we should go to the other extreme and dismiss it as some kind of dangerous irrelevance. There is no room for dogmatism, either for or against NPM. Reformers in the new public management mould make much of the ‘three Es’ (economy, efficiency and effectiveness). Two more are needed: experimentation and eclecticism. The search for solutions to the problems of government in developing countries requires open-mindedness and adaptability above all else.

NOTES This chapter draws and elaborates on parts of Polidano and Hulme (1999). An earlier version was presented at the Third International Research Symposium on Public Management, Aston Business School, Birmingham, 25-26 March 1999. 1.

2.

3. 4.

5. 6. 7. 8. 9. 10.

See, among others, Hood (1995, 1996); Pollitt and Summa (1997); Cheung (1997); and Kickert (1997). However, most of this literature concentrates on the industrialized world. The take-up of NPM reforms in developing countries has yet to be examined in a systematic way. Not all authors accept these as components of the new public management. McCourt (1998a) sees them as parts of what he calls the ‘Washington model’ of public sector reform, which is distinct from the new public management model in that it is almost exclusively geared towards redressing fiscal and economic imbalances. The same author notes that successful retrenchment in developing countries has almost always involved centralizing control over recruitment and issuing detailed headcount reduction directives to departments on the basis of centrally determined staff complements. This is hardly in keeping with NPM tenets. It is very different from the decentralized, budget-driven approach to downsizing used in the heartland of the new public management, whereby the government controls budgetary totals and lets managers decide for themselves how best to make the necessary savings (McCourt, 1998b). Chand and Moene (1999); also personal communication with University of Manchester study fellows from East Africa and Pakistan. Of course the problem of underfunding in Britain is nowhere near as serious as in Africa. But it is there none the less, as can be seen from the intense pressure on family doctors in many parts of the country; the government’s bid to ease the load in 1999 by offering the public a 24-hour health advice hotline; long waiting lists for hospital treatment; and the influenza crisis of late 1998, when the usual winter upsurge in emergency admissions to hospitals brought many to their knees. Surely an internal market or the imposition of performance targets would produce few benefits when service delivery mechanisms are under such stress. Personal communication by a staff member of the Tanzanian revenue authority, May 1998. Brereton and Temple (1999) discount such claims, instead offering findings that NPM reforms have encouraged the emergence of a more service-oriented ethos. Even the bonus system introduced by Ghana’s National Revenue Service was collective rather than individual: all employees got the same bonus according to the revenue performance of the organization as a whole. Personal communication by a Ugandan senior official, July 1998. See Islam (1993) and Mallon (1994) on the mixed fortunes of similar performance improvement initiatives in India and Pakistan and Bolivia respectively. See Polidano and Manning (1996) and McCourt (1998c).

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Klingner, Donald E. (1996), ‘Public personnel management and democratization: a view from three Central American Republics’, Public Administration Review, 56 (4), 390-99. Klitgaard, Robert (1991), Adjusting to Reality: Beyond ‘State versus Market’ in Economic Development, San Francisco: ICEG. Klitgaard, Robert (1997a), ‘ “Unanticipated consequences” in anti-poverty programs’, World Development, 25 (12), 1963-72. Klitgaard, Robert (1997b), ‘Cleaning up and invigorating the civil service’, Public Administration and Development, 17 (5), 487-509. Langseth, Petter (1995), ‘Civil service reform in Uganda: lessons learned’, Public Administration and Development, 15 (4), 365-90. Langseth, Petter and Jeremy Pope (1999), ‘Building integrity to fight corruption: learning by doing’, paper presented at a conference on ‘Human Resources for Development: People and Performance’, University of Manchester, 27-30 June. Larbi, George (1998), ‘Management decentralization in practice: a comparison of public health and water services in Ghana’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 188-206. Livingstone, Ian and Roger Charlton (1998), ‘Raising local authority district revenues through direct taxation in a low-income developing country: evaluating Uganda’s GPT’, Public Administration and Development, 18 (5), 499-517. Makumbe, John M. (1997), ‘The Zimbabwe civil service reform programme: a critical perspective’, Role of Government in Adjusting Economies Paper No. 16, Birmingham: Development Administration Group. Mallon, Richard D. (1994), ‘State-owned enterprise reform through performance contracts: the case of Bolivia’, World Development, 22 (6), 925-34. McCourt, Willy (1998a), ‘ “The bloody horse”: indigenous and donor prescriptions for civil service reform in Sri Lanka’, Discussion Paper No. 54, Manchester: Institute for Development Policy and Management. McCourt, Willy (1998b), ‘Civil service reform equals retrenchment? The experience of “right-sizing” and retrenchment in Ghana, Uganda and the UK’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 172-87. McCourt, Willy (1998c), ‘The new public selection? Competing approaches to the development of the public service commission of Nepal’, Public Policy and Management Working Paper No. 8, Manchester: Institute for Development Policy and Management. Mills, Anne (1997), ‘Improving the efficiency of public sector health services in developing countries: bureaucratic versus market approaches’, in C. Colclough (ed.), Marketizing Education and Health in Developing Countries: Miracle or Mirage?, Oxford: Clarendon Press, pp. 245-74. Minogue, Martin (1998), ‘Changing the state: concepts and practice in the reform of the public sector’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 17-37. Mollel, Ruth H. (1998), ‘Constraints and challenges in establishing executive agencies in Tanzania: the lessons of experience’, M.Sc. dissertation, University of Manchester.

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Nunberg, Barbara (1995), ‘Managing the civil service: reform lessons from advanced industrialized countries’, Discussion Paper No. 204, Washington, DC: World Bank. Olivier de Sardan, J.P. (1999), ‘A moral economy of corruption in Africa’, Journal of Modern African Studies, 37 (1), 25-52. Osborne, David and Ted Gaebler (1992), Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, New York: Penguin. Parry, Taryn Rounds (1997), ‘Achieving balance in decentralization: a case study of education decentralization in Chile’, World Development, 25 (2), 211-25. Polidano, Charles (1996), ‘Public service reform in Malta, 1988-95: lessons to be learned’, Governance, 9 (4), 459-80. Polidano, Charles and David Hulme (1997), ‘No magic wands: accountability and governance in developing countries’, Regional Development Dialogue, 18 (2), 1-16. Polidano, Charles and David Hulme (1999), ‘Public management reform in developing countries: issues and outcomes’, Public Management, 1 (1), 121-32. Polidano, Charles and Nick Manning (1996), Redrawing the Lines: Service Commissions and the Delegation of Personnel Management, London: Commonwealth Secretariat. Polidano, Charles, David Hulme and Martin Minogue (1998), ‘Conclusions: looking beyond the new public management’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 278-93. Pollitt, Christopher and Hilkka Summa (1997), ‘Trajectories of reform: public management change in four countries’, Public Money and Management, 17 (1), 7-18. Pope, Jeremy (1995), ‘Ethics, transparency and accountability: putting theory into practice’, in P. Langseth, S. Nogxina, D. Prinsloo and R. Sullivan (eds), Civil Service Reform in Anglophone Africa, Pretoria: Economic Development Institute, Overseas Development Administration, and Government of South Africa, pp. 275-309. Ramamurti, Ravi (1999), ‘Why haven’t developing countries privatized faster and deeper?’, World Development, 27 (1), 137-55. Reid, Gary J. and Graham Scott (1994), ‘Public sector human resource management in Latin America and the Caribbean’, in S.A. Chaudhry, G.J. Reid and W.H. Malik (eds), Civil Service Reform in Latin America and the Caribbean: Proceedings of a Conference, Technical Paper No. 259, Washington, DC: World Bank, pp. 39-80. Robinson, Mark and Gordon White (1998), ‘Civil society and social provision: the role of civic organizations’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 228-45. Russell, Steven, Sara Bennett and Anne Mills (1999), ‘Reforming the health sector: towards a healthy new public management’, Journal of International Development, 11 (5), 767-75. Schacter, Mark (1995), ‘Recent experience with institutional development: lending in the Western Africa department’, in P. Langseth, S. Nogxina, D. Prinsloo and R. Sullivan (eds), Civil Service Reform in Anglophone Africa, Pretoria: Economic Development Institute, Overseas Development Administration, and Government of South Africa, pp. 325-45. Schiavo-Campo, S., G. de Tommaso and A. Mukherjee (1997), ‘An international statistical survey of government employment and wages’, Policy Research Working Paper No. 1806, Washington, DC: World Bank.

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New public management and development: the case of public service reform in Tanzania and Uganda Jeremy Clarke and David Wood1

INTRODUCTION The spread of new approaches to public management (NPM) throughout the Anglophone Western world has been paralleled by a growing interest in middle-income and developing countries. Much of this has been donor-driven but the public pressure for improved services is generating increasing support from politicians and senior officials. Reforms have probably gone furthest in Latin America, where the trend towards introduction of new performancebased methods and to greater managerial autonomy in public sector institutions is most clearly marked. In some countries these efforts have shown some promising results where the conditions are right, but there are doubts about the sustainability of the approach (Burki and Perry, 1998). Elsewhere in the world and particularly in Africa, the introduction of new approaches has proceeded more slowly. This chapter will consider the experience of applying the new approaches in the public service of Tanzania and Uganda. The purpose is not to add to an already overcrowded debate about the ideological basis of this approach or its appropriateness to East Africa. Instead, the focus is on examining the history of the reforms and the actual experience. The emphasis is pragmatic, with a focus on what has been tried and why it worked (or failed) in the context of these two countries. The discussion is divided into seven main sections. The first describes the broad context and the history of the reform effort in the two countries. The next highlights the increasing emphasis in the programmes on transparency and accountability. Following this, two sections assess the extent to which performance management and performance incentives have been adopted. Then two sections examine the attempts to apply executive reforms; and a 70

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review is offered of the progress with divestment and contracting out before the concluding section.

CIVIL SERVICE REFORMS (CSR) IN TANZANIA AND UGANDA The history of CSR in both countries is well known and there are probably more similarities than differences in the objectives and content of the two programmes. Both countries faced serious problems of overstaffing, low pay and under-resourcing of basic services due to past growth in the civil service and crowding out of operational spending. The result in both countries was a decline in real wage levels and the quality of government, a collapse in services and a growth in maladministration and corruption (Langseth and Mugaju, 1996; Rugumamu,1998). In Uganda the momentum for reform was generated as far back as 1989 by the push for reconstruction following a long period of civil war. The president took a personal interest and was determined to push through major restructuring because the public service was seen as a major obstacle to sustainable development. In Tanzania, although CSR had been on the agenda since 1992, little effective reform took place until the election of President Mkapa with a mandate to pursue wide-ranging economic reform. In both cases progress was dependent on political support at the highest level. Both Uganda and Tanzania have pursued civil service reforms with mixed motives and objectives. Initially both countries gave priority to reducing and controlling numbers in order to release resources for improving salaries and enhancing services. There was also an emphasis on improving central government efficiency through better organization and management in line ministries. Both countries introduced autonomous tax authorities which were designed to give management more discretion over resources and salaries, and the authority to root out corruption. The main achievement has been significant reductions in staffing and corresponding increases in real salaries and wages. In Tanzania and Uganda staff numbers have fallen by 23 per cent and 55 per cent respectively and average salaries have increased by 300 per cent and 75 per cent respectively in real terms since the early 1990s. This is a significant achievement and regional comparisons (see Table 4.1) show how these two countries have successfully reduced their workforce numbers and controlled their wage bills whereas Kenya (where similar reforms were aborted) continues to have an unsustainably high wage bill. The reforms have had a dramatic effect in Uganda (see Table 4.2). For example, the monthly wage of a primary school teacher rose from US$3 in

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Table 4.1 Relative size and remuneration of the general government workforce: international comparisons (1995) Population General govta Ratio of General govt General Wage bill as (million) workforce general govt exp. as % of govt wage % of net (’000) workforce to GDP bill as % recurrent population of GDP expenditureb

Tanzania Kenya Uganda Low incomec

29 26 19

286 532 170

1.0 2.0 0.9

21.0 25.8 20.3

5.1 10.3 2.7

46.5 50.8 34.5

1.81

27.8

5.6

38.4

Notes: a General government includes the civilian workforce in central and local government and public sector education and health workers. b Total recurrent expenditure net of interest payments. c Sources for low-income countries: IMF (1995). Two-year averages 1983-90. Workforce to population ratio calculated from a sample of low-income African and Asian countries. Sources: Government of Tanzania (1995); Republic of Uganda (1996); Government of Kenya (1995).

1990 to US$66 in 1997 and this seems to have improved morale and attendance (Clarke and Cashin, 1997). By improving teacher morale and living standards, the successful pay reform has undoubtedly assisted the subsequent education sector programme with its ambitious targets for the expansion of primary education. The impact of pay and employment reform has been less marked in Tanzania (see Table 4.3) but the size of the government workforce has been considerably reduced, which has helped to address overstaffing and to release resources for improved pay and services. Table 4.2

Uganda: staffing reductions/salary increases

Target Monthly wage of primary school teacher (US$) Target ‘living wage’ for teacher (US$) Number of teachers Total civil service

July ’90 July ’93 July ’94 July ’95 July ’96 July’ 97 3

12

40

46

69

66

64

64

67

67

67

120 000 116 000 99 000 92 000 89 842 91 659 352 000 239 000 184 500 179 002 166 402 157 746

Source: Clarke and Cashin (1997).

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Table 4.3 Effect of retrenchment on total government employment: Tanzania 1971-98, selected years Sector

FY ’71 FY ’75 FY ’81 FY ’85 FY ’88 FY ’93 FY ’94 FY ’96 FY ’97

Education Health Other Total

23 131 32 735 12 400 13 000 103 072 102 488 138 603 148 223

93 318 17 036 104 745 215 099

95 551 30 193 135 062 260 806

101 042 126 410 n.a. n.a. n.a. 32 650 37 705 n.a. n.a. n.a. 165 446 190 497 n.a. n.a. n.a. 299 138 354 612 315 963 285 624 272 553

Source: Government of Tanzania payroll.

In Tanzania the effects on pay were more mixed. Although average civil service salaries increased in the early years of reform, there were later adverse effects from consolidation of allowances into the salary scale for some key professional and middle management grades. Recent estimates suggest that real salaries may actually have declined for this group over the period 1995/96-1998/99 (World Bank, 1998; DFID, no date). The other main outcome from CSR so far has been the restructuring of central government and the move toward more decentralized government. In Uganda the number of ministries was reduced from 34 in 1990 to 22 in 1997 and a large proportion of the central civil service was redeployed in local councils, which were given direct responsibility for service delivery. In Tanzania the president was not prepared to accept any reduction in the number of ministries, but there was substantial restructuring of central government, streamlining of regional administrations, and executive agencies were introduced in a number of areas. Decentralization and strengthening of district councils was pursued vigorously in Uganda but is still at an early stage in Tanzania. These initial successes were not, however, translated into service delivery improvements. Surveys in both countries attest to the inadequate standards and coverage in key areas. It has been acknowledged that service delivery improvements have not been given sufficient attention in either country. In the early stages neither country adopted any targets for service improvements though this was an implicit programme objective in both cases. An example is provided by Table 4.4, which indicates that household perceptions of health services in Uganda were generally low during the middle phase of the CSR. Common problems identified were non-availability of drugs (31 per cent of respondents) followed by poor access (9 per cent), charging (8 per cent) and corruption by health workers (5 per cent). These factors, plus the poor attitudes of staff and delays, reduced access of poor communities to services. The early reform experience suggests that improving public service salaries and organizational efficiency can create the conditions for improving service

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Table 4.4

Service delivery survey: health in Uganda (1995)

Region

District

No. of % service % service % service % service households ‘good’ ‘average’ ‘bad’ ‘no opinion’

Central

Mpigi Rakai Eastern Kapchorwa Tororo Northern Lira Moroto Western Kibale Mbarara Rukungiri Weighted mean (Uganda)

481 766 444 643 713 605 572 817 523 636

42 45 37 35 32 25 27 44 51 38

25 38 45 23 24 25 27 27 33 30

15 11 11 33 33 39 30 17 10 22

18 5 8 9 11 11 14 12 6 10

Source: Cockcroft Dec (1995).

delivery performance, but there are many other factors that also need to be addressed before services begin to improve. Government and donor reviews suggest that there are several possible reasons for the failure to translate reform efforts and successes into service delivery improvements. These are listed below and are addressed in the subsequent sections:

• •

• • •

Reductions in the workforce were not sufficient on their own to release the resources required both to increase salaries and to finance the required improvements in services. There was a failure to identify and protect government spending priorities so that additional resources were not in practice made available to finance operational spending and key services. There was also insufficient effort to track expenditure patterns and stem leakages from authorized budgets. Only limited efforts had been made to introduce management by objectives and to set meaningful performance targets linked to resource provision through the budget. Opportunities for contracting and commercialization could have been more fully exploited to promote private sector involvement in service provision. The reforms were top-down and initially did not make much effort to involve the public and civil society or to develop mechanisms for enhancing responsiveness and accountability for service provision. Opportunities were lost to generate more demand for improved services.

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•

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Sector programmes were not well integrated with CSR, which limited the scope for developing sector performance targets linked to budgets and for mobilizing additional donor resources.

ENHANCING VOICE AND ACCOUNTABILITY The Tanzanian and Ugandan civil services have not hitherto had a tradition of consultation or accountability to citizens and service recipients. In the past, policies and service priorities have been developed through a largely internal process involving senior politicians and officials in a less than transparent way. In Tanzania this was mainly due to a legacy of bureaucratic central planning under a one-party state which was top-down and controlling in its nature. In Uganda it was due to the need to retain tight political control as the country emerged from a long period of civil war. Little was known about the impact of public services or the views of service recipients. In the literature, citizen ‘voice’ is important because well-informed service recipients and citizens can pressure governments for better services and exit when necessary. Competitive pressures can then be used to improve public sector performance. Tanzania and Uganda are far from this situation. Obstacles include the limited capacity of communities and civil society due to low levels of literacy and education; lack of information about service standards and performance; and the limited range and high cost of alternative service providers. This is beginning to change. In Uganda the level and quality of primary services has become a political issue. The president has pledged to provide universal primary education, which has become public policy and has influenced resource allocation. Increased efforts have been made to involve communities in decisions about the utilization of resources and service delivery. Parliament and the media are becoming more active and increasingly holding government accountable for its achievements. Tanzania is also developing consultative mechanisms through its sector programmes in health and education. Recent positive developments include the introduction of service delivery surveys, which have provided a useful baseline measure of the poor state of public services. These have raised public awareness of the level of performance, and in both countries, governments are preparing to carry out follow-up surveys and to conduct regular follow-up in future. But these activities have not typically led to more dialogue with service recipients or the general public. One exception to this is primary education in Uganda, where there is strong pressure to fulfil a presidential pledge to implement universal primary education. Whilst enrolment has increased under this programme, the

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quality of education has been adversely affected, and concern about this is growing. The increased use of expenditure-tracking surveys and the provision of public information about primary education and health in Uganda has been a powerful tool for change. This work has provided policy-makers with information which helps explain why service levels have not been increasing. They showed that on average less than 30 per cent of the recurrent non-salary funding was getting through to schools because it was being absorbed by district council administrations. In health the explanation was different. Nearly 70 per cent of drugs and medical supplies intended for clinics were being diverted by staff and sold on the private market (Ablo and Reinikka, 1998). As a result the government has increased transparency by providing more information through follow-up surveys and making information about monthly financial transfers to the districts and to school boards available to the press and radio. Similar information is posted on public notice boards and increased public scrutiny is being encouraged. Initial indications from the Ministry of Education suggest that improvements in the flow of funds have been made. Less progress has been made in health because policy prescriptions were less clear (World Bank, 1999a). As Box 4.1 shows, more can be done to deepen this approach in Uganda. Improving information about public spending and services is an important mechanism for assessing how well resources are used. Experience in Latin America suggests that surveys can be used for comparing costs of services and their quality in local government. Provided there is public pressure to act, this can introduce an element of competitive pressure amongst service providers. Such an approach may be applicable in other countries. For example, if the costs per unit of primary services in one district in Tanzania or Uganda were unreasonably higher than another, this could indicate maladministration, inefficiency or corruption (though of course it could also indicate variations in needs and resources). Underperforming administrations could be held accountable through Parliament or local assemblies, the Audit Office and through ‘naming and shaming’ in the media. Preconditions for such an approach include the capacity to establish reliable performance measures and indicators and to collect and publish information, and an effective legislature and media. Accountability can also be enhanced if governments set published standards for performance and services. Tanzania is considering using a modified version of the UK Citizen’s Charter as a basis for publishing targets and standards for government and other public bodies. Ministries and departments are expected to prepare a ‘social pact’, setting out standards of service that the public can expect over the medium term. This is expected to enhance upward

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BOX 4.1 CONSULTATIVE POLICY AND PUBLIC SERVICES: UGANDA Much attention has been focused on using participatory techniques and survey instruments in Uganda and elsewhere to assess local perceptions and problems. These have been valuable, but it is also important to ensure that problems are acted upon and that poor people and those who represent them can influence the policy-making process and the allocation of resources. Some initial steps have been taken in Uganda to involve district councils more directly in the development of the budget. A poverty eradication plan has also been developed on a consultative basis. But more needs to be done to ensure that policy-making and the management and delivery of services are more transparent and consultative. The development of the poverty reduction strategy needs to involve broad participation in goal and policy formulation. Public information on budgets, spending and charges can also be made available to the public and the media and to politicians at national and local levels on a more systematic and extensive basis. accountability to Parliament and to enhance monitoring by bodies such as the Audit Office. It will also provide more information to the media and the public so that they can make more informed judgements and can begin to press for action where targets are not being met (Teskey and Hooper, 1999). These are worthwhile developments, but their impact should not be exaggerated. It will take time to make the public service more responsive and to change public attitudes to authority. It will take time to develop a culture of accountability to the public and to raise awareness of consumer rights. Few options for exit from the public service currently exist because of the limited extent and high cost of the private sector. None the less there is increasing evidence from participatory assessments that the public would choose the private sector when faced with inefficiency, corruption and unresponsive staff.

PERFORMANCE MANAGEMENT: A NEW APPROACH TO CAPACITY-BUILDING Earlier efforts to build capacity in the Tanzanian and Ugandan civil services focused on conventional methods, including the provision of in-country

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training in a range of basic skills for middle managers and professionals. These often addressed policy-making, management and specific technical skills. In Uganda this was accompanied by the successful programme to set up an autonomous public sector training organization (the Uganda Management Institute), which was managed along commercial lines and has now become more financially self-sufficient. Unsurprisingly, this narrow effort to upgrade skills was not very successful in improving performance. In Tanzania a broader approach to capacitybuilding is being introduced under the public service reform (PSR), which borrows some of the performance management tools of developed countries. This involves each line ministry and government department setting performance targets for efficiency and for policy or service delivery outputs. These form the basis of a strategic public investment plan which is linked to the available resources through the budget. Management and staff are expected to work toward these targets. The strategic planning process forms the basis of a results-based management system which will set objectives throughout each ministry or department down to the level of the individual staff. Human resource management processes will support this by introducing annual assessments and linking training to job requirements. Improvements to recruitment and selection procedures are planned so that individuals with the competencies required to achieve the targets can be recruited. Merit-based promotion will also help ensure that better performers are promoted to higher levels of responsibility. This is not a particularly new approach. However, it gives more prominence to performance and outputs than in the past and it attempts to integrate a number of different initiatives to build the capacity of each department. There is a strong emphasis on linking strategic plans with the annual budget round so that objectives are realistic and attainable with the resources that are available. Additional funding will be made available from donors if organizations produce performance improvement plans (Goetz and Jenkins, l999). A similar approach was attempted in Uganda at an earlier phase in the PSR. However, the earlier piloting of results-oriented management (ROM) appears to have had limited impact because of a failure to link the strategic planning process with the budget. There was also no parallel effort to strengthen the human resource function until 1998, when improved recruitment and staff appraisal were introduced. The slow pace of implementation has meant that so far ROM has been largely a paper exercise led by external consultants. It is anticipated that a new programme will start in 2000. Despite the failure to apply ROM effectively under the PSR or to integrate it with budget reforms in Uganda, recent evidence suggests that improvements

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to budgetary and financial systems have had benefits. According to a recent study, the delegation of control over budgets to public service managers alongside the introduction of tighter expenditure and performance reporting has begun to have some discernible benefits (see Box 4.2).

BOX 4.2 UGANDA: DELEGATING BUDGETS AND ENHANCED PERFORMANCE REPORTING Uganda is strongly committed to poverty eradication and has given high priority to enhancing key areas of service delivery such as primary health and education. Considerable effort has gone into developing national standards and performance targets, particularly in health. Government has also developed new mechanisms for ring-fencing funds through earmarked conditional grants which ensure that resources are protected and channelled directly to districts for the designated purpose. The aim is to increase the quality and scope of service delivery. Control over the resources is delegated to the budget-holder at school or clinic level. Simultaneously, guidelines on spending priorities and reporting requirements are specified in detail. The aim is to prepare key performance information which can be fed back regularly to the Ministry of Health, thereby enhancing accountability. The system has only been operational for a short while, but there are signs that this approach is beginning to have a positive impact. The publication of performance and expenditure information has raised awareness and created pressure from rural communities for improved services. Coverage of primary health and education is increasing, although it is still too early to judge the quality of services and the overall impact. Source: Goetz and Jenkins (1998).

PERFORMANCE INCENTIVES Experience in the developed countries suggests that attempts to improve performance are unlikely to be successful unless incentives are created for departments and the individuals involved in managing public services (Osborne and Gaebler, 1993). These can take the form of greater autonomy

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and control over resources; more rapid promotion and responsibility; additional resources for departments; and performance pay and bonuses for staff. None of these was tried in the early days of the Uganda and Tanzania programmes and only in the latter stages has the importance of incentives been recognized. The Tanzanian government first attempted to introduce budgetary incentives to encourage ministries and departments to undertake efficiency improvements. The 1998 Financial Year (FY) guidelines stated that a proportion of the annual savings made from introducing efficiency measures could be retained by the ministry concerned. This was expected to encourage ministries and departments to generate savings through retrenchment and other cost-saving or efficiency measures. Retention of some of these savings would then be used by the departments for priority expenditures. In the event this arrangement failed because of lack of credibility. The long experience in Tanzania of budgetary underfunding meant that there were few who believed that any financial savings would actually be made available to those who generated them. A more radical approach is currently being developed. The next phase of reform in Tanzania PSR (2000-2004) involves using a performance improvement model (PIM) to encourage ministries and departments to set improved targets for service delivery (see Figure 4.1). It is hoped that this will improve services by creating systems and capacity which will promote a culture of client orientation and continuous improvement of services. PIM involves each ministry, department or agency (MDA) in strategic planning; annual performance planning and budgeting; setting key result areas; systematic implementation of improvements designed to improve services; regular monitoring, evaluation and reporting. As part of this process it is expected that each MDA will redefine its role and encourage involvement of more private non-governmental organizations (NGOs) and decentralization of public service delivery. Incentives to adopt PIM will be created by guaranteeing a predictable budget-based flow of funds to the MDA in question. When a services improvement programme is in place, the MDA will graduate out of the cashbased budgeting system. The Ministry of Finance will also revive the earlier arrangements so that MDAs which deliver efficiency savings can retain an agreed proportion of these savings. Donor resources will be closely linked to improved performance as well, and will be used to establish a performance improvement fund (PIF). The objective of the fund is to provide donor-financed resources which can be used in a flexible way by ministries and departments to improve their performance. Resources can be used to meet the cost of local contract staff; to meet skill gaps; to finance efficiency improvements; and to develop new

81

Figure 4.1 Tanzania’s performance improvement model

Source: World Bank (1999b).

Reviews Repeat client surveys Audits Staff performance appraisals

MONITORING, EVALUATION AND REPORTING

Gap

is

ys anal • •

New policy environment Performance benchmarks Strategic plan & budget

• • •

Take action, track status and communicate progress

Deploy resources from PIF and appropriations

EXECUTION PLANS

•

Capacity-building plan

•

•

Efficiency improvements

Decentralization & private sector participation plans

Services delivery options

•

•

•

Review and endorsement of plans and budgets

EVALUATION OF PLANS

Proposal for PIF support

Incentives for performance

Capacity-building

Implementation of restructuring and decentralization

ANNUAL PLANNING & PERFORMANCE BUDGETING

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Medium-term expenditure framework

National and sectoral goals and priorities

Vision

Mission

STRATEGIC PLANNING

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organizational models. The fund will be a centrally managed resource which will support the implementation of the PSR. Access to the fund is controlled and MDAs must effectively compete for the available resources by presenting convincing performance improvement plans. These plans are effectively a contract with the fund managers (the central Ministry of Finance and the Civil Service Department). Another important incentive for improving performance is pay levels. Tanzania decided to eschew performance pay but has adopted a medium-term pay policy which sets strict targets for ongoing pay reform which will enable key professional and technical civil service salaries to rise to levels competitive with the private sector in 2002. In the meantime local salaries can be topped up to these levels by donors through the performance improvement fund or through other direct financial support for this purpose. These arrangements will be temporary and will be withdrawn once pay reform targets have been met. This should ensure that positive incentives can be sustained once donor support ends. The size of the gap to be closed is illustrated in Table 4.5. In Uganda some ministries such as Health have defined clear performance targets and simplified reporting systems which should allow effective Table 4.5 Sector comparisons of gross pay levels, 1996 (all remuneration Tanzania shillings) Benchmark jobs

Civil service

Index

Parastatal sector

Chief executive Head of department Doctor Accountant Economist Personnel officer Teacher Nurse Computer analyst Watchman

442 085 272 878 168 353 97 455 77 965 77 965 108 105 51 010 115 875 43 500

100 100 100 100 100 100 100 100 100 100

713 252 518 040 281 886 244 512 228 121 185 126 148 508 149 125 168 227 109 057

Index

Private sector

Index

161 1 136 225 257 190 680 534 249 167 404 400 240 251 316 905 325 293 684 680 878 237 496 420 637 137 109 365 101 292 163 329 320 145 424 296 366 251 74 354 171

Notes: 1. Figures are inclusive of allowances (except for housing and incidental allowances in the case of the civil service). 2. Figures are simple averages of maximum and minimum remuneration. Source: Government of Tanzania (1996).

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performance monitoring. These reforms have been largely driven by improvements to the budget and in particular the introduction of a medium-term expenditure framework (MTEF) rather than the civil service reform itself. The MTEF is increasingly linking resource provision to the achievement of specific objectives and creating positive incentives by guaranteeing the availability of resources and control over their use. As performance and outcome measures improve, it will also be possible to increase resource allocations to individual programmes, ministries or districts which have performed better than others. Uganda has succeeded in progressing pay reform in the earlier years of the civil service reform programme, including monetization of benefits in kind and increased differentials. The compression ratio (average salaries at the top of the pay scale divided by those at the bottom) improved from 4:1 in 1993/94 to 26:1 in 1998/99. However, continued reform was needed and by the late l990s government commitment to allow further increases in the relative pay of professional groups appeared to be waning. Current plans to restrict the compression ratio to 20:1 may impose severe limitations on further efforts to rationalize pay structures. A job evaluation exercise has now been completed. Recent pay surveys have also revealed that average salaries for public servants are 42 per cent of comparator salaries in the private sector. Initial proposals to experiment with performance pay were dropped on the grounds of equity.

AUTONOMOUS PUBLIC BODIES The culture and characteristics of the public service in both Tanzania and Uganda are hierarchical and centralized. The twin pressures of politicization and patronage which affect both services have reinforced these tendencies. There is little familiarity with the concept of management autonomy or empowerment of the workforce by allowing more freedom to agency managers over staffing and resource use. The political acceptability and administrative feasibility of introducing such arrangements is also in doubt. Despite this history, there has been a recognition that in the right circumstances allowing greater autonomy may produce increased efficiency, especially where key functions or service delivery organizations are concerned. The pressing need to improve revenue collection in both countries led to the establishment of the Uganda Revenue Authority (URA) in 1992 and the Tanzania Revenue Authority (TRA) in 1996. Both organizations were given substantial freedom under legislation which separated them formally from the rest of the civil service. The legislation set out the framework for a principal-agent relationship between the board and management of the new authorities and the parent

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Ministry of Finance. Experience in Uganda was that revenue collection initially dipped and then increased from 7 per cent of GDP to around 11-12 per cent in the first few years of operation, but stagnated and weakened thereafter. This is well below other countries in the region (Zambia achieved 18 per cent and Kenya 24 per cent in 1997/98) (TRA, 1998). The factors which contributed to this included corruption, mismanagement and a breakdown of the accountability relationship between the Authority’s i.e. the URA’s board and the Ministry of Finance. This experience may have reduced government’s enthusiasm for further experimentation. Draft proposals and legislation for the introduction of civil service agencies elsewhere in government have yet to be enacted well over a year after completion. The initial experience in the Tanzania Revenue Authority (TRA) has been similar to the early phase of operation of URA. Performance improvements have also been more sustained. After initially dropping back, revenue performance reached just over 12 per cent of GDP in 1997/98, possibly due to more effective management, strong donor support and the fact that the accountability relationships between the Authority’s board and the Ministry of Finance worked more effectively. The institutional framework including the legislation was broadly similar in both countries. TRA management efforts to provide consistent, regular and transparent presentation of performance reports against collection targets was an important factor in ensuring that the principal-agent relationship worked. However, it is early days and perseverance will be required to ensure that the initial success can be sustained.

EXECUTIVE AGENCIES Agencies were regarded in both countries as a potentially important mechanism for improving service delivery. In Tanzania, government identified many areas within the civil service where it would be possible to introduce a more arm’s-length arrangement with managers. Policy-making in parent ministries was to be separated from service delivery, which could be carried out by agencies largely following the approach used in the UK. In Uganda, government started sooner but preferred to be more cautious. Instead of a government-wide programme, initial efforts concentrated on the revenue authority and the Uganda Management Institute, neither of which followed the agency approach precisely. In both Tanzania and Uganda there was a heavier reliance on legislation to define the roles of the new authorities and agencies than in the UK approach. From the outset the Uganda agencies programme suffered from lack of clarity about the criteria for selection of agency candidates. This was because the programme had developed in an unplanned way from a series of

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ministerial reviews which identified activities for possible divestment. However, there was a reluctance to consider abolition of services even if they were redundant, or to sell commercial enterprises to the private sector. As a result, several unsuitable activities were included in the programme, including commercial activities which should have been sold rather than retained in the public service. Tanzania adopted a clear strategy and approach from the outset which introduced UK agency concepts tailored to the Tanzanian context. A pragmatic interpretation was adopted which dropped the less relevant aspects. For example, framework agreements were not used, and instead enabling legislation was introduced in 1997 which laid the basis for the operation of all public sector agencies. Strict requirements were set out for the production and approval of strategic plans and for the reporting of performance against targets. Only when these were approved would the Ministry of Finance allocate funding on a block grant basis and allow management autonomy over finance and staffing. Another characteristic of the approach in both countries was the readiness to adapt the methods used in developed countries and to deal pragmatically with each situation as it arose. The development of the Roads Agency in Tanzania was different from other projects in the main programme. A management board was established on the lines of the Revenue Authority and reporting arrangements were more complicated because there were several ministries with interests. In Uganda, the Uganda Management Institute (UMI) was established under special legislation and it was given authority to charge outside clients for its services. The results of the agency programme in Tanzania are still to be assessed. The initial target was to have 24 agencies by the end of 1998, but progress has been much slower than anticipated. By August 1999 only four agencies were in operation and it is too early to assess performance. Nevertheless, government is persevering and a new target of establishing 37 agencies has been set for the period up to 2004. Since its re-establishment in Uganda in the early l990s, the UMI has steadily improved. There have been some difficulties in changing management attitudes and in ensuring that sufficient long-term financing is available. However, in general programmes are better resourced; staff are better motivated and remunerated; the quality of courses and training has risen and the range of training and consultancy services offered has increased and diversified in response to the demand. The key is whether these benefits can be sustained in future. Uganda has yet to use the UMI approach more widely. Cabinet approval of a new agency programme is anticipated in 2000 which will initiate a government-wide effort (135 potential agency candidates have been identified by the Ministry of the Public Service).

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INVOLVING THE PRIVATE SECTOR: DIVESTMENT AND CONTRACTING The CSR programmes in Tanzania and Uganda were initially developed on the assumption that making government more efficient would necessarily involve greater private sector involvement in the economy with a corresponding reduction in the responsibilities of the public sector. Policy statements and programme designs included commitments to review the functions of government and to divest commercial activities to the private sector. It was also anticipated that efforts to improve the efficiency of the public sector would result in more contracting out of service provision to the private sector. In practice, progress has been slow. Both governments were under pressure from the IMF and the World Bank to implement privatization of commercial parastatals and agreed to do so as part of the wider reform programme linked to the IMF Enhanced Structural Adjustment Facility and World Bank support. Privatization units were established and targets were set for the sale of state-owned commercial activities in the banking, manufacturing, hotel, transport, electricity generation and telecommunications sector. By the late l990s, despite progress in areas such as hotels, airlines and manufacturing, less progress had been made with privatizing major utilities or developing the regulatory capacity of ministries. In the context of CSR it was anticipated that divestment would mean identifying commercial activities currently undertaken by the public service which could be sold to the private sector. In Tanzania organization and efficiency reviews identified several activities (for example dairy farms, prawn culture, retail drugs supply and vehicle maintenance) which could be sold. However, there was little political support for their sale and a long period of time elapsed before any action was taken to progress to sale. The Ugandan experience was similar. Even where a strong interest was shown by line ministries in commercializing and privatizing, little action appears to have been taken. Contracting out of public service provision has also been slow to take off. In Tanzania, government took a cautious approach but experimented early on with services such as office cleaning. The Ministry of Health has been contracting out equipment supply and maintenance (see Box 4.3). The plans for a roads agency also created prospects for a more transparent and effective arrangement for contracting road maintenance. Progress in Uganda was similarly limited to a few sporadic attempts to contract out the same range of services.

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BOX 4.3 PRIVATE SECTOR INVOLVEMENT: HEALTH SECTOR REFORMS IN TANZANIA The private sector accounts for around 40 per cent of health service provision in Tanzania. However, there is only limited cooperation between the public, private and voluntary providers in the health sector. Government is committed to the promotion of private sector involvement but has yet to specify how publicprivate initiatives will be developed. Under the health sector reforms, government is strengthening regulatory bodies and introducing autonomous management in several areas. Executive agencies are being introduced for drugs supplies and other services such as the government chemical laboratory. Contracting out is limited as yet but hospital reforms will enable managers to extend contracting out in areas such as hospital maintenance and cleaning. Hospital reforms include more autonomy and control over finance and staff outside the civil service arrangement; introduction of charging and revenue generation; new management arrangements including strategic planning, commercial accounting and customer relations. Source: DFID (1999).

CONCLUSION Civil service reforms in Tanzania and Uganda have been more successful than most, but have still fallen short in terms of their impact on service delivery and poverty eradication. Nevertheless the pace of reform has been good in the early stages of the process and there has been real progress in addressing structural problems such as overstaffing and low pay, as well as strengthening basic administrative systems including personnel and payroll controls. Both governments need to remain fully committed to reform. The challenge is to deepen the support for reforms and to sustain them over time. There has also been some experimentation with new approaches to public management and these have been most successful where they have involved introducing results-oriented management, performance budgeting and delegation of control and decision-making within the public service. Both countries have been more cautious about creating executive agencies, privatization and contracting out, but reforms in these areas are becoming

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more coherent in Tanzania. Such reforms are politically more sensitive because of the potential loss of government control and have been quite difficult to carry out in practice with the limited capacity that exists to manage new arrangements. Overall, experience suggests that in Uganda and Tanzania there is potential for applying new approaches to public management by building on current efforts to enhance performance-based management and budgetary systems. In both cases this has required, in the first place, substantial effort to address structural problems of overstaffing, low pay and weak administrative systems. Provided delegation and decentralization can proceed with adequate safeguards on accountability, there is potential to improve service delivery. However, conditions are very different from those in the developed countries where civil service reforms have also been implemented, and future efforts will have to be tailored to the local conditions and proceed at a realistic pace. Private sector capacity to undertake contracting in both countries remains limited, and within government there is limited capacity to manage contracts and to carry out regulation effectively. More attention to these constraints will be needed.

ACKNOWLEDGEMENTS The authors gratefully acknowledge comments on earlier drafts by Roger Wilson, Graham Teskey, Tim Williams and Robin Suaisland.

NOTE 1. This chapter is based on the authors’ views and assessments and does not necessarily reflect the view of DFID.

REFERENCES Ablo, E. and R. Reinikka (1998), Do Budgets Really Matter? Evidence from Public Spending on Education and Health in Tanzania, Policy Research Working Paper, Washington, DC: World Bank. Burki, S.J. and G.E. Perry (1998), Beyond the Washington Consensus: Institutions Matter, Washington, DC: World Bank. Clarke, J. and J. Cashin (1997), ‘DFID Review of Uganda Civil Service Reform Programme’, unpublished, London: Department for International Development. Cockroft, A. (1995), Report on Performance and Perception of Health and Agricultural Services in Uganda, unpublished, London: Department for International Development.

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DFID (1999), ‘DFID Health Reform Programme’, unpublished, London: Department for International Development. DFID (no date), ‘Analysis of Pay Levels in the Tanzanian Civil Service’, unpublished, London: Department for International Development. Goetz, A.M. and R. Jenkins (1999), ‘Institutional and Process Issues in National Poverty Policy: Draft Uganda Country Report’, unpublished, London: Birkbeck College. Government of Kenya (1995), Government Finance Statistics, 1993, Nairobi. Government of Tanzania (1995), World Tables, University of Dar-es-Salaam. Government of Tanzania (1996), Comparative Pay and Benefits Survey, University of Dar-es-Salaam. IMF (1995), A Pragmatic Approach to Policy Analysis, Washington, DC: International Monetary Fund. Langseth, P. and J. Mugaju (eds) (1996), Towards an Effective Civil Service: PostConflict Uganda, Kampala: Fountain. Osborne, D. and T. Gaebler (1993), Reinventing Government, London: Penguin. Republic of Uganda (1996), Expenditure Estimates, 1995-96, Kampala: Fountain. Rugumanu, S. (ed.) (1998), Civil Service Reform in Tanzania: Proceedings of the National Symposium, University of Dar-es-Salaam. Teskey, G. and D. Hooper (1999) ‘Case Study of the Tanzania Civil Service Reform Programme’, unpublished, ACBF/DAC Workshop on Institutional and Capacity Development, Harare, August. TRA (1998), Performance indicators quoted are from Tanzania Revenue Authority Corporate Plan, November, unpublished. World Bank (1998), United Republic of Tanzania Public Expenditure Review, Washington, DC: World Bank, July. World Bank (1999a), World Bank Public Service Reform Programme, Tanzania, Project Appraisal Document, Dar-es-Salaam. World Bank (1999b), Using Surveys for Public Sector Reform, Washington, DC: World Bank.

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Local government: management or politics? Howard Elcock and Martin Minogue

INTRODUCTION This chapter examines the range of reforms in decentralized government, analysing ideas and practices in Britain, Eastern Europe and developing countries. The aim is to assess the relative significance of ‘new public management’ reforms in different economic and political systems: developed, transitional and developing. The analysis argues that attempts to apply managerial reforms have varied so considerably across these systems, and with such differential impact, that it would be misleading to suggest anything like a common reform practice. Moreover, it is argued, a political model has greater power than a managerial reform model to capture the significant issues in central-local government relations across different types of economic and political systems at different levels of development. The analysis begins by presenting the structural, managerial and political characteristics of reforms to local government in Britain, chosen because of the substantial degree of change in this developed country example over the past three decades. This is followed by an examination of the significance of political and constitutional issues in decentralizing reforms in the transitional economies of Eastern Europe using case material from Poland and Czechoslovakia; and goes on to consider recent developments in decentralization in developing countries. The primary conclusion is that while new public management reforms have had a significant impact on British local government, there has been little effective transfer of these reforms to local and regional governments in transitional and developing economies, where political strategies of decentralization have been more significant in practice.

BRITISH LOCAL GOVERNMENT’S POLITICAL PROBLEM Local government in all countries is subordinate to the national or central government, which is responsible for foreign and defence policy as well as for 90

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the overall management of the country’s economy. In Britain, local government’s position is peculiarly weak because its powers, functions and very existence are in the gift of its sovereign Parliament. Indeed, councillors, local government officers and students of local government alike have been warning for many years of the impending demise of local government at the hands of the all-powerful central government (see Griffith, 1961). This outcome looked uncomfortably close by the summer of 1991, when John Major’s Cabinet apparently actively considered local government’s total abolition (Jenkins, 1996). This long-term decline had been accelerated by a sustained onslaught on local government’s powers, functions and areas of discretion after Mrs Thatcher came to power in 1979, an attack driven by the managerial imperatives of the ‘New Right’ (Elcock, 1994, ch. 2). However, the pressure for change became more insistent as local authorities increasingly fell under Labour control after 1980 and hence became increasingly centres of opposition to the Thatcher government’s policies. This tendency was reinforced by the election of many relatively young councillors whose Socialist views were more radical than those of their predecessors (Lansley et al., 1989): the ‘New Urban Left’ (Gyford, 1985). Hence the changes which took place in British local government between 1979 and 1997 were motivated at least as much by political pressures and conflicts as by a determination to improve local authority management. The components of this onslaught, in the approximate order of their introduction, were first, reducing local authorities’ financial discretion; second, removing councils which became major centres of opposition to government policies; and third, compelling councils to expose many of their services to outside competition (Elcock, 1994). Initially the government sought to increase its financial control by reforming the system of central government grants to local authorities, so that the government could control not only the national totals of local government spending but also the spending of individual councils through the allocation of the rate (now revenue) support grant (RSG). Councils’ spending is now controlled in part through a system of Standard Spending Assessments (SSAs), which are calculations of what individual councils need to spend to provide a standard level of services. However, the introduction of RSG and SSAs in 1980 led to a tussle between ministers and ingenious local authority members and officers. The latter would find a way to escape from the government’s restrictions, largely through the measures that became known collectively as ‘creative accountancy’ (Parkinson, 1986). The government would then legislate to block the loophole the councils had discovered, whereupon the cycle would begin again. This struggle was largely terminated by the introduction of ‘rate-capping’ in 1984 (1982 in Scotland), which allowed ministers to set maximum total spending

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levels for individual councils and thereby determine rate levels above which councillors could not legally go. This ended the right of local councils to set such local rates as they saw fit - a right which they had possessed since the reign of Elizabeth I in the sixteenth century. However, capping only succeeded after a major confrontation between the government and several Labour councils, notably Liverpool, Lambeth and Sheffield, many of whose members were surcharged for illegal conduct in the preparation of their councils’ 1985-86 budgets; others narrowly escaped this fate (see Elcock and Jordan, 1987). However, the government suffered a major policy disaster with the introduction of the poll tax, an unfair flat-rate local tax on individual residents which was defeated by popular resistance (Butler et al., 1994; Tonge, 1994). It was replaced by a council tax which, like the old rates, is a tax levied on property values and seems to have won at least grudging acceptance (John, 1999). However, the combined effects of the poll tax disaster and the simultaneous establishment of the national non-domestic rate, under which local tax levels for business and commercial premises are set nationally, were to reduce the proportion of revenue raised locally to an almost derisory proportion of around 15 per cent. The second line of attack was structural change. After massive Labour gains in local elections in the early 1980s, local authorities progressively became centres of resistance to Mrs Thatcher’s government and her policies. A notable case was the Greater London Council (GLC), whose headquarters across the Thames from the Palace of Westminster became a highly public focal point for opposition to the Thatcher government. Its leader, Ken Livingstone, became an increasingly popular campaigner against the rising trends of unemployment and inequality in London, which he blamed on the government. In consequence, ministers decided in 1983 to abolish the GLC, together with the metropolitan county councils, which provided strategic government to England’s other six largest conurbations. This measure was forced through Parliament against strong resistance inside and outside Parliament, not least in the House of Lords. Hence the seven councils governing England’s largest conurbations ceased to exist on 31 March 1986. Further territorial reorganizations in the early 1990s served to remove other politically hostile councils from the scene, as well as bringing about wider structural change in the name of efficiency and cost-cutting. The changes introduced by the Major government included establishing unitary local government throughout Scotland and Wales, as well as in many parts of England. This reorganization, which was carried out by the Scottish and Welsh Secretaries of State in those two countries but was delegated to a Local Government Commission in England, was supposed to take account of community sentiment. However, increased efficiency, saving money and

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weakening the opposition to government policies were clearly also factors influencing the decisions ministers took. For example, the abolition of Humberside County Council was welcomed by many residents of Yorkshire and Lincolnshire, who had never accepted that they had been made part of a single subregional community when that council was established in 1973. It also meant the destruction of a large local authority which by the late 1980s was securely under Labour control (Elcock, 1998a). The cumulative result of these various reorganizations has been to reduce the total number of local authorities in the United Kingdom to around 400, compared with over 1400 before 1973. Third, the government sought to impose its market-based ideology on local authorities regardless of their political complexion or the views of their electors, by compelling them to submit many of their services to competitive tendering. This was part of a wider regime of applying market economics to public services. For instance, bus services, many of them formerly operated by local authorities, were deregulated and privatized in 1986. One consequence in the larger cities was excessive numbers of almost empty buses causing traffic congestion and polluting the streets as their operators competed for custom. The introduction and extension of a compulsory competitive tendering (CCT) regime imposed a restriction on local government management which has existed in no other democratic state. In reality its main impact was to make local authorities change their internal management and organizational structures. Initially, the services subjected to CCT were mainly manual functions like street cleaning, catering and refuse collection, followed by the application to leisure facilities. By the early 1990s whitecollar functions like legal services, information technology and internal audit were also brought within CCT. Managerial gains claimed for CCT included negotiating away restrictive practices and streamlining service provision in order to win contracts against private sector competition. ‘In-house’ companies, known as direct service organizations (DSOs), were established to tender for contracts against the private sector. A new emphasis was placed on customer relations. In practice, the in-house tenders were usually successful and relatively few services were actually contracted out to private firms. Paradoxically, evidence from elsewhere in Europe indicates that legal provisions permitting local authorities voluntarily to submit their services to competitive tenders produces more private sector provision than the CCT regime ever achieved, because councillors and officers feel more able to accept contracting out where they decide voluntarily to tender services out to private firms, rather than being compelled to do it by government fiat (Snape, 1995; Elcock 1998b). In reality, CCT was yet another way to oblige local authorities to toe the central government’s line. Its effects were not always

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entirely beneficial; for example, visitors to one council’s old people’s homes discovered that the private contractor responsible for catering in them had reduced the residents’ meal portions to starvation levels in order to protect his profit. Apart from changing local authorities’ financial regime, territorial structures and management processes, the legal provisions also meant that some local government powers and functions were transferred to special-purpose local agencies controlled by an appointed ‘new magistracy’: these agencies were expected to behave more entrepreneurially and to be more businessfriendly than local authorities, at the cost of attenuating their democratic accountability (Stewart, 1993). Notable instances were the urban development corporations established to regenerate inner-city and other decaying city areas, to which local authorities’ planning and other powers were transferred for the duration of the corporations’ existence. Some, especially the London Docklands Development Corporation, were characterized by vigorous conflicts with local authorities and their electors. After the Blair Labour victory in 1997, the local government agenda began to change. Although local government was relieved of the constant and unrelieved obloquy that it had suffered during the Thatcher and Major years, the Labour government applied its ‘something for something’ philosophy, making it clear that in return for restoring powers and functions to local authorities and widening their area of discretion, local government must undertake a radical programme of modernization (DETR, 1998) to include the following measures:

•

•

Reviewing and revising its leadership structures, possibly including adopting elected executive mayors. The government has proposed three new models for a local authority’s core executive. The first is an executive mayor directly elected by the people who would appoint a cabinet from the council members to oversee policy and management. In the second model this role would be filled by a leader and cabinet elected by the council. The last and most radical model is the delegation of most policy-making and management to an appointed council manager, reporting to the council and a directly elected mayor (DETR, 1998, pp. 26-30). The first new-style directly elected mayor with executive powers was elected in London in 2000. Others may follow suit if and when legislation is passed to permit other councils to adopt elected mayors and other new approaches to political and managerial leadership. Developing a ‘best value’ scheme as a replacement for CCT, under which authorities must assess the most efficient means of providing the services for which they are responsible and determine whether the

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service would best be provided by the local authority itself or by tendering it out to private companies or voluntary agencies. Improving its links with local communities in order to increase public interest and hence turnout in local elections. Cleaning up its act where corruption and inefficiency are seen to be problems.

Many within local government see the Blair modernization agenda as its last chance, because civil service hostility to local government will be reinforced by ministerial despair of it if local authorities fail to respond positively to the 1998 White Paper’s proposals. Many are now doing so, but legal constraints prevent the immediate adoption by local authorities of some of the government’s more radical proposals; their implementation must await the passage of new legislation. There are major management issues involved in the government’s proposals. However, both the former Conservative and the current Labour reform programmes go well beyond purely managerial considerations to include issues concerning local government’s constitutional role and the nature of its political decision-making, as well as seeking to improve management within local authorities. Such matters as whether or not to create an elected mayor and how to increase citizen participation in local decisions now have a higher priority than purely managerial issues. Furthermore, this reform agenda has to be addressed within the government’s wider constitutional reform agenda, which includes devolution, regionalism and closer integration with the rest of the EU.

THE TRANSITIONAL POLITIES There is an interesting parallel to be drawn between the travails of British local authorities dealing with radical and changing government policies, and developments in the new democracies which emerged in Eastern Europe after the collapse of Communism in 1989. There, too, management issues have similarly had to be subordinated to the resolution of the constitutional and political issues arising from the collapse of Communism. Furthermore, the resolution of these issues has often been hindered by prolonged periods of political instability as governments changed rapidly. In consequence, agreement on constitutional and other changes has been slow in coming. For example, Poland took from 1989 to 1997 to agree on a new constitution to replace the ‘Stalin constitution’ of 1952, although limited reform in the form of a ‘little constitution’ was achieved in 1992. This regulated the relations between the president and Parliament, as well as defining the status of local

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authorities, but in other respects the ‘Stalin constitution’ continued to regulate government until 1997 because of disagreements as to what should succeed it. The two Chambers of the Sejm, the political parties and the Church all had their own views about what the new constitution should contain. It took a constitutional commission years to resolve the differences so that a new constitution could be adopted by a referendum in 1997 (Elcock, 1997). These disputes included several issues which are now also back on the political agenda in Britain. The first such issue is regionalism, which has also become an increasingly significant issue in Western Europe and elsewhere. Several countries, including Slovakia and Poland, have radically changed their regional structures, partly in preparation for EU membership. However, agreement on new regional structures has not been easy to achieve. In the Slovak Republic successive governments proposed different schemes for the revision of regional and local government boundaries which have been the subject of vigorous dispute among the various political parties and ethnic groups within the country. In July 1996 agreement was reached on a system comprising six regions and 79 districts, with communal governments beneath these. Before this agreement was reached, major matters in dispute included the status of the capital city, Bratislava, and defining the regions where the Hungarian minority is dominant (Malikova and Bucek, 1996). Again, in Poland agreement to replace the 49 Vojewodztwa which constituted the regional system under the Communist regime (Kolankiewicz and Lewis, 1988) with 16 larger regions was only achieved by bipartisan agreement in 1997. One of the reasons for the need to reach agreement on this issue was to ensure that regional governments are in place which will be appropriate to bid for Objective 1 status under the EU’s regional policy once Poland enters the EU. On the other hand, one factor impeding regional reform in Slovakia was a fear that ‘subsidiarity will legalize the dissolution of the nation state from below’ (Malikova and Bucek, 1996, p. l). A second closely related issue is reorganizing the structure of local government itself, which has equally been fraught with partisan and sometimes ethnic disagreements. Generally, the basic communal local government unit remains small, in line with practice in most of Western Europe. Thus Slovakia had 2834 municipal self-governments in 1995 in a country with a population of only 5.2 million. Only 123 of the communal authorities have a population of more than 5000, while 1195 of them have fewer than 500 inhabitants. The largest authority is Bratislava with a population of 441 000; the smallest is a hamlet with only 16 inhabitants. However, their powers and functions are all regulated by the same law (Coulson, 1995, p. 3). Poland likewise possessed 2900 communal governments in 1990 with an average of somewhat over 10 000 inhabitants

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(DoE, 1990). This number has not been radically reduced since then (Cielecka and Gibson, 1995). Hence there has been no disposition to accept the British argument that there is a required minimum size of local government if its units are to be able to provide services efficiently. Third, determining the powers, functions and the scope of discretion of local authorities has been a major task for constitutional reformers. This issue was considered of sufficient importance to be included in the Polish ‘little constitution’ of 1992. A major influence has been the European Charter on Local Self-Government, adopted as part of the new democracies’ effort to convince Western Europe that they are now complying with the standards of human rights observance and guarantees of basic liberties that are required for membership of such organizations as the Council of Europe and the EU. This has entailed radical changes of attitude from the Communist era, when all local and regional government units were controlled by the centralized Communist Party apparatus - the nomenklatura (Kolankiewicz and Lewis, 1988). Bringing about such changes of attitude, especially among local government officials, has been difficult, as we shall see later. The fourth change has been developing new structures of political leadership. Here the central issue has been whether to adopt directly elected mayors or more collective leadership structures, where, if there is a mayor at all, he or she is elected by the council. It has been resolved differently in the various countries which make up the former East European bloc. Thus the Russian Federation opted for directly elected mayors, some of whom, notably Mayors Luzhkov of Moscow and Sobchak of Leningrad, have become leading national political figures (Campbell, 1995, p. 160). In Poland and the Czech Republic, by contrast, the mayor is elected by the council, following French practice, and therefore has no independent popular authority (Cielecka and Gibson, 1995, p. 28; Davey, 1995, p. 47). Neighbouring Slovakia has introduced directly elected executive mayors, following the pattern of the American mayor-council form, which means that the mayor is granted a popular authority to govern independent of that conferred on the council. Revising the financial relationships between central and local governments and developing new systems of local taxation has entailed the resolution of two major issues. The first is to what extent local governments should be assured of sources of revenue independent of central government grants. The second is the nature of the local taxes to be levied. Most of the new democracies have opted for property taxes (Coulson, 1995, p. 3) but there is a wide range of other taxes too, including taxes on businesses and vehicles. Developing stable local plural-party systems and learning to operate them has proved difficult, especially given the fractured party systems that developed in several countries after the collapse of Communism. Thus the first fully democratic Polish Sejm elected in 1991 initially included representatives

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of 29 parties. Holding plural local elections and deciding what electoral system to use needed to be done quickly. Poland held its first democratic local elections in 1990, one year before the first fully democratic elections for the Sejm took place. One major problem has been securing popular participation from electors who have been accustomed to passive behaviour under Communism. The first Polish Commissioner for Citizens’ Rights Protection, Ewa Letowska, complained that the country’s citizens were ‘paternalistically demoralized’ (quoted in Elcock, 1997, p. 370). Citizens are unaccustomed to protesting, complaining or even participating in civic affairs. Similarly, Krzysztof Podemski commented in 1995 that, An anti-individualistic, state-owned, ‘give-me’ syndrome is deeply rooted in the two generations who have lived under Communism. Thus the period of transformation is also a period of disorientation, disillusion and anomie. Perhaps that is why there have been more cases of ‘negative participation’ (participation against someone) than ‘positive participation’ (participation for something). (Podemski, 1995, p. 184)

In consequence, local electoral turnouts have sometimes been low, and it has been difficult to establish participative relationships between citizens and councillors. Yet another problem has been the need to ensure that in the new pluralist parliaments and councils the ruling parties treat opposition members with respect, rather than rejecting them as traitors or at best malcontents (see Olson and Norton, 1996, pp. 78 and 234-5, for example). At the official level, too, major changes in attitudes and behaviour are needed, especially because many local and indeed national officials have retained the offices they held under Communist rule during and after the transformation period. Getting local officials accustomed to working in democracies where they must observe the laws and carry out the instructions of elected councillors, when they have been used to being protected by the ‘Party line’ and the nomenklatura when they broke the law or abused their powers, has proved difficult. Giuseppe Sanviti commented that in the new democracies of Eastern Europe, ‘many officials have a formal respect to the law but have no interest for the objectives it establishes. The former nomenklatura has perpetuated itself, very often as a social class, sometimes as a political-administrative elite’ (Sanviti, 1998, p. 12). In Poland successive Commissioners for Citizens’ Rights Protection have frequently complained that local government officials in particular do not understand that they must now obey the law and that no Party apparatchik is going to rescue them from the consequences if they fail to do so (Elcock, 1997). In 1993, for example, the second holder of this office, Tadeusz Zielinski, complained that Poland was ‘a country which has not yet managed to liberate itself from the influence of a

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Marxist understanding of the law as an expression of the will of the political power governing at the given time’ (quoted in ibid., p. 370). These issues have preoccupied all those concerned with local government in the ‘new Eastern Europe’, largely to the exclusion of purely management issues. They have sometimes been resolved only after political instability has led to repeated changes of mind and lengthy delays. For example in Poland, repeated changes of government, especially before the number of parties represented in the Sejm was reduced by the introduction of an electoral threshold in 1993, have resulted in the abandonment of successive proposals for new regional and community government structures. However, most of these disputes have now been resolved, in part because the national political climate is now more stable and governments can be surer that they will survive their four-year term of office. Furthermore, in 1997 a new constitution was at last agreed and brought into force after years of debate and controversy about local government issues and much else besides. For instance, the Church wanted the preamble to the constitution to begin with the words ‘In the name of Almighty God’, a proposal which was successfully resisted by the secular participants in the Constitutional Commission (see Elcock, 1997, p. 371). In consequence, management issues have inevitably tended to be regarded as secondary to the resolution of these larger, necessarily prior constitutional and political issues. Regrettably the West, especially Britain and the USA, which in 1989 were still under the sway of the ‘New Right’ administrations of Margaret Thatcher and George Bush, concentrated its assistance to the new states of Eastern Europe on management advice and privatization, when assistance with developing new constitutional structures and political processes would have been more beneficial. It might have led to the avoidance of at least some of the instability and uncertainty which dogged local government and delayed necessary reforms, especially in the first few years after Communism collapsed. Indeed, this Western focus on management may have been counterproductive, because training officials in management and information technology while they retained the autocratic habits they had learned under Communism may simply have enabled them to behave badly and abuse their powers more efficiently. Ivor Shelley warned the British Council in 1996 that among those who had provided evidence to his study of the UK’s attempt to disseminate the lessons of its public sector reforms to transitional and Third World polities: There was concern about the extent to which economic liberalization programmes were being pushed too far ahead of reforms to political and administrative structures through which they operated. There is a need for training in more traditional public administration issues such as accountability, control, bureaucratic norms and values. Consultants’ understanding of the political context in which bureaucrats have to operate is particularly vital in those areas where political corruption is

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prevalent and regularly threatens and undermines standards and norms of public service. It is essential to modernize core institutions; without this economic reform implementation will suffer. (Shelley, 1996, p. 6)

These issues were and still are highly relevant to the development of stable democracies in the former Communist states of Eastern Europe.

DECENTRALIZATION IN DEVELOPING ECONOMIES: BACK TO THE FUTURE The analysis so far has shown that in British local government, new public management reforms have been vigorously introduced, though with mixed results, and can best be understood as an attempt to drive through a political reform agenda based in neoliberal economic principles. In transitional economies (at least in Eastern Europe), attempts at managerial reforms have been premature, since a prior need in these countries has been to construct new political and constitutional institutions in the wake of the collapse of socialist systems, with a particular emphasis on regional issues. This section examines the progress of managerial and structural reforms in developing economies. Issues of the most effective relationship between structures and functions below the central level, of central-local relations of control and accountability, and of management and finance are all closely interrelated, and can therefore be discussed under the generic heading of decentralization. Decentralization Decentralization in developing countries is an idea with a long history, strongly promoted as a development strategy as long ago as 1962 (UN, 1962). Despite a patchy and unconvincing record of effective implementation, considered below, it remains high on most reform agendas, either as an overarching strategy for building local institutions, or as an organizational mechanism for the more effective planning and delivery of public policies and services. This is not surprising, since decentralization offers to provide benefits both of efficiency and accountability, and fits in well with the liberalization reforms which attack the overcentralized and overextended state. Indeed, the World Bank (1997) recently signalled its commitment to decentralized forms of government, in the context of claims that there is a positive relationship between ‘good governance’ and levels of successful economic performance. The primary objective must be to make government work better; and the principal strategy advocated is to ‘raise state capability by

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reinvigorating public institutions’. Among the measures to make progress in this respect, the Bank recommends a more responsive mix of central and local governance. The new emphasis, therefore, is not on reducing the central state, but on reorganizing and rehabilitating it through processes of decentralization. Definitions The term ‘decentralization’ is applicable to a variety of institutional structures but in general refers to attempts to change the relationships of power and subordination between central and subnational levels and to redefine the functional roles of units at each of these levels. The literature generally divides into two streams: that of political analysis, which is concerned with notions of territorial decentralization and localized political power, in the context of the broader social and political system; and that of managerial analysis, concerned primarily with the distribution of control, authority, resources and power within organizations (Stevens, 1994). The conventional analysis (Smith, 1985; Mawhood, 1983) refers to two distinct forms: deconcentration, which involves the top-down delegation of central administrative functions and capacity, retaining accountability to the centre; and devolution, which involves the transfer from centre to locality of real decision-making powers and associated resources. An essential characteristic is discretionary authority, so that the supervisory role of central government is limited to ensuring that local governments operate within the boundaries of national policy. Two other labels are now in use. ‘Delegation’ involves transfers of responsibility to regional or functional development authorities or other semiautonomous agencies. This usually occurs in sectors with a sound incomegenerating base, such as energy, telecommunications or public transport. ‘Economic decentralization’ covers recent efforts to move responsibilities for economic production and activities from the public sector to private or mixed public-private organizations, though this approach is now being applied to social policy sectors too. Most accounts of decentralization in developing countries do not go much beyond a functional analysis oriented to the deconcentration of central functions, underpinned by an almost fictional view of devolution (Mawhood, 1983). These, and most official accounts, offer an uncritical analysis which rests on a highly prescriptive institutional model geared to a hierarchicalbureaucratic view of administrative and governmental relations. This orthodoxy, and the critique of it, is well represented by the debate between Rondinelli (1989) and Slater (1989) over the usefulness of decentralization as a ‘tool’ of development. Rondinelli perceives decentralization as a necessary response to the inefficiency and ineffectiveness of local service provision in

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developing countries. Slater (1989) criticizes this approach as locked in to a neoclassical economic framework, and in effect a part of the official (that is, Western neoliberal) discourse which insists on ‘a certain reading of decentralization’ that conceals its political function as an instrument of political and economic power and domination; decentralization is a façade, or a myth. While Rondinelli equates successful implementation with choice, economy and efficiency, and endorses the linkage of decentralized units to market mechanisms, Slater’s critique highlights the constraints to ‘free choice’ and ‘ability to pay’ posed by social structures and power relations. Rondinelli’s view of central-local relations as ‘reciprocal, mutually benefiting, and co-ordinate’ seems idealistic in the face of the many recorded failures of decentralization initiatives, some recorded by himself (Cheema and Rondinelli, 1983), and is less convincing than the argument (Conyers, 1986) that decentralization is invariably a deliberate exercise in recentralization by central elites anxious to retain their control of the machinery and resources of the state. Despite these conceptual disputes and poor track record, decentralization continues to be heralded as central to ‘institutional capacity-building’, not least by the World Bank (1994, 1997). Yet case research offers little comfort to those who hold this assumption. For example, Crook and Manor (1995), comparing decentralization reforms across different systems and regions, found no consistent pattern to associate better institutional performance with enhanced participation. It is clear that analysis of the political and social context is essential for an understanding of the outcome of decentralization initiatives: to see these only in terms of technical design, or financial and administrative resources, is a significant error. Here it is worth summarizing chapter 7 of the 1997 World Bank annual report entitled ‘Bringing the State Closer to the People’. The theme is that ‘carefully managed decentralization can do much to improve state capability, creating pressures for better matching of government services to local preferences, strengthening local accountability, and supporting local economic development’, but the warning is given that this strategy will only work if it is ‘part of a larger strategy for improving the institutional capability of the state’. Non-governmental organizations (NGOs) and grass-roots organizations (GROs) are identified specifically as key reform institutions, the argument being that not only can they take over direct public service provision, but may substitute for weak or non-existent state provision, raising funds and resources. In addition, they may act to represent or act as advocates for local communities, contributing to the building of social capital, an essential combination of trust, cooperation and mutuality. The advantages may be to increase the credibility of government, reduce resistance to government policies, and contribute better information on local needs, problems, costs and

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resources. The central government can contribute by providing a supportive legal and informational environment to NGOs/GROs. The World Bank 1997 report also endorses the use of participatory mechanisms such as consultation, Citizen’s Charters and complaints procedures, client and user satisfaction surveys, ‘report card’ systems which allow users to rank providers, and transparent public decision procedures. A successful programme in Brazil is quoted to show how community monitoring of a government health programme was ensured by an extensive publicity and promotion campaign by the regional governor (see also Tendler, 1997, and McCourt’s Chapter 6 of this book). The general theme is that effective participation in sustainable development is most likely to be created on the basis of cooperation between central governance, local governance and nongovernment institutions. However, the research literature establishes that NGO/GRO bodies have not been developmentally more effective than government agencies, suffering from limited technical and financial resources, diseconomies of scale, low management skills, and poor understanding of national priorities (Edwards and Hulme, 1996). The new emphasis, therefore, has shifted to creating institutional collaborations or ‘partnerships’ between central government field agencies, local government agencies and non-governmental agencies. ‘Healthy’ relationships are ones where the institutions agree common objectives and operate a genuine partnership, but a recent study warns that such partnerships depend heavily upon the degree to which political structures encourage or constrain them (White and Robinson, 1998). These issues are discussed in greater detail by Hulme in Chapter 7. Interestingly, the World Bank itself has recently been more cautious: ‘Decentralization itself is neither good nor bad ... [but] ... is often implemented haphazardly ... models of decentralization are often exported from one country to another without regard for local political traditions’ (World Bank, 1999-2000, p. 107).

CONCLUSION The dominance of economic reforms and the economistic basis of NPM reforms means that political elements in the development and reform of governance have been rejected, or even suppressed. A starting-point should be the differences between national organizational cultures: too often there is a tendency to attempt the transfer of institutional practices which work well in developed country systems, but without considering the problems of host receptiveness, or the possibility that political stability might be a more significant priority than managerial efficiency. A more detailed understanding

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of organizational cultures and their political context in transitional and developing economies is needed if there is to be an effective process of genuinely adaptive institutional transfer. This is not to cast doubt on the democratizing thrust of donor policy: effective public policies and efficient public administration, along with a commitment to the participation and empowerment of disadvantaged groups, are the best antidote to corruption, nepotism and rent-seeking. The NPM emphasis on reducing the scope of the central state has given a new impetus to the identification and use of non-state alternatives, including NGOs and community and local organizations. This focus also promises to put institutional flesh on the too-often bare skeleton of participation and empowerment. While the pathology of decentralization is now well understood, we know much less about the precise ways in which these ‘alternative’, and often localized, institutions work and interact. There is scope here for institutional innovation and experiment, particularly in relation to local governance. The fostering of institutions of civil society (NGOs, community organizations, professional groups) and perhaps of local government may, in the long run, be more productive than an insistence on ‘Western’ democratic norms and inappropriate legal frameworks. This again is an area where indigenous values and culture need to be encouraged and supported in ways which may produce flexible, creative and, above all, local solutions to issues of democracy and human rights. The lesson of this chapter, if there is one, is that NPM reforms must always be evaluated within, and adapted to, the political context of their operation.

REFERENCES Butler, D.E., A. Adonis and T. Travers (1994), Failure in British Government: The Politics of the Poll Tax, Oxford: Oxford University Press. Campbell, A. (1995), ‘Power and structure in Nizhnii Novgorod, St Petersburg and Moscow’, in Coulson (1995), pp. 238-63. Cheema, G.S. and D. Rondinelli (eds) (1983), Decentralization and Development: Policy Implementation in Developing Countries, London: Sage. Cielecka, A. and J. Gibson (1995), ‘Local government in Poland’, in Coulson (1995), pp. 23-40. Conyers, D. (1986), ‘Future directions in development studies: the case of decentralization’, World Development, 23 (4). Coulson, A. (1995), ‘From democratic centralism to local democracy’, in Coulson (1995), pp. 1-22. Coulson, A. (ed.), (1995), Local Government in Eastern Europe: Establishing Democracy at the Grassroots, Cheltenham, UK and Brookfield, USA: Edward Elgar.

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Crook, R.C. and J. Manor (1995), ‘Democratic decentralization and institutional performances: four Asian and African experiences compared’, Journal of Commonwealth and Comparative Studies, 33, 309-34. Davey, K. (1995), ‘The Czech and Slovak Republics’, in Coulson (1995), pp. 41-56. DoE (1990), Local Government Reform in Poland: Report of Visit by British Local Government Experts to Poland, 15-19 January. DETR (1998), Modernising Local Government: In Touch with the People, Cm. 4014, Norwich: The Stationery Office. Edwards, D. and D. Hulme (1995), Non-Governmental Organisations - Performance and Accountability: Beyond the Magic Bullet, London: Earthscan. Elcock, H. (1994), Local Government: Policy and Management in Local Authorities, 3rd edn, London: Routledge. Elcock, H. (1997), ‘The Polish Commissioner for Citizens’ Rights Protection: decaying communism to pluralist democracy through an Ombudsman’s eyes’, Public Administration, 75, 359-78. Elcock, H. (1998a), ‘Territorial debates about local government, or Don’t reorganise! Don’t! Don’t! Don’t!’, in H. Elcock and M. Keating (eds), Remaking the Union: Devolution and British Politics in the 1990s, London: Frank Cass, pp. 176-94. Elcock, H. (1998b), ‘German lessons in local government: the opportunities and pitfalls of managing change’, Local Government Studies, 24 (1), 41-59. Elcock, H. and G. Jordan (eds) (1987) Learning from Local Authority Budgeting, Aldershot: Avebury Press. Griffith, J.A.G. (1961), ‘The future of local government’, Municipal Review. Gyford, J. (1985), The Politics of Local Socialism, London: Allen and Unwin. Jenkins, S. (1996), Accountable to None: The Nationalisation of Britain, Harmondsworth: Penguin Books. John, P. (1999), ‘Ideas and interests, agendas and implementation: an evolutionary explanation of policy change in British local government finance’, British Journal of Politics and International Relations, 1 (1), 39-62. Ko1ankiewicz, G. and P.G. Lewis (1988), Poland: Politics, Economics and Society, London: Pinter Press. Lansley, S., S. Goss and C. Wolmar (1989), Councils in Conflict, London and Basingstoke: Macmillan. Malikova, L. and J. Bucek (1996), ‘Meso Level in Slovakia: The History and Politics of Territorial Reorganisation’, paper presented at the conference on ‘Politics and Geography of Territorial Power-sharing: the formation of meso-level government in East-Central Europe’, Wroclaw, Poland, July-August. Mawhood, P. (1983), Local Government in the Third World: The Experience of Tropical Africa, Chichester: John Wiley. Olson, D.M. and P. Norton (eds) (1996), The New Parliaments of Central and Eastern Europe, London: Frank Cass. Parkinson, M. (1986), ‘Financial ingenuity in local government: the case of Liverpool’, Public Money, March, 27-32. Podemski, K. (1995), ‘Socio-cultural obstacles to community participation in Poland’, in Coulson (1995), pp. 171-85. Rondinelli, D. (1989), ‘Analysing decentralization policies in developing countries: a political economy framework’, Development and Change, 209. Sanviti, G. (1998), ‘Citizens and public administration in developing and former socialist states: originality and comparability with the experience of other countries’,

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paper presented at the 24th International Congress of Administrative Sciences, Paris, September. Shelley, I. (1996), Access to the Public Sector Reform Experience, British Council and Public Management Forum of the Strategic Planning Society, October. Slater, D. (1989), ‘Territorial power and the peripheral state: the issue of decentralization’, Development and Change, 20, 501-31. Smith, B.C. (1985), Decentralization: The Territorial Dimension of the State, London: Allen and Unwin. Snape, S. (1995), ‘Contracting out local government services in Western Europe: lessons from the Netherlands’, Local Government Studies, 21 (4), 642-58. Stewart, J.D. (1993), Accountability to the Public, London: European Policy Forum. Stevens, C. (1994), ‘Decentralization: a meaningless concept?’, Public Policy and Administration, 10 (4), 34-49. Tendler, J. (1997), Good Government in the Tropics, Baltimore, MD: Johns Hopkins University Press. Tonge, J. (1994), ‘The anti-Poll Tax campaign: A pressure movement?’ Politics, 14, 93-9. UN (1962), Decentralization for National and Local Development, New York: United Nations. White, G. and M. Robinson (1998), ‘Towards synergy in social provision: civic organizations and the state’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar. World Bank (1994), Governance: the World Bank Experience, Washington, DC: World Bank. World Bank (1997), The State in a Changing World, World Bank Annual Report, Oxford: Oxford University Press. World Bank (1999-2000), Entering the 21st Century, World Bank Annual Report, Oxford: Oxford University Press.

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The NPM agenda for service delivery: a suitable model for developing countries? Willy McCourt

To what extent do the new approaches to delivering public services associated with the rise of the new public management (NPM) provide a model for improving the management of public services in developing countries? I address this question first by outlining the approaches, presenting them in the historical context in which they emerged, and reviewing the quite welldocumented experience of applying them in the member countries of the OECD. I go on to discuss briefly other changes in service delivery which are outside the NPM model that have occurred in those countries; and I recapitulate that review in the context of developing countries in order to arrive at some provisional conclusions.

THE NPM AGENDA FOR SERVICE DELIVERY Historical Context The NPM agenda for service delivery is best understood in the historical context in which it emerged. As with NPM more generally, there was an intermediate stage between the approaches to service delivery that were associated with classical public administration and the approaches associated with NPM. This was the early years of the Reagan and Thatcher administrations in the USA and the UK, in the first half of the 1980s. It was a period when the two administrations pursued a policy of ‘rolling back the frontiers of the state’ (readers will notice a strong similarity with what I call the ‘Washington model’ in the concluding chapter - Chapter 11 - in this collection). Capitalizing on public hostility to ‘big government’ - government, Reagan said, was ‘not the solution but the problem’ (quoted in Hobsbawm, 1994, p. 412) - both governments lost no time in cutting budgets allocated to public services (Dunsire and Hood, 1989), and in picking, and winning, 107

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symbolic fights with powerful public servants’ unions (air traffic controllers in the USA, civil servants in the UK). Both also downsized enthusiastically: Reagan’s first presidential act was a federal hiring freeze, and Thatcher soon followed suit (McCourt, forthcoming c). Why were the ‘frontiers of the state’ not rolled back further? In Cutler and Waine’s (1994) persuasive analysis, the reformers stubbed their toes on the rock of public opinion. Despite electing the Conservatives four times between 1979 and 1992, the UK public declared their stubborn affection for public services, especially health, whenever opinion pollsters asked them to do so. Left to her own devices, Mrs Thatcher would probably have gone straight from privatizing the state-owned enterprises like British Airways to privatizing schools and hospitals. Bowing to public opinion, she accepted that she was saddled with the public services and began to cast around for ways of managing them better. Right-wing observers saw this change for what it was, and were quick to denounce it (Green, 1990). The replacement of Thatcher by John Major, and the eventual succession of Bill Clinton (Reagan’s immediate successor, George Bush, having shown little interest in administrative reform), accelerated this process. Thus ‘Reinventing government’ guru David Osborne, speaking at a press launch, described Clinton’s reform contender, the National Performance Review, as having been carried out by reformers who ‘don’t hate government’. One of Major’s most senior ministers, Douglas Hurd, told a gathering of Conservative party faithful, rather more Britishly, that ‘We must show that we are not driven by ideology ... to depreciate the worth and quality of the different public services’ (quoted in Jordan, 1997, p. 125). The result was a new ambivalence rather than a straightforward assertion of the ‘worth’ of public services: there was a tacit, occasionally grudging, acceptance that public services were here to stay, but obscured by a continuing smokescreen of small-government rhetoric. In the USA, this led to a fear among federal employees of redundancies arising from the National Performance Review that was disproportionate to their eventual scale. In the UK, the Treasury maintained the presumption that overall spending would not rise: its acquiescence in the Citizen’s Charter initiative (see below), for instance, was on condition that service improvements would not cost anything (Turton, 1996). That ambivalence was encapsulated in the title of a US National Performance Review report: Government that Works Better and Costs Less. Service Delivery Reforms: the OECD experience Increasingly, as Pollitt (1993) notes, managerialism, which we can define as the belief that every political problem has a managerial solution, became the formula deployed to square the circle of government that worked better while

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costing less. From the viewpoint of traditional public administration, this implies a narrowing of focus, since managerial approaches are concerned with means and not ends, as their advocates proudly assert (Osborne and Gaebler, 1992, p. xxi; Frant, 1997, p. 86). As with other aspects of NPM, the content of the NPM agenda for service delivery is more coherent, even in practice, than has sometimes been alleged (though see Common, 1998). In this chapter we concentrate on elements that have been highlighted in a recent survey of OECD member countries (OECD, 1995):

• • •

ensuring performance: the use of performance agreements, including service standards, and performance measurement and evaluation; developing competition: contracting out of services; providing responsive service: improving quality, and improving ‘customer’ accessibility and participation.l

Inevitably even the items in this short list overlap considerably. Thus the development of service standards as expressed through the widespread use of ‘charters’ is one of the main mechanisms that has been used to make service more responsive to users’ needs, and performance agreements have been an essential feature of tender documents when services have been contracted out. While inconvenient for purposes of exposition, this perhaps illustrates the coherence of the NPM agenda for service delivery. Ensuring Performance The NPM approach to ensuring performance hinges on the formulation and measurement of performance indicators. It asserts that performance is more likely to be ensured when public agencies make shift to meet objectives rather than to follow rules. Such indicators have usually addressed the internal operations of individual agencies. In one typical example, Denmark’s national library undertook that by the end of 1996 it would have increased productivity by 10 per cent, increased the number of transactions by 2.5 per cent per year and put purchases before 1979 on computer (OECD, 1995, p. 35). The service standards that figure in the widespread ‘Citizen’s Charters’ can be seen as a variant on performance indicators, with the difference that with the former, accountability is supposed to be to the ‘citizen’ rather than to government or its management agents. Such charters, pioneered in the UK, aim to specify in quantitative terms the quality of provision that a citizen can expect to receive from a given public service, such as how long a patient can expect to have to wait to be seen in the casualty department of a hospital. They

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have spread to other OECD countries, including Belgium, France and Portugal (OECD, 1995). Whereas public administration as a rule leans lightly on theoretical support, advocates of performance indicators can point to plentiful evidence for their value from organizational psychology. Locke et al., surveying numerous relevant studies, characterize goal-setting theory, whose essential claim is that setting goals improves performance, as ‘among the most scientifically valid and useful theories in organizational science’ (1991, p. 370). Not just any old goal, though: research shows that goals should be specific and challenging, and that those who have to reach them should be committed to doing so, and should receive support and encouragement, and feedback on their performance, as they work towards them (Locke and Latham, 1990). Developing Competition The impression of a traditional bureaucracy where, to invoke the celebrated NPM distinction, both ‘steerers’ and ‘rowers’ were exclusively fully paid-up public servants is misleading. A proportion of public work was always contracted out to the private and voluntary sectors, not only in fringe areas like the placing of newspaper advertisements, but also strategic capital projects for the construction of motorways, buildings and so on. In Germany the application of the subsidiarity principle made this inevitable (Reichard, 1997). The difference which NPM makes is to remove bureaucrats’ discretion, making contracting out obligatory, and thereby increasing its scope and extent. Contracts awarded competitively are, in a sense, performance indicators ‘with teeth’. A weakness of purely internal ‘service-level agreements’ based on performance indicators is the lack of effective sanctions if the agreement is broken, since the internal supplier knows that the internal customer has nowhere else to go (Greer, 1994). By contrast, a contracting regime uses competition or the threat of competition to enhance performance at three stages: in the initial bidding for the contract, in monitoring compliance and in re-bidding at the end of the contract period. In this way, as one sympathetic account from New Zealand maintains, provision becomes results-driven, transparency and accountability are ensured and - not least - responsiveness to voice increases because customer feedback really matters. In New Zealand, consequently, delivery of local authority services by external providers jumped from 22 to 48 per cent of provision between 1989 and 1994 (Boston et al., 1996). Providing Responsive Service Initiatives to provide more responsive service have mainly taken three forms: the use of service standards and ‘charters’, the ‘quality’ movement, and the

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use of customer surveys to get direct information on service users’ preferences and views. We have discussed the first of these already; we now go on to discuss the other two. A concern with quality of service is self-evidently perennial, and even its modern manifestation in the paraphernalia of quality assurance and benchmarks dates back at least to the early 1970s in the case of health care (McLachlan, 1976). What is more recent, however, is the notion that professions cannot be left to their own devices where the monitoring of quality is concerned, constrained only by the occasional complaints of individual clients. This is very clear, for instance, from the way that external quality assessment has been introduced in higher education in countries such as France and the Netherlands (van Vught and Westerheijden, 1996). The managerialist approach to quality takes the content of service delivery pretty much as it finds it, being concerned, as we saw, with means rather than ends. Quality initiatives in the public sector have tracked developments in the private sector. Quality circles, an informal workgroup concept imported from Japan where workers at different levels in the hierarchy meet to identify ways of improving quality, are an example. They had their brief moment of glory in the private and public sectors alike in the early 1980s, leaving little lasting trace in either domain: France’s experience is typical in this respect (Trosa, 1995; for the private sector, see Hill, 1991). More recently, interest has shifted to total quality management (TQM). This is a holistic approach to improving the quality of products or services by gearing the total operations of an organization to achieving a quantified standard of quality. Here the private sector experience has been more positive, although the majority of firms have preferred to adopt their own approach rather than to conform to the very prescriptive international quality standard which the ISO 9000 series provides (Wilkinson et al., 1993). TQM has been adopted by a number of governments, including those of France, New Zealand, Sweden, the UK and the USA (Boston et al., 1996; Pollitt and Bouckaert, 1995). It is at first sight odd that the public sector should have been so keen to adopt a methodology which originated in the private manufacturing sector and which even the majority of private firms find too prescriptive. However, it is in line with the institutionalization hypothesis developed by organizational sociologists, which predicts that it is precisely in areas where quality is hard to specify that such external badges of recognition will be sought (Meyer and Rowan, 1977). Less prescriptive, home-grown quality mechanisms have also been used. Quality assurance is now very widespread in the professional public services, such as education and health, though the power of professional groups means that it is the service provider rather than the external assessor who has the whip hand (Pollitt, 1996).

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Quality management offers a limiting case of the spread of NPM measures in industrialized countries. TQM, Japanese in origin, has been adopted by many OECD governments but not, ironically, by Japan itself. The Japanese public’s belief in the commitment of their public servants appears to have combined with the strongly bureaucratic traditional orientation of Japanese public administration to exclude it (Jun and Koike, 1998). A final approach to providing more responsive service has been the use of customer surveys. Ireland’s Social Welfare Services is one among many agencies that have sought the views of their clients (O’Shea, 1996). The Impact of the New Approaches OECD country advocates of NPM approaches, especially among the reformers themselves, see them as almost self-evidently valuable (Goldsworthy, 1991), while critics suspect, a priori, that they are bound to lead to deterioration (Elcock 1998). What is the evidence? In fact the evidence is quite sparse. This is partly because the obsessive tinkering in recent years with public agencies’ structures and tasks makes it hard to compare before and after (Greer, 1994). It is also partly because, in the UK at least, government was very reluctant to commission evaluations which might pour cold water on its fond aspirations (Broadbent and Laughlin, 1997). However, to take the use of performance indicators first, clearly goal-setting theory explains why some of the early, vague indicators failed to bite, being neither specific nor challenging. More specifically, evidence from EU member states for the efficacy of ‘Citizen’s Charters’ is unpromising. Of 1000 people taking part in a UK poll, only one in three had seen a copy of the Citizen’s Charter, only one in ten had read it, and a grand total of 16 people were satisfied with it. Too often, standards fell short of citizens’ expectations, not surprising since, although ‘customers’ were duly ‘surveyed’, citizens were seldom involved in drawing up the standards; their participation was on management’s terms. In particular, little thought was given to the needs of different groups such as ethnic minorities (O’Conghaile, 1996). The evidence on competition is also mixed. Cost savings of between 15 and 30 per cent have been reported in New Zealand (Boston et al., 1996), though these were for manual services, where Walsh et al. (1997) note that the potential for savings is greatest. (Walsh et al. found no evidence that competition in professional services had led to any savings at all.) Newman et al. (1998), again surveying the UK, are even more scathing, reporting missed targets, costs that increased rather than decreased, and indifferent performance, though they concede that all this may improve as civil servants take competition more seriously. One reason for low savings is that the public sector is still accountable for the contracted service, leading to a high

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transaction cost (as is noted in Polidano’s Chapter 3 in this volume, NPM reforms make accountability highly problematic). In general, it is surprisingly difficult to demonstrate that the trumpeted NPM service delivery reforms have actually led to improvements, although there is certainly enough negative evidence to refute some of the more extravagant claims. The conclusion in one study is typical: ‘The quality improvement project in [the Dutch Department of Defence] is generally regarded as a success ... Nevertheless, it has to be acknowledged that no empirical evidence can be produced to give these favourable perceptions an objective foundation’ (Mol, 1995, p. 117). Why, then, have governments been so enthusiastic? One partial suggestion, sketched though not fully developed, is that NPM has functioned as a discourse that has helped right-wing administrations to tighten their grip on the levers of power, while prising away the fingers of professional groups and workers’ representatives (Kirkpatrick and Lucio, 1995). Misgivings and uncertainties such as those we have reported in this section have indeed had some effect on policy. Proposals to extend competition in education by issuing ‘vouchers’ to parents to be ‘cashed in’ at the private or state school of their choice never bore fruit on a large scale, and the UK government stopped short of the wholesale privatization of a health service which was already efficient by international standards. But there is no evidence that the NPM agenda for service delivery has run its course. Confronted with evidence of shortcomings in early NPM attempts, the response has been (to quote a remark of Bill Clinton’s, made in a different context) one of ‘mend, not end’. Thus the new Labour government in the UK has modified, but not abandoned, competition between public health providers, and is actually extending private provision in education, through inviting private companies to ‘rescue’ failing schools. It has also moved towards performance indicators that address outcomes rather than internal processes. By early 1999 it had more than 600 ‘targets’ in place, as ambitious and various as targets to increase beef exports by 10 per cent (this in the wake of the ‘mad cow disease’ débâcle!) and to reduce suicides by 17 per cent, shading into the strategic management model which McCourt outlines in his concluding chapter (Chapter 11). The relevant minister at the press launch characterized the targets as ‘600 rods for our own back’ (The Observer, 1999, p. 9). The implicit metaphor of a rod-wielding public chastising its elected politicians is perhaps encouraging for those who believe that despite all the rhetoric, users’ interests have not actually moved far up the agenda (Walsh et al., 1997). Non-NPM Approaches to Service Delivery One reason for the preference for mending over ending is the absence of a coherent alternative agenda. Alternatives there have been, but they

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have been swept aside by the triumphant progress of the NPM bandwagon. Public administration, as with other branches of learning, is replete with what the Italian novelist Ignazio Silone called ‘the widespread virtue that identifies History with the winning side’ (quoted in Mazower, 1998, p. xi). For even as the NPM bandwagon was gathering speed, other initiatives were being launched. In the UK in the 1980s, non-Conservative-controlled local authorities launched innovations such as devolution of responsibility for housing and other services to neighbourhood offices, an innovation which one study found had produced a marked improvement in service quality (Mainwaring, 1988). Some of these reforms proved ephemeral as the politicians responsible for them were ejected by their electorates. Others, however, have been co-opted into the policy consensus alongside the more familiar NPM measures, albeit shorn of the ideological trappings which had accompanied their introduction. The pervasive concern with the uptake of services by women and disadvantaged minorities, to which the EU has given its blessing, is an example of this. Moreover, one can find precursors of some of the NPM reforms in surprising places. As König (1997) points out, even Communism included provision for a socialist form of competition, through making comparisons between the performance of different public agencies. These alternatives to NPM are in danger of being forgotten, though it is always possible that the change in the political wind represented by the election, recent at the time of writing, of Left-leaning governments in France and the UK will return some of them to prominence. The very interesting application by Mackintosh (1998) of the European concept of ‘social inclusion’ to public management may be a straw in that wind. In complete contrast to the above initiatives, governments have also been making the public pay for services that used to be free. This has often had the aim of reducing the burden on the taxpayer, and is thus linked to the Reagan/Thatcher ‘small state’ agenda: extending the use of such fees was one of the recommendations of the US Grace Commission on civil service reform (Levine, 1985). But there are also links with NPM, since charges have also had the declared aim of fostering customer orientation and service performance, and encouraging the development of competition. In some cases the ‘customers’ have been other government departments, as with Australia’s Attorney-General’s Department, or those who can afford to pay, as with the tax levied by Canada’s Air Navigation System on air passenger tickets. In others, though, the customers can be users of health and social services. Iceland’s reintroduction of fees for visiting community doctors in 1991 led to a 10.6 per cent drop in the number of visits (OECD, 1998).

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The OECD Experience in Summary Summing up, we can see evidence of powerful pressure in most OECD countries to implement a quite coherent set of management measures to improve service delivery. These are the use of performance indicators, increased competition, devolution of responsibility (which is discussed by Polidano in this volume - Chapter 3) and other measures to make services more responsive. There is merely anecdotal evidence that any of this has actually improved services. However, in the absence of alternatives, governments’ response to problems in the first round of implementation has been to modify the measures rather than to abandon them.

MANAGING SERVICE DELIVERY IN DEVELOPING COUNTRIES The Extent of NPM-style Service Delivery Initiatives It would be a mistake to regard the transfer of service delivery innovations between industrialized and developing countries as a one-way traffic. There has been much interest, for instance, in Latin American experiments in the privatization of pensions and use of vouchers for school education (Queisser, 1998; Roth, 1987). The concept of ‘social inclusion’, which we have just invoked, has been given a distinctive twist in Tanzania and Thailand (Mackintosh, 1998); and other examples could be given (Cooke, 1998). However, it is true that the traffic going from industrialized to developing countries has been heavier than that going in the opposite direction, and many of the ships have had the NPM flag emblazoned on their funnels. Moreover, while some of the initiatives have, as it were, got no further than the wharves and warehouses of developing-country governments (Larbi, 1998; McCourt, forthcoming b), there have been some interesting trials. In fact it is possible to report experiences from developing countries in all the three categories of NPM service delivery innovation which we established earlier. Thus performance indicators have been a centrepiece of reform in Ghana (Dodoo, 1997) and Uganda (Government of Uganda, 1994), and are also reported in Malaysia (Sarji, 1995). The relationship between governments and the enterprises that they own is increasingly a quasi-contractual one (United Nations, 1995). A similar mechanism is being used increasingly to manage the performance of individual staff through objective-setting in the context of performance appraisal: Zimbabwe is one example. Citizen’s - or Client’s - Charters have been adopted in Jamaica, Malaysia, Malta and South Africa (Commonwealth Secretariat, 1996; Sunday Times, 1999).

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Alongside the wholesale privatization of state-owned enterprises which Cook (Chapter 8, this volume) discusses, contracting out of some common services such as security has occurred in Ghana (Larbi, 1998), Trinidad and Tobago (Commonwealth Secretariat, 1996) and Zimbabwe. In the health sector, experiences from India, Mexico, Papua New Guinea, South Africa, Thailand and Zimbabwe are discussed by Bennett and Mills (1998). Steps to improve the quality of public services through management mechanisms such as TQM have been taken in a number of countries, including Brazil, Jordan and Malaysia (da Silva, 1999; Sarji, 1995). Quality circles have been reported in Botswana, Malaysia, Mauritius, the Philippines and Sri Lanka (Commonwealth Secretariat, 1996; Eldridge and McCourt, 1998). Attempts to increase the participation of citizens have been very widespread, with initiatives that include the setting up of public complaints bureaux in Malaysia and Singapore, and the carrying out of service delivery surveys in India, Jordan, Nicaragua and Uganda (respectively Paul and Sekhar, 1997; Katterman, 1999; Meyers and Lacey, 1996; Langseth, 1995). In many cases NGOs and civil society organizations have been instrumental in advocating greater public participation: this is discussed by Hulme (Chapter 7, this volume). The instances reported above almost certainly understate the extent of activity by developing-country governments, given the general sparsity of documentation in the public domain. Thus it seems fair to conclude that there is significant evidence of NPM-style service delivery initiatives being taken, despite the misgivings of those who have argued a priori that they are inappropriate (Matheson, 2000; Schick 1998). However, we still need to understand how these initiatives have in fact been carried out, why it is these particular countries and not others that have carried them out, and what other initiatives have been taken. Implementation of NPM-style Initiatives If evaluation material on industrialized-country experience is sparse, material on developing countries is rarely better than anecdotal and fragmentary. This is not usually because developing-country governments are reluctant to expose themselves to scrutiny, since a consequence of the ubiquitous donor presence is that senior officials, and sometimes even ministers, have resigned themselves to being available even to the itinerant researcher. But governments lack money and donors lack interest; until very recently donors have been busy with issues of governance and of financial and human resource management. Academic authors will call for research at the drop of a hat, but in this case the need is palpable. The tentative impression, however, is of a familiar process of interaction between an imported model and domestic imperatives, where the model,

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shaped to a greater or lesser extent by local conditions, is used as a tool to solve local problems, or deployed as a weapon in local battles. Malaysia illustrates this quite well. Clearly Malaysia’s initiatives have a strong NPM outward appearance. But, as Common (1999) has pointed out, there is a discrepancy between form and reality. In a particularistic setting, TQM and quality circles have been partly a device for cementing the unstable merit principle in place, while initiatives in general have been dyed as deeply with Muslim as with NPM rhetoric. Common argues further that NPM in Malaysia has been deployed to consolidate the grip of a dominant elite on the levers of power. (The reader will note how this echoes the similar claim made in relation to OECD countries which we reported earlier.) Although we have not discussed devolution in this chapter, it may be relevant to note that McCourt (forthcoming b) has shown how administrative devolution in Nepal actually increased the incidence of patronage in public appointments, with predictable consequences for the efficiency of public agencies. McCourt (forthcoming a) describes how a similar, and again ostensibly orthodox, devolution in Sri Lanka was actually a device aimed mainly at co-opting the Tamil minority into structures of governance. Where contracting is concerned, Bennett and Mills (1998) found that the performance benefits in the six countries that they studied were mixed, that poor countries were likely to find contracted provision to be more rather than less expensive, and that contracting imposed an even heavier administrative burden than direct provision. Significantly, they found striking similarities with the industrialized-country experience as reported by Walsh et al. (1997). One similarity is that it has been mainly manual rather than professional services that have been put out to tender. Bennett and Mills conclude that direct provision is preferable where administrative capacity is weak, and point to the importance of strengthening that capacity further. Where contracting in the state-owned enterprises is concerned, performance contracts in Bolivia appear to have contributed to improved performance, but at the expense of some abuses which, because of political factors, were not penalized (Mallon, 1994). A study of experience in India, Pakistan and Senegal again found problems, caused in these cases by unclear performance specifications and failure to enforce contract terms. Interestingly, the failure was as much on the part of the ‘client’ as on the part of the contractor. In one example, a Treasury department failed to honour the terms of the contract, insisting on ‘moving the goalposts’ in mid-contract (Islam, 1993). Finally, we have no independent analysis of the World Bank’s recent foray into service delivery surveys. However, there is a suggestion from one country that the surveys there have not been owned by government and may not translate ultimately into service improvements (Kattermann, 1999; see also Clarke and Wood, Chapter 4, this volume).

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International Influences ‘Western’ influences The pattern of dissemination for NPM-style initiatives belies the simple explanation of a uniform process of globalization. Developing countries have in fact been exposed to a range of influences, which can be conceived as so many magnets, exerting a stronger or weaker attraction.2 Readers may have spotted that the UK represents one of the magnets, since many of the countries cited above are members of the British Commonwealth or, like Jordan, have close historical ties with the UK. The USA has had a similar influence on countries in the Americas such as Brazil and Mexico. There are some countries on which the international magnets exert a weak attraction. China is probably the outstanding example. While it is true that China has recently succumbed to the fashion for downsizing (The Economist, 1998), China’s public sector reforms are following an internal dynamic. For instance, where to draw the line of demarcation between political cadres and civil servants remains a live issue. If there is a Western analogy - and it is a weak one - it is with the UK and US civil service reforms of the late nineteenth century (Tsao and Worthley, 1995; see also Aufrecht and Bun, 1995; Lam and Chan, 1996). Regional influences There has also been something akin to ‘Sanskritization’, the term coined by the Indian anthropologist Srinivas (1989) to describe the hegemony of regional as opposed to Western cultural forms (Sanskritic Hindu culture in the case of the Indian subcontinent). Such regional influence can take complex forms. Thus while Malaysia has clearly drawn from the UK in setting up its client’s charter, it has borrowed its Public Complaints Bureau model from Singapore, while its experiment with TQM is heavily influenced by Japan, as one might expect given the government’s self-conscious adoption of a ‘Look East’ orientation. Moreover, Malaysia has come to act as a regional influence in its own right, being emulated as far afield as Nepal and even South Africa. Economic factors A third major influence has been economic: the commonsense view that there must be a link between economic resources and state performance has a strong empirical basis, as Lane and Ersson have shown (1994). The 1980s and early 1990s have notoriously been a period of intense economic difficulty for many developing countries, especially in Africa and Latin America, and this has affected the resources available for service delivery. There has been a tendency for per capita spending on services to decline. This was the case for

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education and health in five and in seven respectively out of eight African and eight Latin American countries, where decline has been attributed in part to the increasing burden of servicing sovereign debt repayments. The effects were felt in deteriorating teaching materials and increasing pupil-teacher ratios, among other things (Grindle, 1996). It is true that the relationship between service spending and service outcomes is an elusive one (World Bank, 1999) - fortunately so, one might say, since this has allowed some important service indicators, notably infant mortality and adult literacy, to continue to improve even as spending has declined (World Bank, 1983, 1999). But clearly the decline in per capita spending constrains governments’ ability to embark on initiatives, unless donor-funded. A country like Angola, where NGOs have filled the vacuum left by the virtual collapse of state service provision (Christoplos, 1998), may be an extreme case. At the other extreme is Sri Lanka, still a low-income country but enjoying sufficient relative prosperity to embark on some NPM reforms under its own steam after showing the World Bank the door (McCourt, forthcoming a). But certainly for some developing countries, tinkering with NPM-style service delivery mechanisms is just so much fiddling while Rome burns. One response to economic difficulties has been to introduce user charges for services in certain countries. Unlike industrialized countries, whose experience we discussed earlier, it has been the aim of reducing public spending which has driven the reforms (Batley, 1999). Here again the World Bank has had an important influence, with charges appearing as a conditionality in loans. The debate in relation to education is summarized, albeit from a critical perspective, by Colclough (1996). The donors If Western and regional models represent two magnets, the influence of donor agencies, and the World Bank in particular, is a third. OECD bilateral agencies, especially British bilateral aid, have predictably peddled the NPM model, and agencies like UNDP and the Asian Development Bank have been prepared to support elements of it (McCourt, forthcoming a), as has the Commonwealth Secretariat (Commonwealth Secretariat, 1996). The World Bank, for its part, has been ambivalent at best, as is discussed in the concluding chapter in this volume (Chapter 11), where the ‘Washington model’ of reform is discussed. Its presumption, at least until recently, was ‘That no government or little government was better than big government’ (Chaudhry, 1994, p. 199), as one of the Bank’s staffers put it. Readers will note that this presumption was shared with the Reagan and Thatcher administrations in their early phases. It is not fanciful, I think, to suggest that a little of the Reagan/Thatcher hostility to public services rubbed off on the World Bank, with its

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headquarters in America’s federal capital. This might explain why the Bank, while generally sceptical about the NPM model, is enthusiastic about its contracting-out element (Bennett et al., 1997). The Bank is generally inclined towards what might be labelled ‘administrative fundamentalism’. This is a position that stresses the need for budget reform and revenue collection improvement and for pay and employment reform in relation to government employees (Lindauer and Nunberg, 1994), and which implies that governments should get those fundamentals right before turning their attention to improving services. (It should be noted that this attitude is shared by some other observers: see Matheson, 2000; Schick, 1998.) Their emphasis on installing rule-based behaviour also implies a preference for a traditional bureaucratic approach, one that is at odds with the NPM emphasis on ensuring performance through meeting objectives rather than following rules. In a slightly contradictory way, however, the Bank has been an enthusiastic champion of service delivery surveys, egged on by one imaginative internal advocate (Paul, 1992). All the surveys which we reported have in fact been financed by the Bank, and the methodology was originally developed in a policy test tube in Washington (Langseth, 1995). But with this exception, Bank influence has militated against the application of NPM approaches. Domestic Influences Integrity Our use of the magnet metaphor portrays developing countries as mere iron filings, pulled this way or that as they come within rival magnetic fields. This is of course inaccurate, if not offensive. There are domestic factors, and also some indigenous initiatives. The first factor is the integrity, in the sense of absence of corruption, of existing provision. There is evidence that where provision is heavily corrupt, the public will be more concerned to ensure that provision is honest than that it is of high quality (Borins and Warrington, 1996). Such a concern, as has been argued elsewhere (McCourt, forthcoming b), may be better met by Weberian bureaucratic than by NPM-style service provision. Capacity A second factor is the capacity of existing provision. A very interesting case in point, unfortunately not documented in the literature but where the author has some personal experience, is the service delivery White Paper produced by the new ANC-led government of South Africa (Government of South Africa, 1997). Its first draft drew heavily on British experience, and gave pride of place to Citizen’s Charter-style mechanisms. It was heavily

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criticized by ‘the stakeholders’ (a very South African term) for its assumption that there was already a structure for service delivery which simply needed to be streamlined. In reality, the need was to create structures from scratch in areas which the previous government had ignored, and to restore the credibility of structures which citizens had boycotted during the anti-apartheid struggle. Bennett and Mills (1998) point to the very practical problems that absence of capacity is apt to pose: they report simple administrative failures in areas such as paying contractors on time and contract record-keeping. In addition, they point to limited capacity in the parts of the private sector which are expected to bid for contracts as a further constraint, although they also show some ways in which governments have managed to overcome this problem. Indigenous initiatives: Brazil Finally, to what extent can we find service delivery initiatives that do not fit the NPM mould? There seem to be few, and certainly there is no sign of a coherent alternative agenda emerging. The collapse of socialism has tended to discredit ‘classic’ developmental approaches in which the state played a leading role. South Africa is one exception, undocumented as yet. The pioneering experiments carried out in Brazil’s Ceará province and adulated by Tendler (1997) are a second exception. In one of Brazil’s poorest regions, with negligible help from foreign donors, the Social Democrat state government, elected fortuitously in 1987, implemented measures that had the effect of reducing infant mortality by 32 per cent in three years. Their programme, where it was the state rather than fashionable NGOs or civil society organizations which took the lead, was an eclectic one. It included orthodox measures to increase tax revenue and to reduce state expenditure by eliminating ghost workers, but it also launched a programme modelled on China’s ‘barefoot doctor’ scheme to train local people, employed at basic wages, in the essentials of baby care. In a creative variation on the contractingout theme, the state required its drought relief projects to buy supplies from local producers. Given the assurance of a guaranteed buyer, rural people quickly responded by opening hundreds of small businesses to produce reliefrelated items. The programme was unpopular with the state’s legislators, who defected en masse, but very popular with the electors. One should not make too much of this undoubted success - even in Brazil there are signs of ‘Ceará fatigue’. But it does show that in a cash-starved developing-country administration it is still possible to improve service delivery: ‘Being poor is no obstacle to being well governed’ was how The Economist’s (1991) headline put it. There are also interesting parallels with the non-NPM initiatives which we reported earlier from industrialized countries.

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The Developing-country Experience in Summary In summary, there is evidence of significant attempts in developing countries to execute all or part of the NPM service delivery agenda, belying a priori arguments that they are infeasible. The evidence on their effectiveness is sparse, but there have clearly been problems of implementation, particularly with regard to contracting out. On closer inspection, the appearance of orthodox NPM implementation dissolves, yielding to a more complex picture in which NPM measures are first modified and then deployed to solve local and somewhat idiosyncratic problems. There are a number of reasons for all of this. They include the influence of Western and regional models, the influence of international donors, particularly the World Bank, economic factors and, at a domestic level, the integrity and capacity of administration. Some countries, notably China, have been wholly isolated from the NPM agenda. While there are few reported instances of non-NPM initiatives, and no sign of a coherent alternative agenda, South Africa and Ceará state in Brazil are interesting exceptions.

CONCLUSION To what extent, then, does the NPM agenda for service delivery offer a viable model for developing countries? Certainly it has spread to virtually every OECD country with the exception of Japan, and there are significant experiences in some developing countries. However, our review of OECD experience allows us to rule out some of the NPM practices. It is unlikely that Citizen’s Charters, contracting out of professional (as opposed to manual) services, quality circles and the more prescriptive TQM approaches, all of which have delivered indifferent results in industrialized countries, will perform any better in developing countries. When we focus on developing countries themselves, we can see that a number of conditions need to be in place for NPM reforms to flourish. First, and rather banally, they need to be disseminated. At the moment they are mainly confined to countries which have close ties with the UK (possibly also, in the Pacific region, with Australia and New Zealand). Second, economic conditions need to be favourable, allowing money to be allocated to reform. For countries where conditions are not favourable, as things stand, substantial donor funds are only likely to materialize after a government has convinced the World Bank’s administrative fundamentalists that basic reforms and the habit of following rules are in place (although in strengthening rule-following, governments would be entrenching the very bureaucratic practices which the NPM exists to challenge). There are two further conditions at the domestic

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level. Administrative integrity must be such that citizens make quality rather than integrity of service their priority; and administrative capacity must be enough to carry the load which the new approaches impose. It must be admitted that this is a daunting list of conditions. But if we conclude from it that there is nothing in the NPM agenda for service delivery that is relevant to developing countries, we must be clear what we are doing. At the moment there is little sign of the emergence of a coherent alternative agenda for managing services. The return of poverty to the top of the development agenda, with the World Bank (2000) and the UK government (DFID, 2000) both engaged at time of writing in producing policy statements which focus on targeting public services at poor people (see also Macdonald, 1999), is encouraging, but its impact on practice is a long way off. By default, therefore, we are condemning governments to struggle on with discredited bureaucratic modes of provision for which virtually no one can summon up any enthusiasm, except in so far as they guarantee an equally poor level of service to every citizen. Perhaps even after almost twenty years of the present generation of structural adjustment some, or many, governments need to maintain their concentration on the administrative fundamentals. But what models are available for governments whose concentration on the fundamentals has paid off, or for governments which would like to aspire to something more appealing than the infinitesimally small state? What models, indeed, will attract those citizens who would like to see some service improvements in return for their more efficiently gathered taxes? There is perhaps a need to experiment with, and to study, NPM elements such as the use of performance indicators and some contracting-out and quality management approaches, where the OECD experience is promising. The prospects of improvement held out by the increased role for NGOs and civil society, and also the private sector at large, are discussed in the relevant chapters of this volume. There is also a need to search out and to study indigenous non-NPM approaches such as those that have been taken in recent years in South Africa and northeastern Brazil, approaches in which the state has, rather unfashionably, played a leading role. We might even go so far as to retrieve some of the earlier experiments, in both industrialized and developing countries, from the dustbin of history to which the collapse of Communism has temporarily consigned them.

NOTES 1. 2.

We exclude here the issue of devolution, which is discussed at length by Polidano (Chapter 3, this volume; see also McCourt, forthcoming b). The following section draws on Dolowitz and Marsh’s (1998) work on policy transfer, though the actual mechanisms of transfer suggested here have been developed independently.

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Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 38-58. Dunsire, A. and C. Hood (1989), Cutback Management in Public Bureaucracies: Popu1ar Theories and Observed Outcomes in Whitehall, Cambridge: Cambridge University Press. The Economist (1991), ‘Hope from the north-east’, The Economist, 321 (7736), SS18-20. The Economist (1998), ‘Zhu takes on the red-tape army’, The Economist, 14 March, p. 83. Elcock, H. (1998), ‘The changing problem of accountability in modern government: an analytical agenda for reformers’, Public Policy and Administration, 13 (3), 23-37. Eldridge, D. and W. McCourt (1998), Human Resource Management and Development, London: School of Oriental and African Studies. Frant, H. (1997), ‘The new public management and the new political economy: missing pieces in each other’s puzzles’, in L. Jones, K. Schedler and S. Wade (eds), Advances in International Comparative Management: International Perspectives on the New Public Management, Greenwich, Conn: JAI Press, pp. 71-88. Godber, G. et al. (1976), A Question of Quality? Roads to Assurance in Medical Care, Oxford: Oxford University Press. Goldsworthy, D. (1991), Setting up Next Steps: A Short Account of the Origins, Launch and Implementation of the Next Steps Project in the British Civil Service, London: HMSO. Government of South Africa (1997), White Paper on Transforming Public Service Delivery, Pretoria: Department of Public Service and Administration. Government of Uganda (1994), Management of Change: Context, Vision, Objectives, Strategy and Plan, Kampala: Ministry of Public Service. Green, D. (1990), ‘A missed opportunity’, in D. Green, J. Neuberger, M. Young and M. Burstall (eds), The NHS Reforms: Whatever Happened to Consumer Choice?, London: Institute of Economic Affairs. Greer, P. (1994), Transforming Central Government: The Next Steps Initiative, Buckingham: Open University Press. Grindle, M. (1996), Challenging the State: Crisis and Innovation in Latin America and Africa, Cambridge: Cambridge University Press. Hill, S. (1991), ‘Why quality circles failed but TQM might succeed’, British Journal of Industrial Relations, 29, 541-68. Hobsbawm, E. (1994), Age of Extremes: The Short Twentieth Century, 1914-1991, London: Michael Joseph. Islam, N. (1993), ‘Public enterprise reform: managerial autonomy, accountability and performance contracts’, Public Administration and Development, 13,129-52. Jordan, G. (1997), ‘The search for governmental efficiency’, in A. Massey (ed.), Globalization and Marketization of Government Services: Comparing Contemporary Public Sector Developments, London: Macmillan, pp. 105-27. Jun, J. and O. Koike (1998), ‘Why is total quality management not popular in Japanese public administration?’, International Review of Administrative Sciences, 64, 275-88. Kattermann, D. (1999), Personal communication to author. Kirkpatrick, I. and M. Lucio (eds) (1995), The Politics of Quality in the Public Sector, London: Routledge. König, K. (1997), ‘Entrepreneurial management or executive administration: The perspective of classical public administration’, in W. Kickert (ed.), Public

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Management and Administrative Reform in Western Europe, Cheltenham, UK and Lyme, USA: Edward Elgar, pp. 213-32. Lam, T. and H. Chan (1996), ‘China’s new civil service: what the emperor is wearing and why’, Public Administration Review, 55, 479-84. Lane, J. and S. Ersson (1994), Comparative Politics: An Introduction and a New Approach, Cambridge: Polity. Langseth, P. (1995), ‘Service delivery survey: a diagnostic tool’, in P. Langseth, S. Nogxina, D. Prinsloo and R. Sullivan (eds), Civil Service Reform in Anglophone Africa, Washington, DC: Economic Development Institute, pp. 239-64. Larbi, G. (1998), Implementing New Public Management Reforms in Ghana: Institutional Constraints and Capacity Issues: Cases from Public Health and Water Services, University of Birmingham, doctoral dissertation. Levine, C. (1985) ‘Introduction’, in C. Levine (ed.), The Unfinished Agenda for Civil Service Reform: Implications of the Grace Commission Report, Washington, DC: Brookings Institution, pp. 1-14. Lindauer, D. and B. Nunberg (eds) (1994), Rehabilitating Government: Pay and Employment Reform in Africa, Washington, DC: World Bank. Locke, E. and G. Latham (1990), A Theory of Goal-Setting and Task Performance, New York: Prentice-Hall. Locke, E., G. Latham and M. Erez (1991), ‘The determinants of goal commitment’, in R. Steers and L. Porter (eds), Motivation and Work Behaviour, New York: McGrawHill, pp. 370-89. Macdonald, M. (1999), Influence and Access: Local Democracy and Basic Service Provision, London: One World Action. Mackintosh, M. (1998), ‘Public management for social inclusion’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 76-93. Mainwaring, R. (1988), The Walsall Experience: A Study of the Decentralisation of Walsall’s Housing Service, London: HMSO. Mallon, R. (1994), ‘State-owned enterprise reform through performance contracts: the Bolivian experience’, World Development, 22, 925-34. Matheson, A. (2000), New Public Management: How Well Does It Travel?, Oxford: Oxford Policy Institute, ‘Rethinking approaches to government reforms’ Seminar Series, No. 1. Mazower, Mark (1998), Dark Continent: Europe’s Twentieth Century, London: Penguin. McCourt, W. (forthcoming a), ‘Finding a way forward on public employment reform: A Sri Lankan case study’, Asia Pacific Journal of Human Resources. McCourt, W. (forthcoming b), ‘The new public selection? Competing prescriptions for the development of the Public Service Commission of Nepal’, Public Management. McCourt, W. (forthcoming c), ‘Towards a strategic model of employment reform: explaining and remedying experience to date’, International Journal of Human Resource Management. McLachlan, G. (ed.) (1976), A Question of Quality? Roads to Assurance in Medical Care, Oxford: Oxford University Press. Meyer, J. and B. Rowan (1977), ‘Institutionalized organizations: formal structure as myth and ceremony’, American Journal of Sociology, 83, 340-63. Meyers, R. and R. Lacey (1996), ‘Customer satisfaction, performance and

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accountability in the public sector’, International Review of Administrative Sciences, 62, 331-50. Mol, N. (1995), ‘Quality improvement in the Dutch Department of Defence’, in Pollitt and Bouckaert (1996), pp. 111-20. Newman, J., S. Richards and P. Smith (1998), ‘Market testing and institutional change in the UK civil service: compliance, non compliance and engagement’, Public Policy and Administration, 13 (4), 96-110. Observer (1999), ‘Labour targets cradle to grave’, Observer, 16 May, p. 9. O’Conghaile, W. (1996), ‘Current and future developments in service quality initiatives in Portugal, France and the United Kingdom’, in OECD, Responsive Government: Service Quality Initiatives, Paris: OECD, pp. 65-70. OECD (1995), Governance in Transition: Public Management Reforms in OECD Countries, Paris: OECD. OECD (1998), User Charging for Government Services: Best Practice Guidelines and Case Studies, Paris: OECD, Occasional Paper No. 22. Osborne, D. and T. Gaebler (1992), Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, Reading, MA: AddisonWesley. O’Shea, R. (1996), ‘Case study in service quality improvement: social welfare services, Ireland’, in OECD, Responsive Government: Service Quality Initiatives, Paris: OECD, pp. 203-17. Paul, S. (1992), ‘Accountability in public services: exit, voice and control’, World Development, 20, 1047-60. Paul, S. and S. Sekhar (1997), ‘A report card on public services: a comparative analysis of five cities in India’, Regional Development Dialogue, 18 (2), 119-35. Pollitt, C. (1993), Managerialism and the Public Services, Oxford: Blackwell. Pollitt, C. (1995), ‘Improvement strategies’, in Pollitt and Bouckaert (1996), pp. 131-61. Pollitt, C. and Bouckaert, G. (eds) (1996), Quality Improvement in European Public Services, London: Sage. Queisser, Monika (1998), The Second-Generation Pension Reforms in Latin America, Paris: OECD. Reichard, C. (1997), ‘“Neues Steuerungsmodell”’: local reform in Germany’, in W. Kickert (ed.), Public Management and Administrative Reform in Western Europe, Cheltenham, UK and Lyme, USA: Edward Elgar, pp. 61-82. Roth, G. (1987), The Private Provision of Public Services in Developing Countries, Oxford: Oxford University Press. Sarji, A. (1995), The Civil Service of Malaysia: Towards Efficiency and Effectiveness, Kuala Lumpur: Government of Malaysia. Schick, A. (1998), ‘Why most developing countries should not try New Zealand’s reforms’, World Bank Research Observer, 13 (1), 123-31. Srinivas, M. (1989), The Cohesive Role of Sanskritization and Other Essays, Delhi: Oxford University Press. Sunday Times (1999), ‘Quality service charters for the public service’, Sunday Times (Malta), 9 May, p. 7. Tendler, J. (1997), Good Government in the Tropics, Baltimore, MD: Johns Hopkins University Press. Trosa, S. (1995), ‘Quality in the French public service’, in Pollitt and Bouckaert (1996), pp. 58-68. Tsao, K. and J. Worthley (1995), ‘Chinese public administration: Change with

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continuity during political and economic development’, Public Administration Review, 55, 169-74. Turton, G. (1996), ‘Current and future developments in service quality initiatives service quality programme: the United Kingdom’, in OECD, Responsive Government: Service Quality Initiatives, Paris: OECD, pp. 59-64. United Nations (1995), Performance Contracting for Public Enterprises, New York: United Nations. Van Vught, F. and D. Westerheijden (1996), ‘Quality measurement and quality assurance in European higher education’, in Pollitt and Bouckaert (1996), p. 33-57. Walsh, K., N. Deakin, P. Smith, P. Spurgeon and N. Thomas (1997), Contracting for Change: Contracts in Health Social Care and Other Local Government Services, Oxford: Oxford University Press. Wilkinson, A., T. Redman and E. Snape (1993), Quality and the Manager, London: Institute of Management. World Bank (1983), World Development Report 1983, Oxford: Oxford University Press. World Bank (1999), World Development Report 1998/99, Oxford: Oxford University Press. World Bank (2000), World Development Report 2000 (draft chapter 3), Washington, DC: World Bank.

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Reinventing the Third World state: service delivery and the civic realm David Hulme

INTRODUCTION Shifts in development theory and policy in the late 1970s and early 1980s favoured the ‘rolling back of the state’ and opened up a golden era for ideas about the role of civic organizations in development (Hulme and Edwards, 1997; White and Robinson, 1997 and 1998).1 In particular, the civic realm has undergone a vast expansion in terms of the numbers and scales of operation and finance of international and domestic non-governmental organizations (NGOs) and a renewed focus on the role of grass-roots organizations (GROs) in meeting the needs of people at the local level. Salamon (1993, p. 1) wrote of an ‘associational revolution’ sweeping the late twentieth-century world that might have profound impacts on the nature of society. More recently such grand claims have been scaled down with the ‘return of the state’ into development thinking (most clearly illustrated by the World Bank’s (1997) recognition that a minimal state is not the best prescription for economic growth or poverty reduction) and a growing awareness that there are limits to what civic organizations can contribute to development. Increasingly, talk is of the need for ‘partnerships’ and pluralist approaches to service provision. In this chapter we explore the implications of the contemporary context and the ‘return of the state’ for civic organizations - and particularly on NGOs and GROs - with a focus on the role that they can play to help improve the access that poorer and disadvantaged ‘publics’ have to basic social and economic services.

THE CIVIC REALM: CIVIL SOCIETY OR THE THIRD SECTOR? Although it is now common to make generalizations about the role of ‘civil society’ and ‘the third sector’ in development, both of these concepts are 129

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contested and are used in different ways by different writers. I have chosen to write of the civic realm in this chapter in an attempt to avoid some of the confusion arising from the use of these terms. There appear to be two main issues: the values embodied in civil society and the third sector, and whether there are two or three distinct sectors into which human activity can be split. For international development agencies, aid donors and normative theorists, civil society and the third sector are associated purely with positive attributes. Thus the bigger (or denser) civil society is, the better. The fact that civil society is embedded in a set of power relations and the possibility that civil society might be peopled by organizations that promote racial, ethnic, gender or religious discrimination and that may use physical violence to achieve their goals, is not acknowledged. This is clearly untenable given the historical record. In writing of the civic realm and civic organizations in this chapter I make no assumption that its component parts are socially inclusive and nonviolent. The second issue relates to how many ‘sectors’ one conceptualizes a society as having. While it is not necessary here to explore the history of the concept of civil society,2 it must be observed that in contemporary usage the term sometimes indicates a two-sector model (the state and non-state or private) and at others a three-sector model (the state, the market and the civic). The latter usage is most common in recent times, on the premise that there is a fundamental distinction between private action to make a financial profit and private action that is not commercially motivated. From this perspective we can understand human activity in terms of the state, the commercial sector and civil society (or the third sector).3 Organizations within each sector are held to use different forms of incentive to secure compliance with their goals (Fowler, 1997). In this view, the state adopts hierarchical mechanisms of control and enforcement, the private sector uses competitive market mechanisms and monetary rewards, while the third sector relies on voluntaristic mechanisms such as personal values and commitment, discussion, persuasion and bargaining. Proponents of this framework argue that civil society or the third sector has a set of distinct characteristics. They are not part of state structures, are not primarily motivated by commercial considerations or profit maximization, are largely self-governing, and they rely on voluntary contributions (of finance, labour or materials) to a significant degree. Uphoff (1993 and 1995) challenges the idea of three distinct categories and argues for a continuum that recognizes, at least partially, the variations that occur within a sector. This moves (Uphoff, 1995, p. 26) from a ‘public sector’ (composed of a public administration and political agents), through a ‘membership sector’ (composed of membership organizations and cooperatives) to a ‘private sector’ (composed of non-profit, and at its pole

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position, of for-profit businesses). This framework has the great advantage of separating organizations that are member-owned and member-managed from large-scale charities which are professionally managed and which are to a high degree ‘owned’ by a small number of trustees or board members. By discussing these different concepts here I do not seek to determine which model is ‘best’ but to make the reader aware of the unfeasibility of identifying an uncontested civic realm. In this chapter the ‘civic organizations’4 that are discussed range from local-level membership organizations to cooperatives and to public benefit organizations operating as charities. All must have a significant degree of autonomy from the state and so, for example, cooperatives that are essentially an extension of the state (such as Sri Lanka’s multi-purpose cooperative societies) are not examined. Similarly, organizations that claim non-profit status while hiding their commercial focus (for example Fowler’s (1997, p. 32) commercial NGOs or CONGOs) are regarded as businesses in disguise, not as civic organizations. Even with these exemptions this civic realm covers an enormous range of organizations. These vary in terms of scale (from vast multinational NGOs to tiny savings and credit clubs), formality (from the registered organizations with written procedures to informal groups that have no documentation), role (from multi-activity to a single-product focus) and strategy (from working closely with government and business to adopting a confrontational approach). Most of the examples cited relate to domestic and international public benefit organizations (NGOs) and developmentally oriented GROs that may have local origins or may be NGO-induced. A final point to note in this section, and which will be returned to in the conclusion, is the fallacy of the ‘optimal’ sector. Much development theory and practice has been based on the premise that there is a best-choice sector for specific functions, for example the state for law and order or the civic realm for caring for the disabled. However, the empirical record and emerging theory (Robinson and White, 1997, pp. 24-46) provide a clear argument that development goals are most likely to be achieved when different agencies state, civic and private - take on interlinked roles that, within specific contexts, allow their comparative advantages to be captured while their comparative weaknesses are avoided.

THE CIVIC REALM AND DEVELOPMENT Ideas about the role that civic action should play in development have changed profoundly over time. While there has never been a consensus about what role is appropriate, it is possible to identify the dominant discourse at particular times and chart how this has changed.

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In the early ‘development decades’ (the l950s and 1960s) civic organizations were not seen as having great significance. The state was seen as the prime designer and implementer of development policies because of ‘market failure’. Allied to this was what may be termed ‘civic failure’.5 A belief that pre-existing civic organizations (irrigation societies, rotating savings and credit associations, burial societies, labouring groups and so on) were ‘traditional’, and thus an obstacle to development, meant that when a need for civic action was identified, this was done through state-induced association. The organizations created by such means - cooperatives and community development associations - were usually also state-controlled (Hulme and Turner, 1990, pp. 184-90). Although anthropologists pointed out that during the colonial period most welfare provision (social safety nets, caring for the disadvantaged) and economic development activity (financial services, technological change) were through civic provision, their arguments received little attention in an era of state-led modernization. During the 1970s the failure of this approach rapidly to deliver economic growth and poverty reduction was increasingly acknowledged and by the early 1980s a paradigm shift was evident. Neoliberal ideas became dominant, arguing that ‘state failure’ had blocked development and that economic liberalization,6 within the context of a minimal state, was the only way forward (Turner and Hulme, 1997). Business was afforded pride of place within this paradigm but, to greater and lesser degrees, the civic realm was seen as having a supplementary role. It was viewed as comprising formal private voluntary organizations - basically, non-profit businesses - that have a comparative advantage in working with ‘customers’ who are poor or disadvantaged. For more than a decade this paradigm was a major influence on policy, and elements of the civic realm, particularly international NGOs based in OECD countries (northern NGOs or NNGOs) and national NGOs (southern NGOs or SNGOs), reaped the benefit. It was clear, however, by the mid-1990s that these policies were not achieving their prime goal of stimulating rapid economic growth in poorer countries. Development was also being refined, with a much greater emphasis on poverty reduction and human rights, in ways that challenged neoliberal and economistic analyses. The exact nature of these changes is still not clear and at present they may be interpreted as either populist or pluralist.7 Arguments about the centrality of ‘social capital’ to development, as ‘society’ creates ‘governance’ and ‘governance’ makes the economy work (Putnam, 1993), allied to the contemporary enthusiasm for participatory approaches8 to policy and projects (Chambers, 1997; Blackburn and Holland, 1998), provide support for a populist paradigm dominating contemporary discourse. After eras of state-centred and market-centred strategies, the international development community appears to be moving to a society-centred approach. This neopopulist shift is not without critics,

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however. Brown (1998) and Mosse (1994) have pointed out the ethical and practical problems of participatory approaches and the ‘new professionals’ who are their vanguard, while Tendler (1997) has challenged Putnam and argues that the state can play a leading role in creating an active citizenry. An alternative analysis argues that by the late 1990s development theory and practice had begun to understand that achieving development goals was not simply about finding the correct sector (state or market or civil society) to prioritize; rather, it was about finding the ways in which state, market-based and civic organizations could interrelate to promote development in differing contexts. This argument had been well made in earlier eras (most notably by Leonard, 1982) but during the late 1990s support for it has grown (Edwards, 1999; Robinson et al., 2000; Robinson and White, 1997; Evans, 1996). It is further strengthened by the influence of the NPM model of public management, which envisages a central role for non-state providers of public services (Dunleavy and Hood, 1994). Such providers could be either private for-profit or civic, not-for-profit organizations. The relationships between state, market and civic organizations do not have to be seen as a zero-sum game but could be complementary and even synergistic. ‘An organizational arena which has in the past tended towards practices which could be referred to as serial monogamy, has been indulging in more complex and polygamous behaviours’ (Robinson et al., 2000, pp. 1-2).

STATE-CIVIC ORGANIZATION RELATIONSHIPS Given the premise of state failure that led to the renewed interest in civic provision one could anticipate that state-civic organization relationships would be strained. This is often the case, but these relationships are varied and complex with specific contextual factors - such as the sector a civic organization works in, government policy, the nature of its financial supporters and the interpersonal relationships between its leaders and government officials - influencing the exact nature of the relationship. At times some parts of the state may be on favourable terms with civic service provision agencies, while others are antagonistic. For example, in Ethiopia during the l990s northern NGOs had good relationships with the central government but were greatly resented by local authorities (Teka, 1994). A key factor determining state-civic organization relationships is the disposition of the regime. Where there was a pre-existing legacy of service delivery by civic organizations, as in India, national leaderships have been highly supportive in their rhetoric and gently supportive in their actions. By contrast, in much of Latin America ‘deep estrangement’ (Bratton, 1989)

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has been reported as regimes have felt threatened by the adversarial stance that civic organizations have taken. Similarly, where regimes have (or formerly had) an ideological position that discourages civic action, such as Malaysia, Tanzania or, in the extreme, Myanmar, state-civic organization relationships are usually based on suspicion. Relationships are far from fixed, however. For example, the Kenyan government’s originally favourable attitude to domestic and foreign NGOs changed dramatically in the l990s (Box 7.1). While civic organizations often assert their right to know what governments are doing, governments have at least four legitimate reasons for wanting to

BOX 7.1 NGO-GOVERNMENT RELATIONSHIPS IN KENYA Following the attempted coup in 1982, the Kenya government’s previously open and accommodating attitude towards NGOs gradually hardened to the extent that in 1989, for instance, the national women’s organization (Maendeleo yu Wanawake) was affiliated to the national President’s party by decree. Similar threats have been made against the National Council of Churches, and the more radically empowering NGOs, particularly those affiliated to the Catholic Church. They have come under close scrutiny from the internal security services. In 1991, after only cursory consultation with NGOs themselves, a new framework was established for compulsory registration of NGOs with a statutory board accountable to the Office of the President. Efforts to ensure compatibitity of NGOs’ operations with local development plans include the requirement that NGOs should submit proposals for expatriate recruitment and for imports to the relevant District Coordinating Committee for approval. Additionally, NGOs are required to coordinate their activities at district level with those of government under the District Focus for Rural Development strategy established in 1985. Actions such as these have led to views (Kenya Daily Nation, 26 June 1992) that the Coordination Board created under the NGO Act will continue to be treated with suspicion by NGOs. Source: Farrington and Bebbington (1993), p. 52, from original work by K. Willard and J.G. Copestake.

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know what the civic realm is up to. The first of these is to ensure that civic organizations are pursuing activities that merit their special treatment, such as being non-taxable, and having import duties waived in many countries because of their charitable status. The second is to ensure that civic groups, and especially non-membership NGOs, properly account for the resources that they utilize. There is now widespread concern in Asian and African countries that large numbers of NGOs are being set up largely for the benefit of their directors and staff. Unfortunately most governments have a very limited capacity to identify such fraud and punish its perpetrators. Interestingly, although many civic organizations push for government transparency and accountability, very few are prepared to be transparent about their own activities (Edwards and Hulme, 1995). The third reason for government oversight is to try to ensure that different civic organizations coordinate their activities with government agencies. This requirement often leads to conflict, with organizations claiming that coordination actually means control and greatly reduces their efficiency, as has been the case in Nepal (see Box 7.2). Governments point out that failures in coordination mean that villagers receive different messages from different

BOX 7.2 GOVERNMENT MECHANISMS FOR NGO COORDINATION IN NEPAL Voluntary action at the local level has a long history in Nepal, and continues to be an important means of providing facilities (bridges, trails, canals, schools, temples) where communities remain isolated. From the 1950s to the 1970s, government was hostile to the establishment of new, larger NGOs unless they could serve to draw in foreign funds and provide employment opportunities for the élites who supported the political system. Compulsory registration of NGOs with the newly established Social Service National Coordination Council (SSNCC) under the patronage of the Queen was introduced in 1975, with strengthened procedures in 1978, but a number of NGOs are still able to operate without registering. The new constitution of 1990 removed some of the SSNCC’s powers of patronage and control, but a recently drafted government directive envisages a new range of financial controls over NGOs and visa restrictions for expatriate NGO staff, to be implemented through a re-strengthened SSNCC. Recently approved local government bills envisage NGO representation on Advisory Committees to be set up by each Municipality and

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Village Development Committee. NGOs will also participate in the design and implementation of local development activities, with funds both from increased local government budgets and from their own resources. Local government bodies are given the powers to ensure that the activities of NGOs are consistent with the agreed local development framework, to insist on coordination of activities among NGOs and to audit their accounts. Although the extent to which this legislation will be implemented remains to be seen, it is clear that closer coordination of NGOs’ activities with government development plans is anticipated. Source: Farrington and Bebbington (1993), p. 54, from original work by N. Shrestha and J. Farrington.

agencies. This causes confusion and leads to unnecessary duplication of services in some areas while other areas have no services at all. The final reason that governments have to oversee civic organizations’ activities relates to internal security. Many governments are concerned that civic organizations create ideal vehicles for hiding types of political activity which, rightly or wrongly, the government has defined as unlawful. In Central and South America, NGOs have at times been used as cover to help resource insurgents of both the Left and the Right. There is much evidence that the USA’s Peace Corps was utilized by the CIA for gathering intelligence in the 1960s and 1970s. Concerns that civic organizations may threaten regime security remain a central issue in many countries.

SERVICE DELIVERY AND THE CIVIC REALM Two main roles can be identified for civic action with regard to service delivery. Clark (1995) has characterized these as ‘supply side’ and ‘demand side’ understandings of the civic realm. From a supply-side perspective, civic organizations can be viewed as having a significant role to play in the direct provision of social and economic services. From the demand side, their role can be seen in terms of ‘voice’ - mobilizing and clarifying demand for services, from both the state and market, so that the broader population is able to achieve its development goals and ensure that providers are accountable for their actions and achievements. These perspectives are not exclusive and so it is possible for an organization (or a network of interlinked organizations) to function on both the supply and demand sides and forge the linkages between microtasks (provision of goods, social and financial

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services, capacity-building, process facilitation and reconciliation) and macrotasks (policy advocacy, lobbying, public education and mobilization, reconciliation and monitoring compliance) of which Fowler (1997, pp. 12-16) writes. In the following sections we explore these two roles in more detail. Direct Service Delivery: the Supply-side Role of the Civic Realm The ‘rise and rise of NGOs’ throughout the 1980s and early 1990s was fuelled by international development agencies and aid donors who assumed that civic organizations should rapidly scale up their direct service provision function (Edwards and Hulme, 1995). There were macro-level reasons for this that were both ideological (rolling back the state) and pragmatic (as structural adjustment programmes cut into public expenditure, increasing numbers of poor and ‘newly’ poor people lacked basic services). These were matched by micro-level supports, arguing that the organizational attributes of NGOs and GROs favoured effectiveness and efficiency and gave them an enhanced capacity to ‘reach the poor’ (Fowler, 1988).9 While one might assume that there was also a substantial body of empirical evidence demonstrating the comparative performance of civic organizations, this was not the case.10 Historical and other factors mean that changes in the activities of civic organizations have varied enormously. At one extreme are aid-dependent countries in Africa, but also Bangladesh in South Asia. In such cases, and fostered by donor financial and technical support, there has been a massive expansion. Robinson and White (1997) review the situation in Africa and find that commonly 40 to 50 per cent of hospital facilities are provided by NGOs or churches. In Zimbabwe, some 68 per cent in rural areas are church-provided while in two divisions in Kenya, 80 per cent of both health and educational services are provided by a single NGO.11 Civic provision in education is at similar levels: in Tanzania there are now 160 places in NGO-run secondary schools for every 100 in state-run schools. Even in Kenya, where the state remains the major provider of primary educational services, there is a heavy reliance on community contributions to schools and parent-teacher associations. In Bangladesh the number of NGOs has proliferated beyond the capacity of the state to register them. Most NGOs mobilize village organizations or GROs so that a complex web of NGOs and GROs is spread across the country. In addition, a number of super-NGOs have evolved such as the Bangladesh Rural Advancement Committee (BRAC), Proshika, ASA, Swarnirvar, TMSS and RDRS, with client numbers in excess of 250 000 (Credit and Development Forum, 1998, p. 7). The biggest, BRAC, employs more than 24 000 full-time staff and works with around 3 million households (Box 7.3). In other parts of South Asia and in Latin America the expansion of civic

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BOX 7.3 THE BANGLADESH RURAL ADVANCEMENT COMMITTEE (BRAC) BRAC was set up in 1972 by a group of Bangladeshi social activists seeking to provide relief and welfare services to people in the Sylhet area following the traumas of the war of liberation. In 1973, it began to experiment with integrated development projects - agriculture, fisheries, rural crafts, local organization, literacy, health and family planning - in the Sulla area. It found it difficult to succeed with a community-based approach and in 1976 decided to work exclusively with the landless poor, and not permit other villagers to become programme members. In the late 1970s it also undertook research into the socio-economic processes of village life and produced influential reports such as ‘The Net’ describing how more affluent villagers and bureaucrats ‘net’ resources targeted for the poor. During the 1980s and l990s BRAC expanded its programmes across Bangladesh. Its Oral Therapy Extension Programme reached 13 million women, it runs more than 10 000 non-formal primary schools and its Rural Credit Programme has 2.5 million members. A BRAC Bank lending only to poor women and men, is to be established. Recently it has abandoned is Freirianinspired Functional Education Programme for consciousnessraising and started a large-scale Human Rights and Legal Education Programme (HRLE) that gives members specific information about their rights according to the laws of Bangladesh. In addition to its poverty-reduction activities BRAC runs a private university and a large-scale printing business (the profit from which is used for its development activities). BRAC is directed by one of its founders, Fazle Abed, who was originally employed in the private sector. It now employs 24 000 people full time, has a 28 storey high head office and has achieved international recognition for its work. Source: Updated from Turner and Hulme (1997), p. 205.

service provision has been less extensive and has generally not focused on ‘core’ state functions, such as primary education and primary health care, as is common in aid-dependent countries. Provision has targeted neglected issues such as adult literacy and non-formal education and disability - while the

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for-profit private sector has taken the lead in providing health services. A particular feature of NGOs in Latin America has been their emphasis on functional literacy, political empowerment and more radical approaches to development. In terms of public management, several writers have distinguished two main ways in which civic organizations can be involved in service delivery. The first is service delivery on behalf of the state, usually through contracting out, which is an important element of the NPM doctrine (see Minogue, Chapter 2, this volume). The second is the autonomous provision of services by civic organizations to meet needs that the state has not prioritized or to fill ‘gaps’ in state provision. In the case of developing countries a third mode can be identified - service delivery by civic organizations (usually NNGOs or SNGOs) on behalf of an aid donor. This mode, as indicated earlier, has become increasingly important since the 1980s. The key features of these different arrangements are summarized in Table 7.1. It must be noted, however, that the ‘agent of an aid donor’ mode is often complex. Commonly donors argue that their aid is disbursed in agreement with host-country governments so that their support for NGOs is on behalf of the host government. In many cases, for example Bangladesh, high-level government sources report that donors make it clear that if programmes are not implemented by NGOs, then aid will not be provided. Interestingly, for the first category (provision on behalf of the state) - which is central to NPM theory and practice - there is little evidence of large-scale utilization. Where this mode has been used it is mainly in Latin America (particularly Bolivia and Chile) and has focused on agricultural research and extension and rural water supply and sanitation (Robinson, 1997, pp. 71-4). An extensive literature review found that ‘there were no documented examples of NGO contracting on a competitive basis by governments in Africa and Asia which were outside a donor-funded aid project’ (ibid., p. 71). There are several reasons for this situation, but probably of greatest importance is the lack of commitment of most governments in developing Table 7.1

Modes of direct service delivery by civic organizations (CO) Design of the service

Delivery of the service

Provider of finance for the service

Prime accountability to

CO as agent of the state CO autonomously

State

CO

State

State

CO

CO

Trustees and/or donors

CO as agent of an aid donor

Donor or donor with CO

CO

CO or unconditional grants Donor

Donor

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countries to the NPM agenda. Allied to this lack of commitment is a lack of resources (with public expenditure levels capped or reducing) and a lack of state capacity to ‘contract out’. The technical and managerial demands of setting standards, preparing contracts, running a tender process, evaluating proposals, monitoring contracts and applying standards are beyond the capacity of many governments. The second mode - autonomous provision - is an important activity for civic organizations that have access to independent finance such as churchbased groups and self-financing institutions (such as credit unions). However, beyond such fortunate groups most COs rely on financial support from donors or private sponsors. It is the third mode - CO service provision on behalf of donors - that has been the growth industry of the 1980s and 1990s. This model operates in a number of different ways. The World Bank and US Agency for International Development (USAID) commonly use a client-contractor model - drawing up detailed tender specifications for service delivery (usually as a project), taking tenders and making an award. Other donors, such as the UK’s Department for International Development (DFID) and the Swedish International Development Agency (SIDA), usually award grants, not contracts, to NGOs and commonly the plans that are to be implemented are the result of detailed negotiations between the NGO and the donor (or donor consortium). Powerful NGOs, such as BRAC (see Box 7.3), are able to take the lead in shaping how they will use grants; smaller, less-established NGOs are more likely to have to accept grants for which the activities are virtually pre-programmed by aid donors. Robinson’s (1997) analysis of NGOs operating as ‘public service contractors’ found that the World Bank contracted NGOs for their specialist skills and expertise and a belief that this would reduce costs because of the NGOs’ low overheads and tax advantages. While some volunteer programmes (for example the UK’s Voluntary Service Overseas) can demonstrate considerable cost savings over privately contracted technical cooperation officers, NGOs may not always be ‘cheaper’. Evidence from two projects implemented by CARE in West Africa provided mixed results: a road construction project was relatively expensive, but a school building programme was estimated to be 30 per cent cheaper than the private sector would have been (ibid., p. 66). One of the main ways that the World Bank has financed civic organizations for service delivery has been through the social safety nets it has supported to mitigate the effects of structural adjustment. The Emergency Social Fund in Bolivia was implemented by 500 organizations, out of which around 80 per cent were NGOs or GROs. It was judged to be successful, but the utilization of this model in Guatemala (ibid., p. 70) and Sri Lanka (Hodson, 1997) was highly problematic. The Bank-designed Egyptian Social Fund has become a

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byword for corruption, with politicians and public servants establishing NGOs and GROs that operate scams on it.12 While for some writers (for example Korten, 1990) the main concern about civic organizations taking contracts with donors has been that this impoverishes civil society - by converting them into non-profit businesses the key issues for our focus are accountability and sovereignty. The adoption of a client-contractor approach by donors such as USAID and the World Bank has created a device by which ‘southern’ states are bypassed and play only a limited role in important fields such as poverty reduction. Donors may talk of ‘partnerships’ but in practice the government is usually the junior partner in such arrangements and, as accountability for implementation is largely to donors, governments do not develop their capacities to contract out services in the future. Donor enthusiasm to extend their ‘direct funding’ of SNGOs (Bebbington and Riddell, 1997) creates similar processes that encourage those engaged in service delivery to the poor to see their prime accountability to aid donors (that is, foreign governments) rather than to southern governments or the citizens that they claim to be assisting. Wood (1997, p. 79) characterized this as ‘the problem of the franchise state ... states without citizens’! It must also be noted that in countries where NGOs have begun to operate on a grand scale, questions have been raised about whether they supplement state capacity or weaken it. The most obvious situation in which this happens is when NGOs (offering more fulfilling work, better pay and conditions, opportunities for overseas travel or whatever) attract key staff out of the civil service. This situation is particularly serious in small countries where replacements are difficult to find. In the Gambia, both the Ministries of Agriculture and Health have reported increased operational problems because of the loss of key personnel to NGOs (Davis et al., 1994). Such losses may not only hamper field activities but, ultimately, may reduce the capacity of governments to formulate policy and undertake internal reforms. In Mozambique, it has been argued that the rebuilding of state capacity has been retarded by the donor preference for funding NGO projects, while in Angola ‘the government ... has turned over responsibility for making use of the civil service to NGOs and donors’ (Christopolos, 1998, p. 262). In other cases, NGOs can contribute to a more generalized loss of motivation in the civil service. In both Bangladesh and Sri Lanka, the author has frequently been told by public sector field staff that results can only be achieved if they are resourced (vehicles, salaries, allowances, telephones and so forth) at the levels of locally operating NGOs. But such a situation is impossible as these NGOs are resource-intensive organizations, despite their image, and their programmes are rarely replicable on a regional or national scale with only domestic funding. This is usually not evident to the government field-worker, who shakes his or her head and may assume that

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nothing can be achieved until everyone has a four-wheel drive or motorbicycle, ‘like NGO people’. While negative impacts on state service provision capacity have been highlighted in the literature, such effects are not automatic and will clearly vary with context. There is much anecdotal evidence from South Africa that ‘the civics’ and NGOs provided a high-quality pool of personnel from which the post-apartheid government drew in the l990s as part of its civil service reforms. In a similar vein, Goodhand (1999) has pointed out that the 15 000 Afghanis presently working for NGOs in that country are the main source from which a public service could be built in the future. They are the main grouping that has high levels of organizational management skills in a society in which military and religious skills and knowledge have been prioritized. Interestingly, in terms of the focus of this volume, there is growing evidence that the expansion of the service delivery role of civic organizations has been associated with NGOs’ adoption of new public management (NPM) methods. Everywhere NGOs talk of the influence of the ‘contract culture’ and report a need to ‘professionalize’ rather than rely on voluntarism. Usually this means taking on private sector practices (or the practices that modernized civil services have been taking on) - market-based pay scales, performance-related pay, short-term staff contracts, strategic planning, performance appraisals, cost monitoring, cost recovery and market research. For those civic organizations associated with foreign aid there are intense pressures for them to ‘standardize’ their methods (Wallace et al., 1997). From such evidence it could now be argued that the civic realm is being ‘reinvented’ along the lines of a performance-oriented bureaucracy accountable to foreign governments! Making the State Work: the Demand-side Role of the Civic Realm The demand side role of civic organizations focuses on improving the access that people (and particularly the poor and disadvantaged) have to stateprovided services.13 It is an indirect role, but when successful it means that civic organization can have a great impact by improving the quality of services that millions, or tens of millions, receive (Edwards and Hulme, 1995). This is an area into which many civic organizations have been moving during the l990s, with agencies ranging from ActionAid (with thousands of staff operating in a score of countries) to the Uganda Society for Disabled Children (with 30 staff in a single country) revisioning and restrategizing to move away from direct service delivery and prioritize policy advocacy and lobbying. The demands of advocacy and lobbying call for quite different capacities and relationships from those of service delivery. Small numbers of staff with research and advocacy skills working in a ‘creative’ environment may be required, rather than larger numbers of staff working in a standardized

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manner. Advocacy also raises questions about the roles of different types of NGOs and particularly about whether ‘northern’ NGOs have any right to engage with influencing public policy in developing countries. The nature of advocacy work is also tremendously varied. At the ‘elite’ end it involves the personal lobbying of politicians and senior bureaucrats alongside the careful use of contacts within the media to get the ‘right’ stories placed in newspapers and on the radio and TV. At the ‘mass’ end it involves mobilizing public opinion - through meetings, briefings, marches and so on and mobilizing the poor and disadvantaged so that they can make their demands for better services directly. The nature of the activity mix varies with the issue that is to be addressed and the specific context. Some issues (for example demanding improved primary health care) may be less politically sensitive than others (such as demanding that incidents of police corruption are investigated). ‘No’ campaigns to block a decision, for example the building of a dam, have a much easier objective to define than advocacy for more complex policy changes, such as a change in rights of access to water. There are also great differences in the type of work involved in policy or legislative change, in trying to reform public organizations so that they implement policy more effectively, and in monitoring the accountability of the public sector. For example, the Uganda Land Alliance (ULA) has found that it is more difficult to get policy implemented than it is to get policy reformed. Getting politicians to issue new policies and change legislation is daunting; but getting politicians and bureaucrats to implement policy - through restructuring the public service, introducing new and detailed procedures, changing financial systems and retraining thousands of middle and junior staff - is far more difficult! Finally, such work requires the maintenance of intense and complex relationships with many other organizations: it is not simply about ‘getting the money and doing the job’. Commonly, a large number of different agencies are involved in an advocacy activity and will need to work out whether they wish simply to network (that is exchange information but work independently) or coordinate much more closely and, for example, establish a coalition in which they formally link their activity and work as a collective entity (Fowler, 1997, pp. 107-19). In the case of ULA, forming an alliance involved 34 NGOs (international and Ugandan) and GROs agreeing to work together and support a common secretariat. Relationships with the state are also important. Civic organizations can seek to influence public policy and the public sector by tactics ranging from collaboration (working together to achieve common goals) through to confrontation (publicly attempting to discredit a policy, an organization or its leadership). The nature of the state and the ideological foundations of the civic organization have a great influence on the choice of tactics. In what Clark (1995) terms ‘healthy state-NGO relationships’, all

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options will be open and the civic organization(s) can select its (their) tactics on the basis of the issue and ideology. Organizations with radical and militant origins are more likely to adopt confrontational approaches, while those with charitable or welfarist roots are more likely to pursue dialogue and gentle negotiation. However, in many countries authoritarian and repressive regimes make a confrontational approach infeasible or dangerous. Such regimes have their own tactics to deal with civic protest, ranging from the supervision of civic organizations, ‘break-ins’ at their headquarters and the arrest or ‘disappearance’ of their leaders. Bratton (1989) was pessimistic about the likelihood of NGOs in Africa influencing policy. Despite a wave of democratization, such pessimism still seems well grounded in much of that region. The above paragraphs have discussed the ‘demand side’ in a general way. At this point it is useful to illustrate how civic organizations might seek to improve service delivery through some concrete examples. While there are now numerous examples of alliances managing to stop dams being built, such as the Itaparica scheme in Brazil (Hall, 1992), there is also now an emerging set of examples of civic organizations influencing legislative reform. ParryWilliams (1992) describes the way in which Save the Children Fund (SCF), in conjunction with other NGOs such as the African Network for the Prevention and Protection Against Child Abuse and Neglect (ANPPCAN), influenced the Government of Uganda to reform ‘Child Law’. SCF took an interest in this area from 1987, and by adopting collaborative tactics became a ‘trusted partner’ (ibid., p. 96) of government. When a committed Minister of Relief and Social Rehabilitation appointed a Child Law Review Committee (CLRC) it was able to advise the committee and its members through its expertise ‘in identifying the underlying principles which will guide the reforms when the time comes to make specific proposals’ (ibid.). Following the passing of the Children Act, it continued its work in this area by lobbying for the financial resources and capacity-building programmes, such as retraining magistrates, the judiciary and police, so that the Act could be effectively implemented. At times SCF’s close relationship with government led to ‘a hostile reaction from other NGOs’ (ibid.) and from political groups in opposition to the one-party framework of the National Resistance Movement. At the grass-roots end of the spectrum the growth of a number of NGOs in India demanding access to information about the decisions taken by district administrations on government poverty reduction and rural development schemes is of particular interest (Joshi et al., 1997). The energy and persistence of these NGOs in Rajasthan, and to a lesser degree in Karnataka and Maharashtra, have led to some extraordinary successes in making local administrative decisions more transparent (Polidano and Hulme, 1999). Village-level public meetings have been convened at which the official lists of

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the ‘beneficiaries’ of government subsidy and grant schemes have been read out. Many villagers have been enraged to find that they are listed as recipients for grants that they have not even heard about or that grants have gone to nonresidents or non-existent people. Mass action has followed (protests, marches and meetings with politicians) as villagers demand that those who have embezzled the grants (local administrators and the rural elite) be brought to court and punished. Although to date such activity has only occurred on a local scale, it does mean that, for the first time, local bureaucrats can no longer rest assured that official records will be kept secret and that they can ‘get away with it’. While the above examples have focused on demand-side work targeted on southern governments, this work is also important in the North. For example, in the UK many NGOs are actively engaged in lobbying the government (and particularly the Department for International Development) to pursue policies that are more pro-poor. Such activity takes many forms, ranging from consultations on White Papers and policy documents, to public meetings and protests and, in the case of OXFAM (Oxford Committee for Famine Relief), an attempt to ensure that a member of a local OXFAM supporters’ group regularly has a personal meeting with their Member of Parliament (MP) to lobby for effective aid and trade policies in every constituency.14 Northern NGOs also engage in long-term ‘development education’ to raise the awareness of northern publics about development issues. The intention is to mobilize northern citizenries so that they demand from their governments aid and trade policies that will help the poor in developing countries.15 Coalitions of civic organizations (NGOs, trade unions and church groups) have formed to lobby at the international and global level. The Jubilee 2000 coalition has lobbied very effectively for debt reduction, so that low-income countries can devote a greater proportion of their public expenditure to education and health services. Many NGOs are engaged in lobbying work to challenge the imposition of ‘global social policy’ (Deacon et al., 1997) on developing countries by the World Bank and IMF. The profile of civic organizations in such work has risen exponentially over the last decade, ranging from the Amer-Indian and Inuit leaders’ role at the UN Rio summit on environment and development to the work of ‘direct action’ and more moderate lobbying NGOs at the World Trade Organization (WTO) meeting at Seattle in December 1999. The approaches presented above offer innovative means for civic organizations in the South and North to demand effective service delivery from their governments. Interestingly, this important role has not been recognized in the NPM doctrine, which sees the role of the civic realm as direct service provision, thus increasing competition and promoting efficiency, rather than

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recognizing its advocacy and accountability roles. Grass-roots mobilization is not a panacea, however, as ‘effective citizen involvement [in such processes] does not come easily’ (World Bank, 1997, p. 110). Assumptions about the time and energy that people will voluntarily devote to ‘making government work’ need to be carefully examined, and there is a clear need for ‘professional’ advocacy and lobbying groups to maintain the long-term focus that reform requires. The Civic Realm and Service Delivery in the Future: Partnerships, Synergy and Inter-organizational Relationships Until recently the choice of whether civic organizations adopt a direct or indirect role in improving service delivery has commonly been perceived as an ‘either-or’ choice, in which ideology plays a central role: whether to ‘deal with the symptoms’ and deliver services or, more radically, ‘deal with the causes’ and influence policy, and perhaps also the processes of state formation. During the 1990s, however, a number of different ideas have been evolving that argue for what Uphoff (1992) calls ‘both-and’ approaches to development. Theoretically, these ideas posit that there is no ‘optimal’ method for the delivery of a service, rather it depends on the linking of different organizations that can support each other’s comparative advantages, create performance incentives for each other and change as needs change. Robinson and White (1997, p. 24) conceptualize this task as ‘organizing synergy’: extending the contribution that the civic realm makes to service provision through inter-organizational partnerships that can compensate for its weaknesses (problems of funding, uneven or unequal coverage, accountability, quality maintenance, internal organizational inadequacies, duplication, exclusion and sustainability). They argue for pluralist welfare systems that promote synergy, partnership and co-production. Fowler (1997) points to the importance of linking microaction (work at the coalface) to the macroaction of policy advocacy and lobbying: knowledge generated by local-level action can inform policy-level work, while effective policy reform can support local action so that it is more successful. Robinson et al. (2000, p. 2) see a fundamental change occurring in international development efforts with ‘a move from interaction generated by operational needs and requirements, to attempts to build more enduring relationships stimulated by an appreciation of more strategic issues’. While they use the conventional ‘ideal types’ of classical social science competition, coordination and cooperation - to examine inter-organizational relationships, their conclusions are eclectic. Effective development action entails moving from the appreciation of a situation to an analysis of that situation and then strategic engagement with that situation. Contingency,

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flexibility and solutions lie in developing existing inter-organizational relationships and creating new relationships. The development of frameworks to understand such linkages, and guide them towards synergy, remains in its infancy compared to the more straightforward NPM model of principal and agent. It should also be noted that the experience of many SNGOs has been that their relationship with NNGOs has operated along patron-client lines and not as equal ‘partners’, as was intended. In practice, this is a brave new world that organizations are only beginning to explore. The forms through which it might be operationalized are illustrated by the business partnerships for development (BPDs) initiatives that are being developed (Warner, 2000). The BPDs involve close collaboration between a company that is operating a major natural resource project in a specific locality, an NGO that operates in the country concerned, the central and local government, and a major international development agency. In each locality the partners have to agree on common goals - such as poverty reduction and environmental sustainability - and then agree on actions that allow them to work together to achieve these common goals. Readers of this collection (and especially Minogue’s Chapter 2) will be aware how closely this chimes with the NPM emphasis on ‘the enabling state’, where services are contracted out to private sector and civic organization providers. However, a key issue will be whether the aid donor displaces the host government. The cosy ‘partnership’ that underpins such approaches is based on assumptions of businesses that are striving to be socially responsible, governments that are democratic (or at least moving in that direction) and civic organizations and donors that are committed to poverty reduction but pragmatic about the means by which it will be achieved. Cynics will argue that these new approaches are purely ‘public relations exercises’ by multinational companies. They may also point to the formidable problems of coordination that are likely to arise: we already know that a common reason for the failure of civil service reform programmes is poor donor coordination (Nunberg, 1997). The major challenges that face these new models of service provision ‘lie in making sense of the politics which underlie the rather cuddly notion of co-operation, the real conflicts of interest and agenda which persist in all areas, and the processes through which both self-interest or short-sightedness, as well as genuine conflict over values, are constantly being managed’ (Robinson et al., 2000, p. 2). Initiatives such as BPD recognize interorganizational conflict as a key issue and build training in techniques for conflict resolution and consensus-building into their approaches to establishing partnerships. Their assumption is that a bottom line for agreement can be found, and that from this inter-organizational relationships will develop that foster trust and a capacity to influence each other’s values so that more

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ambitious goals can be set in the future. This is a process approach - in which goals, roles and methods are constantly revised - not the blueprint for goal achievement that earlier theory and practice sought.

CONCLUSION The role of civic organizations in service delivery has undergone profound changes in recent times. From being a minor issue in the early development decades, the civic realm was seen as a key player in the 1980s and l990s as a direct provider of services and as a key influence on state provision. The simple (perhaps simplistic) frameworks of the past - ‘state best’, ‘private best’ or ‘civic best’ - are now being left behind, with calls for paradigms that are pluralist. These are early days for the ‘new paradigm’ and it remains to be seen whether these ideas will promote more effective service delivery that is flexible, able to cope with contingency and that can evolve and develop its capacity, or is simply a cosy illusion that fails to appreciate that service delivery is not only about services but also about politics and power. While the ideological supports for a greater role for civic organizations in service provision are similar in both advanced and developing countries, the practice of this concept has operated in fundamentally different ways. Whereas in economically advanced countries the NPM model of state as principal and civic organization as agent (or contractor) has been dominant, in less economically advanced countries aid donors commonly function as the principal, NGOs16 as the agent and the domestic state functions as a spectator. This situation arises because of power relations between aid-giving and aidreceiving states and also because of competing accountabilities. The donor insistence that it must account back to its government and taxpayers wins out, and accountability for service delivery and poverty reduction focuses on northern actors and agencies. If we view this as part of the evolution of an international civil society (Edwards et al., 1999) in which ‘northern’ and ‘southern’ citizens network to get decent services to the world’s poorest people, then this might be seen in a positive light. My own analysis is more negative: it is that it challenges the sovereignty of poorer states, reduces the responsibility that they have towards service provision for the poor and weakens public accountability within recipient countries (which is already very weak in many cases). The central question for future theoretical work and research is whether models of ‘partnerships’ and ‘inter-organizational linkages’ can be developed (and eventually converted into practice) in which the more powerful actors are prepared to subordinate their needs for accountability to those of other ‘partners’. Technologies to deal with the multiple accountabilities that

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complex partnerships may require are developing, most clearly in the form of social audits (New Economics Foundation, 1997). Unfortunately, major aid donors, such as the UK’s DFID, and major NNGOs, such as OXFAM, CARE and Save the Children Fund, have considered undertaking social audits but all have decided not to proceed. If northern agencies are not prepared to change their practices, then change, if it is to occur, must be promoted from the South. If this is the case, then for a final point we must return to the issue of the strategic choices that face civic organizations in the South. While international fashions and donor finance have encouraged them to move into direct service delivery, there remains a need for them to continue and extend their ‘demand-side’ role of policy advocacy and lobbying and public education and mobilization - to ensure that they ‘marry service delivery with ... leverage’ (Edwards et al., 1999, p. 117). Such activities may encourage ‘southern’ governments to take on responsibility for basic service delivery, and may help to make aid donors aware of the ways in which their use of NPM concepts and methodologies might weaken, rather than strengthen, the developmental capacities of ‘southern’ states.

ACKNOWLEDGEMENT I am grateful to Willy McCourt and Martin Minogue for detailed comments on an earlier draft of this chapter. They have strengthened it greatly.

NOTES 1.

While the policies of economic liberalization and reducing the role of state were intended to create an enabling environment primarily for private for-profit organizations, many benefits also accrued to non-profits. 2. For discussions see Kumar (1993). 3. The reader should consult Robinson and White (1997, pp. 3-7) for a discussion of the ‘third sector’. This chapter has drawn extensively from their paper. 4. The use of this term is based on Robinson and White (1997). 5. Salamon (1987) has explored this idea in terms of ‘voluntary failure’. 6. In its most extreme forms neoliberals argued that development was simply about ‘getting the prices right’ by exposing all economic activity to unbridled market forces. 7. No doubt in a few years’ time, with the advantages of hindsight, it will be possible to make a concrete case for the present era pursuing a ‘populist’ or ‘pluralist’ paradigm. 8. The proliferation of ‘participatory’ approaches in recent years has been amazing: from an initial focus on participatory rural appraisal (PRA) we now have participatory learning and action (PLA), participatory project planning (PPP), participatory technology development (PTD), participatory impact assessment (PIA), participatory reflection and action (PRAII) and many, many more. 9. This experience was not just in low-income countries but also occurred in high-income countries. For example, during the 1980s and early 1990s NGOs in the UK took over the

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10.

11. 12. 13.

14.

15.

16.

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Internationalization of public management bulk of responsibility for social housing and for the care of the mentally ill ‘in the community’. In a four-country study of 16 NGO projects Riddell and Robinson (1995) found limited evidence that in some cases NGOs were more effective than comparable state service delivery agencies and found that costs were very similar. More recently, through an extensive literature review, Robinson and White (1997) found that in terms of quality of provision, operational efficiency and equity of access the picture was very mixed. As Gilson et al. (1994) express it, ‘the available evidence is limited and variable’. NGOs appear to have a capacity to work with poorer people (but rarely the poorest), but the quality and efficiency of the services they provide is often problematic. Particular problems include their lack of sustainability because of very high dependencies on foreign aid donors - often at levels of 90 to 95 per cent - and a tendency for them to start working with the less poor when they attempt to improve their sustainability through charging user fees or insisting that clients take out micro-credit. While a number of high-performing NGOs, such as BRAC and Proshika in Bangladesh, have clearly shown that they are more effective at service delivery than state agencies, it would be very wrong to assume that this is a general picture. See Robinson and White (1997) for detailed references to specific pieces of information. Donor staff, ESF staff and independent observers have all confirmed this but, for obvious reasons, these reports are confidential. Civic organizations also have advocacy roles in relation to the private sector (for example monitoring their compliance with national and international standards and overseeing their environmental and social responsibilities), the community itself (for example advocacy about domestic violence and communal tensions) and state corruption. These are important functions but I do not explore them in this chapter. OXFAM has recorded the experience of a supporter who met with Kenneth Clarke, the Chancellor of the Exchequer, during his constituency surgeries of the late 1980s and early 1990s. At the end of five years of meetings the Chancellor’s position on debt relief had come round to the position proposed by the OXFAM supporter in their first meeting. Clare Short, the UK’s Minister for International Development since 1997, has identified one of her goals as ‘raising the British level of public awareness about development to the levels that have been achieved in Scandinavian countries’ (Clare Short, personal communication). In countries with well-developed civic realms, SNGOs are dominant. However, in countries that have experienced state collapse (such as Mozambique, Sierra Leone, Liberia), large NNGOs, such as CARE, often play a major role.

REFERENCES Bebbington, A. and R. Riddell (1997), ‘Heavy hands, hidden hands, holding hands? Donors, intermediary NGOs and civil society organisations’, in D. Hulme and M. Edwards, NGOs, States and Donors, London: Macmillan, pp. 107-27. Bratton, M. (1989), ‘The politics of government-NGO relations in Africa’, World Development, 17 (4), 569-97. Brown, D. (1998), ‘Professionalism, participation and the public good’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 132-51. Chambers, R. (1997), Whose Reality Counts? Putting the First Last, London: lT Publications. Christopolos, I. (1998), ‘Public services, complex emergencies and the humanitarian imperative: perspectives from Angola’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 260-77.

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Clark J. (1995), ‘The state, popular participation, and the voluntary sector’, World Development, 23 (4), 593-601. Credit and Development Forum (1998), CDF Statistics, Dhaka: Credit and Development Forum. Davis, D., D. Hulme and P. Woodhouse (1994), ‘Decentralisation by default: local governance in The Gambia’, Public Administration and Development, 14 (3), 253-69. Deacon, B. et al. (1997), Global Social Policy, London: Sage. Dunleavy, P. and C. Hood (1994), ‘From old public administration to new public management’, Public Money and Management (July/September), 9-16. Edwards, M. (1999), Future Positive, London: Earthscan. Edwards, M. and D. Hulme (eds) (1995), NGOs’ Performance and Accountability: Beyond the Magic Bullet, London: Earthscan and West Hartford: Kumarian Press. Edwards, M., D. Hulme and T. Wallace (1999), ‘NGOs in a global future: marrying local delivery to worldwide leverage’, Public Administration and Development, 19, 117-36. Evans, P. (1996), ‘Government action, social capital and development: reviewing the evidence on synergy’, World Development, 24 (6), 1119-32. Farrington, J. and A. Bebbington (1993), Non-Governmental Organizations, the State and Sustainable Agricultural Development, London: Routledge. Fowler, A. (1988), ‘NGOs in Africa: comparative advantage in relief and microdevelopment’, IDS Discussion Paper 249, Brighton: IDS. Fowler, A. (1997), Striking a Balance, London: Earthscan. Gilson, L., P.D. Sen, S. Mohammed and P. Mujinja (1994), ‘The potential of health sector nongovernmental organizations: policy options’, Health Policy and Planning, 9 (1), 14-24. Goodhand, J. (1999), ‘NGOs and peacebuilding in complex political emergencies: a study of Afghanistan’, Working Paper No. 3, IDPM, University of Manchester. Hall, A. (1992), ‘From victims to victors: NGOs and empowerment at Itaparica’, in M. Edwards and D. Hulme, Making a Difference, London: Earthscan, pp. 148-59. Hodson, R. (1997), ‘Elephant loose in the jungle: the World Bank and NGOs in Sri Lanka’, in Hulme and Edwards (1997), pp. 168-87. Holland, J. and J. Blackburn (1998), ‘Whose voice?’, in Participatory Research and Policy Change, London: Intermediate Technology. Hulme, D. and M. Edwards (eds) (1997), NGOs, States and Donors: Too Close for Comfort?, London: Macmillan and New York: St Martin’s Press. Hulme, D. and M. Turner (1990), Sociology and Development: Theories Policies and Practices, London: Harvester Wheatsheaf. Joshi, S., M. Bhat and P. Edwin (eds) (1997), Experiences of Advocacy in Environment and Development, The Hague: NOVIB. Korten, D. (1990), Getting to the 21st Century, West Hartford, CT: Kumarian. Kumar, K. (1993), ‘Civil society’, in W. Outhwaite and T. Bottomore (eds), The Blackwell Dictionary of 20th Century Social Thought, Oxford: Blackwell. Leonard, D.K. (1982), ‘Analysing the organisational requirements for serving the rural poor’, in D.K. Leonard and D.R. Marshall (eds), Institutions of Rural Development for the Poor, Berkeley: University of California Press, pp. 1-39. Mosse, D. (1994), ‘Authority, gender and knowledge: theoretical reflections on the practice of participatory rural appraisal’, CDS Working Paper No. 2, Swansea: Centre for Development Studies. New Economics Foundation (1997), The Social Audit Workbook, London: NEF.

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Nunberg, B. (1997), Rethinking Civil Service Reforms: An Agenda for Smart Government, Washington, DC: World Bank, Poverty and Social Policy Department. Parry-Williams, J. (1992), ‘Scaling-up via legal reform in Uganda’, in M. Edwards and D. Hulme, Making a Difference, London: Earthscan, pp. 89-98. Polidano, C. and D. Hulme (1999), ‘Public management reform in developing countries’, Public Management, 1 (1), 121-32. Putnam, R. (1993), Making Democracy Work: Civic Traditions in Modern Italy, Princeton, NJ: Princeton University Press. Riddell, R. and M. Robinson (1995), Non-Governmental Organizations and Rural Poverty Alleviation, Oxford: Clarendon Press. Robinson, D., T. Hewitt and J. Harriss (2000), Managing Development, London: Sage. Robinson, M. (1997), ‘Privatising the voluntary sector: NGOs as public service contractors?’, in Hulme and Edwards (1997), pp. 59-78. Robinson, M. and G. White (1997), The Role of Civic Organisations in the Provision of Social Services: Towards Synergy, Research for Action 37, Helsinki: UNU/WIDER. Salamon, L.M. (1987), ‘Of market failure, voluntary failure, and third-party government: towards a theory of government-nonprofit relations in the modern welfare state’, Journal of Voluntary Associations, 16 (12), 29-49. Salamon, L. (1993), ‘The global associational revolution: the rise of the Third Sector on the world scene’, Institute for Policy Studies Occasional Paper No. 15, Baltimore, MD: Johns Hopkins University. Teka, T. (1994), ‘International NGOs in Ethiopia: a case study of Wolaita’, Ph.D. thesis, University of Cambridge. Tendler, J. (1997), Good Government in the Tropics, Baltimore, MD and London: Johns Hopkins University Press. Turner, M. and D. Hulme (1997), Governance, Administration and Development: Making the State Work, London: Macmillan. Uphoff, N. (1992), Learning from Gal Oya: Possibilities for Participatory Development and Post-Newtonian Social Science, New York: Cornell University Press. Uphoff, N. (1993), ‘Grassroots organizations and NGOs in rural development: opportunities with diminishing states and expanding markets’, World Development, 21 (4), 607-22. Uphoff, N. (1995), ‘Why NGOs are not a third sector’, in Edwards and Hulme (1995), pp. 17-30. Wallace, T., S. Crowther and A. Shepherd (1997), The Standardization of Development: Influences on UK NGOs, Oxford: Worldview Press. Warner, M. (2000), ‘Business partnerships for development’, London: CARE. White, G. and M. Robinson (1998), ‘Towards synergy in social provision: civic organisations and the state’, in M. Minogue, C. Polidano and D. Hulme (eds), Beyond the New Public Management, Cheltenham, UK and Northampton, USA: Edward Elgar, pp. 94-116. Wood, G. (1997), ‘States without citizens: the problem of the franchise state’, in Hulme and Edwards (1997), pp. 79-92. World Bank (1997), The State in a Changing World (World Development Report 1997), New York: Oxford University Press.

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Privatization and regulation in developing countries Paul Cook

INTRODUCTION Privatization has become a worldwide phenomenon in recent years. Defined as the transfer of productive assets from public to private ownership and control, privatization has particularly gained momentum in developing countries since the late 1980s. A significant proportion of privatization transactions in the developing economies have entailed sales of public utilities. Indeed, privatization transactions for the utilities sector have accounted for over a third of all transactions in developing countries since 1988 (Cook and Kirkpatrick, 1995). Privatization has not necessarily meant more competition. As a consequence, regulation of monopoly utilities has become a major policy issue. Regulatory structures and institutions are required to protect consumers from monopoly abuse and provide incentives to management and investor interests to maintain profitability, efficiency and investment. In practice it has been difficult for many developing countries to build sound regulatory systems that can effectively reconcile these potentially competing objectives. Research aimed directly at measuring the effectiveness of regulatory systems for privatized utilities in developing countries is scarce. Most has been confined to investigations in Latin America using a case-study approach, Wellenius and Stern (1994) for telecommunications, and Gilbert and Kahn (1996) for the electricity sector. More recent empirical work using econometric methods has been applied to Africa and Latin America for telecommunications (Wallsten, 1999) and to Argentina for gas, electricity, water and telecommunications using a computable general equilibrium model (Chisari et al., 1997). Greater attention has been paid to measuring the extent of privatization (Bennell, 1997). Relatively little emphasis has been placed on assessing the performance of enterprises after privatization; the most substantial studies to date have been Galal et al. (1995); Megginson et al. (1994) and Boubakri and Cosset (1998). The research on performance that does exist is limited and is flawed by methodological difficulties (Cook and 153

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Kirkpatrick, 1994). It has been more concerned with examining the effects of changing ownership than with the effectiveness of regulation. There is a need for a more extensive investigation into the effectiveness of regulation in developing countries in relation to the objectives that have been established by government and on the effects of regulation on the performance of privatized utilities. This chapter examines the effectiveness of regulation by drawing on the results of recently conducted country studies, covering the telecommunications and electricity industries, to provide a comparative analysis of their experience with privatization and regulation. It draws some specific and general conclusions. The next section reviews the extent of privatization in developing countries. The third section focuses on issues related to assessing the performance of regulation with respect to privatized enterprises, and the fourth examines the experience of Venezuela and Argentina in privatizing and regulating their telecommunications industries. The final section provides a summary and outlines the lessons learnt from the variety of post-privatization regulatory experiences.

PRIVATIZATION IN DEVELOPING COUNTRIES Privatization continues to gain in policy momentum in all parts of the developing world. It has been central to the expenditure-reducing and resource-switching policies of structural adjustment pursued by the World Bank and IMF (Cook, 1988). The reduction in government expenditure achieved through privatization is viewed as a policy that will improve productive efficiency in the public and private sectors, while the liberalizing effects of competition policy that are associated with privatization ensure that relative price signals work and promote welfare-enhancing resource allocation. Initially, the pursuit of privatization lagged behind the implementation of structural adjustment programmes. Of the 40 structural adjustment loans to 21 countries between 1980 and 1986, only 13 per cent requested outright privatization (Mosley, 1988). In the late 1980s, however, the pace of privatization accelerated. The number of privatizations increased more than fourfold in Latin America and threefold in Asia, when the six years from 1988 to 1993 are compared with the previous eight years (Cook and Kirkpatrick, 1998). In Africa nearly three times as many public enterprises were partially or completely sold during 1988-95 than in the preceding eight-year period (Bennell, 1997). Indeed, in Africa the total US dollar value of divestitures in 1994-95 was double the level in 1989-90. Major new privatization had previously been stalled or halted.

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In many countries privatization had earlier been confined to the smaller and medium-sized enterprises. After 1988 privatization included a greater share of larger state enterprises in such important sectors as electric and water utilities, transportation and telecommunications. Between 1988 and 1993 the value of transactions for the infrastructure industries amounted to US$30bn, compared to US$78bn for all privatization transactions in developing countries (World Bank, 1995). The resurgence of interest in privatization is likely to proceed with even more utility privatization and may even involve a greater proportion than previously of loss-making enterprises (Bennell, 1997; Kikeri, 1998). Despite the slow start and the recent resurgence of interest in privatization in developing countries, however, enterprises remaining in the public sector are still numerous. Among the low-income countries, state enterprises continue to provide 14 per cent of gross domestic product, 27 per cent of investment and 18 per cent of modern sector employment (World Bank, 1995). There are a number of economic, political and social reasons why the scale of privatization in developing countries has been less than originally expected. Imperfectly developed markets, especially in the financial sector, uncompetitive private sectors and the lack of administrative capacity have been identified as major practical constraints to implementing privatization (Adams et al., 1992; Cook and Kirkpatrick, 1995). The failure to match buyers’ expectations regarding the value of public enterprises to be sold with governments’ need to maintain prices in order to raise revenue from sales has often resulted in fewer transactions. In recent years, political factors have been emphasized as an obstacle to privatization in developing countries (Cook and Minogue, 1990; Young, 1995). Policy-makers have often set a broader agenda for privatization than the efficiency and resource allocation objectives implicit in structural adjustment. The motives for privatization have encompassed improved fiscal, equity and distributional performance (UNCTAD, 1996). The importance attached to each has varied between and within countries over time. These have often been established in the light of the poor performance of public enterprises in these areas (Killick, 1983; Cook and Kirkpatrick, 1988). In practice, privatization may have contributed to one objective but at the same time made it more difficult to achieve others. The private sector’s willingness to pay for an enterprise depends on expected profit performance, which in turn varies inversely with the level of competition in the market. Sales revenue to the government is maximized when market protection is granted, which will almost certainly jeopardize the efficiency performance of privatized enterprises and have adverse consequences for consumer welfare. Inevitably, success or failure with privatization has been predominantly defined by political and ideological priorities. This has influenced initial

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empirical work which has been preoccupied with measuring the extent of privatization through recording the volume and value of transactions (Vuylsteke, 1988; Sader, 1993). The preoccupation with examining the size, methods and characteristics of privatization has not been similarly matched by empirical studies on either the impact of privatization or the effectiveness of regulations, despite the extensive period that has elapsed since some countries first implemented privatization. Existing studies have predominantly concentrated on the economic consequences of privatization approached from both a macroeconomic and microeconomic perspective. At the macro level the impact of privatization has typically been assessed through the change in the state’s share in the economy (World Bank, 1995), the reduction in the fiscal imbalance (Pinheiro and Schneider, 1995) and the development of capital markets and resource mobilization, including foreign investment (Sader, 1993). The micro indicators used in studies have included technical efficiency, cost efficiency, financial profitability and real prices (Cook and Kirkpatrick, 1995). Based on the limited range of studies, the World Bank concludes that privatization has had favourable results. Regulation The nature of the national regulatory framework that develops for privatized utilities in developing countries is affected by a country’s capacity to implement a system of regulation and by the type of markets within which enterprises function. The processes of regulation that have developed have differed widely in form and scope. Some regulatory systems have established price caps that effectively limit the price that can be charged for a particular service. This form of regulation is intended to provide incentives to reduce costs so that the savings achieved can be used to increase profitability for the owners of the utilities. Other forms have commonly consisted of profit regulation, which imposes ceilings on the permitted rate-of-return or cost-ofservice regulation, in which the regulator approves a profit mark-up on an agreed cost of providing a service (Martin and Parker, 1997). Similarly, there have been differences in the institutional arrangements for regulation. It has been quite common to establish a dedicated regulatory authority for each of the main utility sectors, following the UK pattern. In other cases regulation for all utilities has fallen under the umbrella of a single institution. Some attain a high degree of autonomy and others are tightly controlled by government authorities. The scope of regulation has also varied. In some cases, as in the telecommunications sector, regulation has generally been comprehensive and consisted of controls on entry into the market, rules for permissible pricing and business earnings, monitoring quality, and

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oversight of investment programmes (Sappington, 1994). Alternatively, regulation has been more partial, affecting only some of the activities of an enterprise or sector. In developing countries, regulatory systems that have developed as a result of privatization have concentrated on the need to improve economic efficiency and curb abuses of monopoly power. In the telecommunications sector, forms of price-cap regulation have been implemented in Argentina, Mexico, Venezuela and Malaysia. Chile has adopted benchmark regulation while Jamaica and the Philippines have rate-of-return regulation. In the electricity sector, regulatory systems have ranged from self-regulatory systems, as for example in New Zealand before full privatization, to independent regulation similar to systems developed in Malaysia and more recently in Vietnam (World Bank, 1995; Cook, 1999). In practice, it has been difficult for many developing countries to create sound regulatory systems with respect to competitive behaviour, service obligations and pricing policy. It has been much quicker and easier to privatize the utilities, with the result that monopolies and anti-competitive practices may have become entrenched in many countries. This is particularly the situation where responsibility for competition policy lies outside the regulatory system and the administrative and judicial agencies are weak or underdeveloped. Even by the late 1980s only a handful of developing countries had implemented effective competition legislation (Gray, 1991). As a result there is a continuing need to assess which regulatory systems work best and to understand the factors that inhibit the development of effective regulatory processes.

THEORETICAL PERSPECTIVES ON PRIVATIZATION AND REGULATION A good system of regulation is one which enables the utility to raise finance for investment at an acceptable cost and also provides incentives for efficiency in operation, pricing, investment and innovation (Newbery, 1994). In practice, in developing countries, regulators tend to restrict their remit to ensuring that incentives are maintained for management of privatized monopoly utilities to pursue efficiency gains, and pay less attention to monitoring the distribution of these gains between consumers, through lower prices and improved quality of goods and services provided, and shareholders, through profits. The distribution between shareholder gains and investment is important for future efficiency gains and their distribution between future consumers and shareholders. The privatization of large public utilities brings to the forefront the critical

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issue of the division of profits and what precisely might be the effects of regulation in distorting the normal mechanisms of governance and hence the distribution of gains. The literature on the distributional aspects of profits is rich. Recent attention has focused on the split between insider shareholder interests and those of outsiders. The discussion is set within the context of a large utility that has typically been privatized through a share flotation. Insiders usually have an element of direct managerial stakeholding, acquired through their longstanding relationship with an organization, perhaps as previous managers of the utility under public ownership or as a result of a remuneration package which includes stock options. According to agency theory, the interests of insiders and outsiders is likely to vary for a wide range of reasons. Insiders may fear the loss of corporate and managerial control through pressure exercised by outside shareholders (Myers, 1998). Such inroads into managerial control may threaten the scope of insiders to gain benefits over and above those acquired by outside owners. There may indeed be an element of substitution between insider gains, in the form of dividend payments and insider remuneration, in terms of salaries and other rewards. Similarly, outsiders may wish to maximize income flows to themselves, fearing they are vulnerable to the dictates of insiders. The agency problem arises when information flows between the two sets of owners is imperfect. Insiders may be in a better position to conceal information. In response, outside shareholder behaviour will be affected. With imperfect information to monitor the activities of insiders, outsiders might adopt short-run approaches that maximize dividends to themselves. If dividend flows are not forthcoming they will exercise their right to sell their stock and cause share prices to fall. The problem of imperfect information may also be affected by the macro environment and legal framework within which the utility operates. If outside shareholders operate in a strong legal framework, which strengthens management information, then this may influence the demand for dividends (La Porta et al., 1998). In a situation where a utility is growing and a strong legal system ensures that information is available, outside shareholders may forgo high dividends in order to increase the level of investment made by the utility. Information to monitor insiders’ activities will ensure that profits go to investment and are not consumed by insiders. In a system backed by a weaker legal environment, outsiders are uncertain about their ability to monitor insider behaviour and will correspondingly demand higher dividends. Similarly, if growth prospects are high, then outsiders are likely to be willing to sacrifice dividends in the present period for the expectation of gains in the future. Weaker prospects for growth will create demand for present dividends, which reduces investment and future growth. The effects of the external environment and varying scenarios for growth

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are difficult to unravel. In relation to privatized utilities, it is likely that a weak system of legal protection will ensure that greater gains are captured by insiders as a result of privatization. The problem is compounded, however, by the system of regulation that has been installed in the post-privatization period. The effects of regulation on governance mechanisms are unclear. Several possible effects of regulation may be postulated, depending on the type of regulation that is established and on the assumptions made about the information problem. Incentive Regulation Agency theory has been applied to the regulatory issue. The effectiveness of regulation is constrained by the amount of information available to the regulator. Under incentive or price-cap regulation, utilities are expected to increase profits through reductions in costs. Under this type of regulation returns are not guaranteed. Management is only provided with indirect incentives to improve efficiency. Shareholders will apply pressure on management to increase efficiency and hence profits in order to ensure that funds flow to dividends and investment. Efficient price-cap regulation aims to ensure that in the long run a privatized monopoly utility’s pricing structure is no higher than current estimates of marginal supply costs of an efficient firm (Parker, 1999). In this respect regulation is acting as a surrogate for real competition. At the outset it is assumed that the utility behaves as a monopolist and would like to set prices above marginal costs, and there is a degree of inefficiency carried over from public ownership that is reflected in higher costs. Under incentive regulation a level of price cap is established that encourages the utility to lower costs and permit higher profits. Higher profits can continue to be made by the utility until the next price review. Each subsequent review will attempt to bring prices gradually closer to marginal costs. This implies that the scope for earning above normal profits will diminish over time as costs increasingly reflect marginal conditions. A change in technology could prolong the period in which utilities can earn extra-normal profits by changing the structure of industry supply costs. In order to establish the link between price and marginal costs, the regulator will require information from the regulated firm. This information will be used to permit regulators to build the kind of incentive mechanism that is conducive to establishing efficiency gains that can be passed on to shareholders while ensuring that capped prices gradually reflect conditions found in a more competitive environment, which will provide gains to consumers. The costs associated with gaining the required information may be considerably higher in developing countries (Jones, 1994).

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Assessing Regulatory Performance Several issues arise in attempting to unravel this complex relationship between regulators, firm management and owners. Regulation itself may result in regulatory inefficiency and regulatory failure (Bradburd and Ross, 1991). Regulatory inefficiency can be defined in terms of the market inefficiency that regulation was supposed to remove, as described above. Regulation aims to remove the tendency for a monopolist utility to produce at output levels where prices are set above marginal costs and bring prices in line with marginal costs, the so-called Pareto optimum. Regulatory inefficiency then represents a departure from this optimum at which the marginal social costs of the remaining market inefficiency are equal to the marginal social costs imposed by the regulation that is intended to overcome that market inefficiency. In this case regulation is either wrong, in the sense that there is too little or too much of it, or is not operating in a cost-effective manner. Extensive regulatory inefficiency eventually becomes regulatory failure. This occurs when regulation simply makes the situation worse than it would have been with no regulation. A variety of reasons may account for ineffective regulation. It may result from regulatory capture, where the regulators adopt the regulated utilities’ objectives as their own. This can occur at the beginning of regulation where utility interests have influenced the design of the regulatory systems, and is referred to as top-level capture (Peltzman, 1976). Lower-level capture results from regulators consistently making regulatory decisions over time that favour the interests of the regulated utility rather than other interest groups, such as consumers. Regulatory capture is more likely to occur in developing countries because utilities wield considerable political power, and the shortage of expert skills may mean that staff in regulatory agencies are drawn from the industry being regulated. Regulatory capture may be an extreme situation and regulation may simply not be operating as originally envisaged. Utilities may be attempting to circumvent regulation through the information that they control. Information asymmetries that exist between regulators and the regulated are central to the regulation problem. Other explanations for the poor performance of regulation in relation to expectations include: the failure of regulatory institutions to adapt to changing external conditions; the tendency for regulation to escalate over time in response to fire-fighting exercises; and the pursuit of selfinterest by the regulators, which may result in self-preservation strategies and avoidance of monitoring mechanisms which have been established by government. In price-cap regulation that incorporates periodic price reviews, usually five years, utilities are permitted to make above-normal profits provided they lower

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costs and become more efficient in the period between reviews. Generally, regulators would not intervene between price review periods. The critical questions concern the extent to which prices are realigned at each review and the scope given to earn above-normal profits in between reviews. Strictly speaking, the scope continuously to reduce costs diminishes over time in terms of static efficiency, and gains from dynamic efficiency, through technological change and market conditions, will need to be introduced to maintain high profit levels in the future. In this case the effect of regulation differs from the introduction of real competition, even though the regulatory system acts as a kind of surrogate competition. Under price-cap regulation utilities are allowed to widen pricecost margins between reviews and their actions therefore correspond to those operating in imperfectly competitive markets. Under real competition both prices and costs would be expected to fall. Under this form of regulation the effect on prices does not occur until each review period comes round. If regulators fail to align prices closer to long-run marginal costs, thereby introducing a lax form of regulation, then price-cost margins will persist that are similar to those achieved in the previous regulatory period but without cost reductions of an equivalent size. Similarly, if regulation is harsh and prices are severely capped, then utilities will need substantial reductions in costs to achieve above-normal profits before the next price review. The effectiveness of regulation, therefore, needs to be judged in relation to the multiplicity of goals that have been established and what effect they are likely to have on the various interested parties, such as owners, investors, consumers and government. Effective regulation will permit utilities to make excess profits on the basis of cost reductions and improvements in efficiency. Periodically prices ought to be realigned with costs, leading to a return to normal profits. The decisions about the division between earnings retained for consumption, investment and dividend payments, that is determined by the relation between inside and outside investors, will, among other things, be influenced by the effectiveness of regulation. The ways in which these regulatory issues are mediated in practice in the circumstances of developing countries is illustrated in the next section.

THE TELECOMMUNICATIONS SECTOR IN VENEZUELA AND ARGENTINA As was the case in many developing countries that have recently privatized their telecommunications sectors, needs were initially met by branches of private foreign-owned telephone companies. Nationalization occurred, as for example in Argentina, when the market grew and became more complex, and

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communications was viewed as a politically sensitive area. Typically this entailed the consolidation of private companies under a single public ownership, whose management had little entrepreneurial capability or spirit and, as a consequence, management rapidly became highly politicized. This is illustrated in Argentina, when in September 1946 the Peron government bought assets and a controlling share of Union Telefonica, describing the telephone and telegraph as ‘services ... essential for the economy and defense of the country ... [and] the nervous system of the nation’ (Petrazzini, 1996, p. 111). Public ownership in telecommunications has been characterized by systems of political appointments at senior levels, overlapping responsibilities for the sector by various layers of public administration and excessive political interference in day-to-day operations. Within this complex structure, social objectives related to redistributional policies were primarily pursued through pricing controls. Whether or not privatization has lessened political interference and contributed significantly to efficiency gains is a question that cannot be answered in a simple manner. Identifying policy objectives and tracing the mechanisms by which policies that change ownership affect outcomes is a complex issue (Cook and Kirkpatrick, 1994). This section examines the cases of privatization in the telecommunications sector in Argentina and Venezuela to show that evaluation requires an assessment of political, as well as economic, factors. Pre-reform Period Venezuela’s telecommunications company CANTV was originally established in 1930 as a private firm under a concession granted by the Development Ministry, and was nationalized in 1953. Before privatization in 1991 it was 100 per cent state-owned, enjoyed monopoly power and sales of $550m. per annum, and had 19 861 employees (Ramamurti, 1996). As a state sector firm, CANTV benefited from considerable state funding for network expansion such that, by 1980, the density of telephone subscribers had reached eight per 100 of population (Frances, 1996), on a par with that of neighbouring countries although still low by world standards. During the 1980s, however, network expansion halted as demand grew, service declined and inefficiency and corruption increased, leaving the sector in poor shape by 1990. CANTV’s poor performance before privatization clearly demonstrated the need for reform. Tariffs remained almost unchanged during the 1980s in spite of large cost increases, leading to steadily deteriorating financial performance. In terms of service, 47 per cent of demands were remaining unmet and the

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average waiting period to obtain a new line was eight years. Over 50 per cent of public telephones were out of order and just 19 per cent of international calls were completed (Adam, 1993). In Argentina, Union Telefonica was fully nationalized in 1948. In 1956, the state-owned enterprise became known as ENTel (Empresa National de Telecommunicacione). The state company’s management was highly politicized, with the chief executive officer and other senior managers being appointed by the president, and its operations were constrained by often contradictory policies issued by a variety of government departments and agencies. Its pricing structure and revenue mechanisms were designed to meet social needs, such as subsidizing welfare and industrialization programmes, and to control inflation, and thus denied the company funds for maintenance and expansion for the network. Tariffs fell in real terms throughout the 1980s, reaching in August 1989 their lowest point since 1960 (Hill and Abdala, 1993). The official policy of infrastructure development adopted in Argentina initially led to a quick expansion of the network in the years following nationalization; this growth slowed during the 1960s and 1970s until eventually recovering again in the 1980s. By 1988 an average of 147 400 lines were installed each year, and the sector’s total 3.4 million installed lines in 1989 represented 10.7 per 100 of population and compared well with the Latin American average in that year of only 6.7. The state company’s highly politicized management and lack of entrepreneurial spirit, however, contributed to poor quality of service and financial performance. The waiting list for connection, which had risen from an equivalent of 2.2 per cent of subscribers in 1941 to 29 per cent by 1946, averaged 40 per cent throughout the 1960s and 1970s, resulting in waiting times of 12 to 14 years for those customers who bothered to sign up. Under an expansion plan established in 1985, under which customers financed installations through advance payments, the waiting list fell to 24 per cent within the subsequent three years, but by 1990 the waiting period for a connection had fallen to four years. By the 1980s, with 50-year-old network equipment and inadequate maintenance and investment, only a half of local and a quarter of long-distance calls went through (Mairal, 1994). By 1989, 46.6 per cent of lines were out of service and taking an average of 11 days to be repaired. Labour productivity in 1989 was poor by international standards at 75 lines per employee, and the company’s problems were compounded by powerful labour unions representing its 47 000-strong workforce, which strongly influenced ENTel’s management and operations. ENTel’s financial performance was considerably affected by its politically motivated and cost- and profit-incentive tariff structures. Although consistently showing a profit since the 1940s, high taxes, low prices and a rapid

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expansion in debt due to exchange rate fluctuations left the company showing losses through most of the 1980s. Performance deteriorated rapidly in the year and a half before privatization. Whether as a result of a deliberate government ploy to demonstrate a need for privatization, or of a preoccupation with privatization leading to a neglect of daily operations, this deterioration reduced the attractiveness of the company to prospective buyers, and so had the effect of reducing the sale price achieved by the government and the stringency of performance targets it was able to impose on the new owners. Sector Reform The poor performance of telecommunications in Venezuela led the government to seek core investors and to permit foreign control in the industry. Two bids were received in an open international bidding process, both involving foreign control and a local minority partner. The bidding was won by the GTE consortium with an offer of $1.885m. (Pisciotta, 1994). Even though local control was not required, GTE had formed an international consortium with substantial local participation because management had regarded the involvement of local investors as desirable. Two local companies, Electricidad de Caracas and Grupo Mercantil, had a combined 28 per cent stake in the consortium. The consortium purchased a 40 per cent stake with rights to appoint five out of nine board members. An 11 per cent stake was sold to workers on a favourable deferred payment basis, at the same price as that of the consortium but financed by interest-free loans. Workers were assigned two out of nine seats on the board. The government retained 49 per cent of the shares, planning to sell them in tranches on the local and international capital markets. CANTV is the second largest company in the country, so this would add a major company to the Caracas stock exchange. CANTV’s broad-based local ownership is regarded as a force for stability, and the employees’ stock ownership as an incentive that will continue to help to transform the firm into an efficient and responsive private sector enterprise. CANTV was sold ‘as is’, with no prior reorganization or reductions in the workforce, although the government assumed $500m. in long-term debt and interest owed to reduce the liabilities of the new owners (Frances, 1996). The government realized $1885bn from the cash sale to the GTE consortium (Ramamurti, 1996). GTE’s assessment of the company’s value was based on a reasonable set of rules intended to allow the enterprise to be a financially viable business, able to meet expansion and quality targets. In Argentina, the privatization process began in March 1988 with an agreement for the Spanish Telefonica Internacional to purchase a 40 per cent

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stake and gain management control of ENTel for approximately $750m. Negotiations were delayed by parliamentary opposition from Menem’s nationalist Peronist Party, and the bid was abandoned soon after the 1989 presidential election which brought the Menem government to power (Ambrose et al., 1990). Privatization talks were soon resumed, however. Under the plan that was finally implemented, ENTel was later in 1989 divided into northern and southern regional companies, each including a share of the greater Buenos Aires area. Each company was made responsible for local services in its region under a monopoly concession initially granted for five years and later extended to a maximum of ten to be more attractive to investors. The regional division was intended to foster competition based on performance comparison between the two monopolies, and to set the stage for competition to be introduced later between the two companies, and third parties, on each other’s territory. In addition to the basic services company established in each region, a value-added service company was established as a joint venture of the two. Adjustments were made to ENTel’s personnel, assets and liabilities before their transfer to the two new companies. The workforce was reduced by attrition, the working week was extended by 7.5 hours, job guarantees were ended and workers’ rights were curtailed. In addition, hundreds of millions of dollars worth of equipment was purchased to add to the companies’ inventories, and $1757m. of debt was absorbed by the government, leaving only $380m. to be assumed by the companies’ buyers (Ramamurti, 1996). While improving the companies’ attractiveness to investors, these measures served severely to strain labour relations. Additional problems in the run-up to privatization included a lack of reliable accounting information, arrears to creditors, and an economic environment of hyper-inflation and high uncertainty. Core investors were sought to purchase 60 per cent stakes in the new companies and foreign control was permitted. Although other sales were for cash, debt-equity swaps were allowed to the core investors. Further, the government was initially to guarantee 16 per cent per annum profitability for the first two years, estimated to be worth more than $500m. (Ambrose et al., 1990). Although attractive to foreign investors, this plan put a low value on ENTel and made few provisions to guarantee upgrading of the network, and so it met with considerable domestic opposition. In March 1990, the plan’s opponents were able to bring about two major alterations to it. The stateguaranteed profitability was reduced by around $200m. by basing the 16 per cent on ENTel’s fixed purchase price of $1.9bn instead of its fixed net asset value of $3.5bn; and the value of debt-equity swaps to potential foreign investors was lowered through a fixed minimum debt exchange worth $3.5bn. Following these changes, some bidders withdrew and other bids were invited.

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The Citicorp-Telefonica group won the initial bidding for both companies, but because no single consortium was allowed to win both, Bell Atlantic and Manufacturers Hanover were awarded the stake in the northern company. Finally the northern concession was awarded instead to STET of Italy and J.P. Morgan and Co., as Bell Atlantic had to withdraw when Manufacturers Hanover failed at the last minute to provide the promised financing as a result of the complexity of the debt-equity swap portion of the deal. The remaining 40 per cent of shares of the two companies were reserved: 10 per cent for employees and 30 per cent for the national and international stock markets (Harteneck and McMahon, 1996, p. 79). The employees’ shares were sold at a price just 20 per cent of that paid by the winning consortia, and workers were assigned one seat on the companies’ boards. The government realized $3.3bn in total from the sale, representing a poor $630/line from the consortia but $2200/line from the international offering. In the run-up to the sale, tariffs were raised repeatedly to improve profitability. In February 1990 they were raised by 50 per cent for local and long-distance calls, and in July by a further 120 per cent and 70 per cent respectively. At the insistence of the buyers, the government agreed on the eve of the sale to raise them another 27 per cent. Although local calls remained cheap by international standards, price distortions were not corrected and very high rates for connection and long-distance services were continued. Post-reform Period In Venezuela the GTE was granted exclusive rights over local and longdistance services for nine years from 1992 to 2000, but all other services were opened to competition. These basic services were protected from competition so that CANTV would be able to continue to expand the country’s telecommunications infrastructure to the benefit of the country as a whole. A regulatory regime based on a price-cap system with rate rebalancing was intended to give CANTV an incentive to meet national telecommunications objectives while also compensating the shareholders fairly. Two large price increases raised CANTV’s revenue per line from $275 in 1990 to $500 in 1992 (Frances, 1996). Rate rebalancing was planned to end cross-subsidization from 1994 to 2000, and the telephone tax on CANTV was reduced. Subsequently, a price cap allowed increases with no productivity adjustment until 1996, then a 3 per cent per annum adjustment on long-distance services to the year 2000. Explicit performance targets were set for network expansion, public service obligations and quality of service, and a new regulatory agency CONATEL was established by presidential decree 1826 in 1991 (Pisciotta, 1994). The regulatory regime provides for CONATEL to monitor and review CANTV’s

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performance in meeting its objectives, but not to approve or control management actions. Both the pricing methodology and the specific areas and conditions under which competition is allowed have been consistent with the terms of the original agreement. The government does not seem likely to change the rules of the game. Post-reform Performance CANTV’s initial results have been regarded as impressive, and it has maintained quality and network expansion targets. It has already exceeded its interim target to grow from approximately 1.6m. lines in 1991 to over 4.4m. by 2000. During 1992-93 it planned investments of over $1bn and during 1992 it installed 413 000 digital lines. A total of 210 000 new customers were recruited, and 18 400 new public telephones were installed. The number of lines out of service fell by 70 per cent (Adam, 1993). Adam (1993) regards CANTV’s privatization as having proceeded with success for all parties, in spite of political instability reflected in two military coup attempts in 1992. According to Andrew T. Jones, vice-president of International Telephone Operations for GTE, which led the winning consortium: Knowing what we know now, with hindsight, our consortium would still bid for CANTV. We don’t see any change in the long-term fundamentals for Venezuela, and in fact, we see the stage set for very positive social change in the country. We think the trend of events is toward positive democratic change. The basic fundamentals which caused us to bid for CANTV are still in place. Venezuela has a tremendous future, and we’re glad we’re going to participate in it. (Adam, 1993, p. 10)

By 1993, the two privatized companies controlled and monopolized most of the Argentine telecom sector. Each company enjoyed exclusive rights over local and long-distance services in its region for seven years, extendable to ten if performance targets were met. The joint venture of the two companies was granted the right to be one of two cellular service providers nationwide, subject to the requirement that the second provider enter the market within two years. Both companies were also permitted to offer additional services through subsidiaries. For the sake of a quick sale, no regulatory changes had been made before privatization, but repeated changes were made to the regime during the negotiation process and the first years of privatization. After changing the base of the 16 per cent p.a. rate-of-return pricing mechanism from ENTel’s fixed net asset value to the lower purchase price, the rate-ofreturn formula was replaced altogether just a few weeks before the sale with a

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price-cap mechanism. A formula of RPI-X was agreed between the government and the new buyers, where X was set at 2 per cent for the first seven years and 4 per cent for the three remaining years of the ten-year exclusive concession. In practice this new regime allowed the companies to earn a rate of return of 28.5 per cent on fixed assets, effectively improving both the companies’ profits and the government’s tax revenues at the consumers’ expense (Hill and Abdala, 1993). Explicit network expansion and service quality goals were set for the new owners, in terms of annual percentage network growth, number of additional lines and public phones, call completion and failure rates, days taken to repair faulty lines and installation delays in months. They were, however, widely criticized as being too lax. Compared to those imposed on TELMEX in Mexico, for example, they were extremely modest (Petrazzini, 1996). Moreover, rules for interconnection were not spelled out precisely. Instead, operators were required to provide such rules, subject to the intervention of a regulatory agency. Enacting and enforcing such a framework thus required a competent regulatory agency. The Comision Nacional de Telecomunicaciones (CNT) was established in June 1990, with a mandate to ‘apply, interpret and enforce laws, decrees and other norms in the telecommunications sector’ (Decree 1185/90 art. 6, cited Petrazzini, 1996, p. 133). It failed to function until 1992, however, and was then hamstrung by political interference and uncertainty. It had been designed to be accountable to the president but was placed under the Ministry of Public Works, and when that was abolished it came under the Ministry of the Economy. It had also been predicted on a rate-of-return regulatory regime, and the last-minute change of this to a price-cap formula seriously weakened its powers. Finally, while its funding was intended to be available from a levy on the operating revenues of the telephone companies, this was never accessed because the budget was never approved. Although a revitalized CNT achieved in three months in 1992 more than it had in the previous 15 months put together, it was still a long way from providing a stable, credible regulatory regime. Petrazzini has concluded that ‘the lack of autonomy, limited human and material resources and restricted finances placed the Argentine regulatory agency, the CNT, at odds with the technically and politically difficult task assigned to it’ (Petrazzini, 1996, p. 138). This lack of effective regulation had a significant impact on sector development. Significant revenues were generated for the government by the privatization, the foreign debt was lowered, and foreign investors were attracted, thus strengthening the credibility of the overall reform programme. However, although the sale raised a total of around $955m., comprising $214m. in cash and $5.029bn in debt and interest at face value, at only $800/line this represents the lowest

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price per line received for telecommunications sector privatizations in developing countries. Nevertheless, the sales were regarded as free of corruption or favouritism, even by those whose bids were rejected. Performance from the investors’ perspective was good, however, and foreign investors were among the main winners. Repeated tariff increases raised revenue per line from $328 in 1991 to $794 in 1993, and as the labour force was reduced by 20 per cent, productivity improved from 13 to 10 workers per thousand lines (Wellenius, 1994). Contracts were renegotiated and input prices reduced by 50 per cent. The business became highly profitable as rates of return rose from 24 per cent to 33 per cent. Share values also rose and firms enjoyed early entry into a new high-growth market. Argentine bond-holders also benefited as the price of debt rose from 12 to 19 cents per dollar, and then further to 35 cents. In terms of service performance, the network grew by 12 per cent in the first four years after privatization, as compared to 5 per cent in the five previous years. Telephone density rose from 9.4 lines/100 people in 1985 to more than 14 in 1994, and the average capital spending rose three to four times from the early 1980s to $1.2bn per annum after privatization. Consumers were not impressed, however, as they were adversely affected by the price increases. A May 1991 public poll showed that 66 per cent of respondents perceived no improvement in the service after privatization (Petrazzini, 1996). Although workers’ rights shrank, their wages rose and they became partowners of the businesses, and job losses were not as great as predicted. Pensioners, however, suffered from the loss of tax revenue previously generated for the national pension fund from a tax that had comprised 31.58 per cent of tariffs before privatization. In order to avoid the political opposition anticipated in gaining congressional approval to eliminate the tax, it was instead reduced by presidential decree to a rate of just 0.001 per cent and the difference was retained by the new owners. Privatization had contributed to a further concentration of wealth in Argentina. The overall conclusion as to whether the privatization of ENTel may be considered a success must rely to a considerable extent on the goals and ideological persuasion of the commentator. Wellenius takes the optimistic view that ‘a tentative assessment two years after privatization confirms that the new owner-operators have been successful in rationalizing the two regional companies and meeting the performance and investment targets set forth’ (Wellenius, 1994, p. 117). Mairal similarly concludes that, ‘given the obstacles faced and the time constraints, the privatization of ENTel can be considered a success ... it is to be hoped that future improvements of the service and an adequate level of tariffs will lead the Argentine public to share this conclusion and that the path thus opened may be followed by other major public utilities’ (Mairal, 1994, pp. 172-3).

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In contrast, Petrazzini observes that, ‘given the political and economic power of the new consortia and the protective regulatory framework put in place, the state’s ability to open the market up to competition in the future is somewhat suspect’ (Petrazzini, 1996, p. 136), and he concludes that ‘the rush to divest the sector under conditions of high economic and political instability resulted in a sub-optimal and less-than-smooth transition’ (ibid., p. 138).

CONCLUSIONS The country studies reviewed here, and the literature in general, reveal the variety of solutions that have been applied to the utilities to try to reconcile the interests of major stakeholders: governments, consumers, producers and investors. The industry structures and systems of regulation that have emerged have been shaped by political considerations, history, technology, resources and the development of the economy. Clearly, at the present time, privatization is preceding the development of effective regulation and competition. In this situation, anti-competitor behaviour exists and is difficult to prevent when a state monopoly is privatized as a private monopoly without an accompanying regulatory system. The establishment of effective regulatory institutions and processes is therefore critical to the privatization process in the utilities sector. Given that the interest of private investors in managing and operating newly privatized companies is likely to favour weak rather than strong regulation, it is up to government to provide the political commitment to put in place effective regulatory and competition-inducing structures. Experience has shown that the development of regulatory regimes is a continuous process and not a one-shot exercise. It has also been the case that, while the structures for regulation initially established have important implications for the evolution of the future system, political considerations often lead to compromise solutions that depart from those originally envisaged. Nevertheless, achieving an effective regulation and competitive environment is a difficult and slow process, whereas privatization is easier to achieve. This is particularly the case where new forms of regulation are being introduced and where there is little previous experience of regulation on which to draw. Of the surveys of regulatory performance that have been conducted in recent years, most conclude that successful regulatory design has needed to address problems relating to information asymmetry, and pricing. In the former case, attempts to overcome this have relied on the introduction of a more competitive environment although, in a large number of cases, countries operating telecommunications under private ownership have ended up with continuing monopolistic structures. Some services have been split on a

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regional basis to create regional monopolies, as in the example of Argentina. As a result, forms of regulation have acted as surrogates for real competition or the threat of competition has been introduced should a private operator fail to live up to their licence agreements, as for example, in the cases reviewed here for Argentina and Venezuela. But the point is also relevant to the situation experienced in Chile, Mexico and Jamaica (Galal and Nauriyal, 1995). In Argentina, the complexity of the financial package, in the case of ENTel, caused the withdrawal of one of the original bidders, considerably weakening the government’s bargaining position (Adam, 1993). The poor overall performance of the company also reduced the interest of potential buyers and the prices they were prepared to offer for the company. Lengthy negotiation over the terms of the sale in fact discouraged investors, who feared instability of regulation rather than encouraging them as hoped. As a result, the number of bidders decreased and their demands increased, and much of the planned liberalization never materialized. The case of telecommunications in Argentina illustrates a more general lesson: privatization can be delayed by political debate, and can begin to flounder if financial arrangements become too complex.

REFERENCES Adam. P. (1993), ‘Privatization in the telecommunications industry’, Economic Reform Today, 2, Washington, DC: CIPE. Adams, C., W. Cavendish and P. Mistry (1992), Adjusting Privatization: Case Studies from Developing Countries, Oxford: James Currey. Ambrose, W., P.R. Hennemeyer and J.P. Chapon (1990), ‘Privatizing telecommunications systems: business opportunities in developing countries’, IFC Discussion Paper No. 10, Washington, DC: World Bank and IFC. Bennell, P. (1997), ‘Privatization in sub-Saharan Africa: progress and prospects during the l990s’, World Development, 25 (11). Boubakri, N. and J. Cosset (1998), ‘The financial and operating performance of newly privatized firms: Evidence from developing countries’, unpublished draft, Université Laval, p. 26. Bradburd, R. and D. Ross (1991), ‘Regulation and deregulation in industrial countries: some lessons for LDCs’, Policy, Research and External Affairs Working Paper No. 699, Washington, DC: World Bank. Chisari, O., A. Estache and C. Romero (1997), ‘Winners and losers from utility privatization: lessons from a general equilibrium model in Argentina’, Policy Research Working Paper No. 1824, Washington, DC: World Bank. Cook, P. (1988), ‘Recent trends in multilateral development bank lending to the private sector in LDCs: policy and practice’, Development Policy Review, 6 (2). Cook, P. (1999), ‘Privatization and utility regulation in developing countries: the lessons so far’, Annals of Public and Cooperative Economics, 70 (4), 1-37. Cook, P. and C. Kirkpatrick (1988), Privatization in Less Developed Countries, Brighton: Harvester Wheatsheaf.

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Cook, P. and C. Kirkpatrick (1994), A Report on the Experience with Privatization and a Methodology for Assessing the Results, Geneva: UNCTAD, November. Cook, P. and C. Kirkpatrick (1995), Privatization Policy and Performance: International Perspectives, Hemel Hempstead: Prentice-Hall. Cook P. and C. Kirkpatrick (1998), ‘Privatization: trends and prospects in developing countries’, in P. Buckley and P. Ghauri (eds), Multinational Enterprises and Emerging Markets: Managing Increasing Interdependence, Fort Worth: Dryden Press. Cook P. and M. Minogue (1990), ‘Waiting for privatization in developing countries: towards the integration of economic and non-economic explanations’, Public Administration and Development, 10 (4). Frances, A. (1996), ‘A planned approach to telephone privatization: Venezuela’, in R. Ramamurti (ed.), Privatizing Monopolies: Lessons from the Telecommunications and Transport Sectors in Latin America, Baltimore, MD: Johns Hopkins University Press. Galal, A. and B. Nauriyal (1995), ‘Regulating telecommunications in developing countries’, Policy Research Working Paper No. 1520, Washington, DC: World Bank. Galal, A., L. Jones, P. Tandon and I. Vogelsang (1992), World Bank Conference on Welfare Consequences of Selling Public Enterprises: Case Studies from Chile, Malaysia, Mexico and UK, 11-12 June, World Bank, Country Economics Department, Washington, DC: World Bank. Galal, A., L. Jones, P. Tandon and I. Vogelsang (1994), Welfare Consequences of Selling Public Enterprises: an Empirical Analysis, New York: Oxford University Press. Gilbert, R. and E. Kahn (eds) (1996), International Comparisons of Electricity Regulation, Cambridge: Cambridge University Press. Gray, C. (1991), ‘Antitrust as a component of policy reform: what relevance for economic development’, in D. Perkins and M. Roemer (eds), Reforming Economic Systems in Developing Countries, Cambridge, MA: Harvard University Press. Harteneck, G. and B. McMahon (1996), ‘Privatization in Argentina’, in Privatization in Asia, Europe and Latin America, Paris: OECD. Hill, A. and M. Abdala (1993), ‘Regulation, institutions and commitment: privatization and regulation in the Argentine Telecom sector’, Policy Research Working Paper No. 1216, Washington, DC: World Bank. Jones, L. (1994), ‘Appropriate regulatory technology: the interplay of economic and institutional conditions’, Proceedings of the World Bank Annual Conference on Development Economics 1993, Washington, DC: World Bank. Kikeri, S. (1998), ‘Privatization and labor: what happens to countries when governments divest?’, World Bank Technical Paper No. 396, Washington, DC: World Bank Killick, T. (1983), ‘The role of the public sector in the industrialization of African developing countries’, Industry and Development, 7, UNIDO. La Porta, R., F. Lopez-de-Silanes, A. Schleifer and R. Vishny (1998), ‘Agency problems and dividend policies around the world’, NBER Working Paper No. 6594, Cambridge, MA. Mairal, H. (1994), ‘The Argentine telephone privatization’, in B. Wellenius and P. Stern (eds), Implementing Reforms in the Telecommunications Sector: Lessons from Experience, Washington, DC: World Bank.

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Martin, S. and D. Parker (1997), The Impact of Privatization, Ownership and Corporate Performance in the UK, London: Routledge. Megginson, W.L., R.C. Nash and M. van Randenborgh (1994), ‘The financial and operating performance of newly privatized firms: an international empirical analysis’, Journal of Finance, 49, 403-52. Mosley, P. (1988), ‘Privatization, policy-based lending and World Bank behaviour’, in Cook and Kirkpatrick (1988). Myers, S. (1998), ‘Outside equity financing’, NBER Working Paper No. 6561, Cambridge, MA. Newbery, D. (1994), ‘Regulatory policies and reforms in the electricity supply industry’, DAE Working Paper No. 9421, Dept of Applied Economics, University of Cambridge. Parker, D. (1999), ‘Price cap regulation, profitability and returns to investors in the UK regulated industries’, Utilities Policy, 6 (4), 303-15. Peltzman, S. (1976), ‘Towards a more general theory of regulation’, Journal of Law and Economics, 19, 211-40. Petrazzini, B. (1996), ‘Telephone privatization in a hurry: Argentina’, in R. Ramamurti (ed.), Privatizing Monopolies: Lessons from the Telecommunications and Transport Sectors in Latin America, Baltimore, MD: Johns Hopkins University Press. Pinheiro, A. and B. Schneider (1995), ‘The fiscal impact of privatization in Latin America’, Journal of Development Studies, 31 (5), 751-76. Pisciotta, A.A. (1994), ‘Privatization of telecommunications: the case of Venezuela’, in Wellenius and Stern (1994). Ramamurti, R. (1996), ‘The new frontier of privatization’, in R. Ramamurti (ed.), Privatizing Monopolies: Lessons from the Telecommunications and Transport Sectors in Latin America, Baltimore, MD: Johns Hopkins University Press. Sader, F. (1993), The Experience with Privatization in the Developing World 1988-92, International Economics Department, WPS1202, Washington, DC: World Bank. Sappington, D. (1994), ‘Principles of regulatory policy design’, Policy Research Working Paper No. 1239, Washington, DC: World Bank. UNCTAD (1996), Comparative Experiences with Privatization: Policy Insights and Lessons Learned, New York: United Nations. Vuylsteke, C. (1988), ‘Techniques of privatization of state-owned enterprises, volume 1: methods and implementation’, Technical Paper No. 88, Washington, DC: World Bank. Wallsten, S. (1999), Competition, Privatization and Regulation in Telecommunications Markets in Developing Countries: An Econometric Analysis of Reforms in Africa and Latin America, Stanford University and World Bank, mimeo. Wellenius, B. (1994), ‘Telecommunications restructuring in Latin America: an overview’, in Wellenius and Stern (1994). Wellenius, B. and P. Stern (1994), Implementing Reforms in the Telecommunications Sector: Lessons From Experience, Washington, DC: World Bank. World Bank (1995), Bureaucrats in Business: the Economic and Politics of Reform, Washington, DC: World Bank and Oxford University Press. Young, R. (1995), ‘Privatization: African perspectives’, in Cook and Kirkpatrick (1995), 162-77.

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Human resource management and new public management: two sides of a coin that has a low value in developing countries? Harry Taylor

INTRODUCTION Changes in the ways that both public and private sector organizations have been managed, and in particular in the ways that their employees have been managed, have accelerated in the last 15 to 20 years. Regardless of whether we are considering the private or public sectors, employees are given the message that there are no longer ‘jobs for life’, that performance and results are allimportant and that in terms of career, employees should ‘pack their own parachute’. In the face of globalization, an increasingly international division of labour, increased competitive pressures, and the worldwide desire to reduce public expenditure and improve public services, employees (if they retain that status) are facing intensifying pressures to abandon old attitudes and work practices in favour of flexibility, pay for performance, reduced job security and an increasing individualization of the employment relationship at the expense of collective bargaining and consensus. Of course these changes have not proceeded evenly across sectors and regions, and in some circumstances the changes are more visible and advanced than in others. However, my argument in this chapter is that the ways of managing employees have changed in a way that broadly reflects the intentions of the ‘New Right’ agenda. In order to operationalize these tenets it has been necessary to construct a politically neutral justification for detailed reform of the employment relationship. I further argue that ‘new public management’ (NPM) and ‘human resource management’ (HRM), whilst operating separately with different academic and practitioner audiences, both serve to provide such a justification, and draw upon the same basic ‘New Right’ ideas and philosophies. Needless to say, NPM is oriented to the public sector, whereas HRM has its roots in the private sector but with claims to 174

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applicability in all sectors of employment. In both cases, however, the original conceptualization and application have been in the developed world, and this raises the issue of whether these philosophies and practices are capable of transplantation to less developed countries (LDCs). In the next section I consider in detail the argument that NPM and HRM share a similar ideological basis and a similar change agenda. I follow this with a selective examination of the general critiques of both NPM and HRM that have been offered. The remarkable similarity of the critiques corroborates the above argument and throws doubt on the validity of both NPM and HRM, even in developed countries. Next, I assess the applicability of HRM thinking to public sector organizations in LDCs. Finally, I consider the recent shift in NPM/HRM thinking towards more flexible, pragmatic and balanced approaches, and whether such developments answer the criticisms made in this chapter.

NPM AND HRM: TWO SIDES OF THE SAME COIN? That NPM and HRM have developed separately as academic models should not be too surprising since, in addition to the normal tendency for academics to overspecialize and attempt to create new disciplines which splinter reality, on a superficial analysis NPM and HRM are different. The former appears to deal with broad general managerial change processes and strategies in the public sector, whereas the latter restricts itself to the specialist, functional ‘people management’ aspects of management applied particularly in the private sector. However, I contend that in their historical development and their theoretical underpinnings NPM and HRM are for the most part dealing with essentially the same issues, and drawing on the same justificatory ideology for support. In terms of historical development, both NPM and HRM emerged at around the same time as a response to the same social, economic, political and cultural changes in Western developed nations. The long period of consensus in economic and organizational management in developed countries extended from the end of the Second World War until the early 1970s. At the end of this period the oil crises and the declining performance of Western economies relative to newly emerging competitors in the East (first Japan, then later the other ‘Asian Tigers’) created a series of economic crises and a desire to move away from the discredited apparatus of Keynesian economic management, national planning and a tripartite, collective bargaining approach to the ‘problem of labour’. Hence ‘New Right’ thinking emerged as an antidote to poor economic performance and the power of trade unions. Newly elected governments in the UK and the USA popularized ‘New Right’ ideas and set in

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motion a series of reforms which included returning to market mechanisms, reducing the extent of state involvement in economic matters, and the replacement of collectivist approaches to the ‘problem of labour’ with a more individualist ideology. These reforms provided a fertile seedbed for the emergence of both NPM and HRM: they ushered in the view that markets are in most circumstances the preferred mechanism for organizing economic activity. For the public sector this meant privatizing as many public sector organizations as possible. Where this wasn’t feasible, the introduction of private sector management mechanisms and practices such as agencification, contractualism and internal markets was the next best thing (see Cook’s chapter in this volume for more detail on these issues - Chapter 8). In addition to these specific mechanisms, public sector organizations were generally expected to emulate their private sector counterparts in managing resources, including people, in an efficient, goal-oriented and flexible way. It is here that the philosophy and practices of NPM came into play. As Hughes (1998) indicates, although NPM partly emerged as a result of growing dissatisfaction with traditional bureaucracy, its main impetus was provided by the ‘New Right’ reforms which required reductions in public expenditure (while coping with increased demands for public services), reductions in taxation levels, an emphasis on serving the ‘customer’ and on measuring service delivery. Correspondingly, the emergence of a discipline called HRM from the early 1980s onwards was a reaction against the ‘long consensus’ which had, it was perceived, given too much power to unions, permitted unproductive working practices, eroded the power of managers to manage and acted as a block to creativity and flexibility (see Beardwell, 1992; Hendry and Pettigrew, 1990; Coopers and Lybrand, 1985). All of these were seen as increasingly damaging to long-term global competitiveness. The agenda of HRM was to reverse this decline by introducing changes in management practice (not solely in the personnel functional areas) which matched the ‘New Right’ agenda. The earliest models of HRM (see Fombrum et al., 1984; and Beer et al., 1985) emphasized the importance of commitment to organizational values, mutuality of interests, and the requirement for the ‘strategic needs of the business’ to take precedence over other interests. This was a clear rejection of the pluralism and consensus-seeking of the personnel/industrial relations approach which had developed up to the 1970s (Guest, 1987). Although HRM claimed to increase involvement and participation by giving employees a ‘voice’, this was essentially on management’s terms and was seen not as an end in itself but as a means of delivering a ‘committed workforce’. HRM attempted to install an individualist approach to managing the employment relationship through a variety of mechanisms such as individual contracts, individual performance-related pay, and an increased use of performance appraisal (Sisson, 1990). The earlier model of managing people, now commonly

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referred to as ‘traditional’ personnel management, with its low status, administrative ethos and peripheral ‘housekeeping’ role, was to be replaced by a dynamic strategic function which concentrated only on those HR practices which were ‘key levers’, having a direct impact on individual and organizational performance, namely, selection, employee development, appraisal and managing pay. Given the simultaneous emergence of NPM and HRM as responses to economic, political and cultural developments, it is possible to delineate a degree of common theoretical underpinnings and values for NPM and HRM. Other chapters in this book, especially Minogue’s (Chapter 2), set out the NPM agenda in more detail. For the purposes of comparison I propose to utilize what Hood (1991, pp. 4-5) calls the doctrinal components of NPM and attempt to link these to the main elements of the HRM agenda: 1.

2.

3.

The notion of ‘giving management back to line managers’ (as opposed to specialists) and devolving power to the lowest possible level is a key element of HRM thinking (Storey, 1995, pp. 18-19). A critique of traditional personnel management was that too much of the job of managing people had become specialized within the personnel department and subject to the effective veto of trade unions. Disciplinary issues, terms and conditions of work, labour deployment and recruitment were beyond the control of line managers whose responsibility it was to achieve results through people. Thus HRM transferred control over employees to managers, with HR specialists as supporters and facilitators. This corresponds quite closely to Hood’s first component of ‘hands on professional management in the public sector’. The latter referred to a desire to give freedom and discretion to managers to manage resources without bureaucratic fetters through devolved management structures. Both ideas place the line manager at centre stage, and represent a general reaction against overspecialization and bureaucratic procedures. HRM also places great emphasis on the contribution of employees to the ‘bottom line’. Since personnel activity was not seen as having any impact on organizational performance, personnel was not seen as a high-profile function. By contrast, HRM claims to have just such an impact. This has moved the management of people to centre stage. The corresponding component of Hood’s NPM model refers to ‘explicit standards of performance’ in the public sector rather than bureaucratic rule serving. Thus both models, although with a slightly different emphasis, put a premium on maximizing performance. In HRM, commitment of workers to the job and the organization is one of the factors that distinguish ‘excellent’ companies (Peters and Waterman, 1982). This committed performance is to be elicited through an

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individualization and incentivization of the employment relationship. Committed performance cannot be achieved if employees have a ‘false’ loyalty to some other collective group (for example a trade union). Thus collective mechanisms are downplayed and performance improvement is sought through individual incentives, participation and communication methods. Although there is no directly corresponding element in Hood’s analysis, the notion of commitment is arguably implicit in what Hood calls the ‘disaggregation’ of the public sector, and in the introduction of competition. Disaggregation refers to the breaking up of monolithic units into semi-freestanding entities such as executive agencies. This not only allows the users a greater access but also, from an HRM point of view, allows employees to identify more easily with the goals of the organization and develop a true sense of commitment to organizational goals. Also, the introduction of competition in NPM refers to competition between overall organizational entities but finds an echo in HRM, where the introduction of more flexible and competitive labour markets is intended to replace the perceived rigidities and restrictive practices of the collectivist arrangements. The end of the ‘job for life’ mentality, together with the promotion of performance-related pay, downsizing and a more vigorous opposition to some or all aspects of collective bargaining, indicates the application of individualist and competitive notions of the employment relationship in the public sector. 4. Another important notion in HRM is that of strategic integration. How staff are managed must be integrated with the overall strategic direction of the organization, and so HR practices and policies must contribute to achieving the overall strategy. Moreover, the organization’s HR strategy should also be coherent within itself: the components of HR strategy selection, development, rewards, appraisal and so on - should be coordinated to realize a ‘grand plan’ for the management of people. HRM assumes the existence of an overall organizational strategy with which an HR strategy can be integrated, one that gives a clear direction for the HRM components. The contribution to achieving overall strategy, in fact, is the most important single test of the success of HRM (Fombrum et al., 1984). This feature of HRM does not explicitly align with any of Hood’s components, although there is something implicit in the notion of ‘output controls’ which stresses the need for results in public sector organizations. For the public sector the notion of managing for results was something of an innovation and the criticism was that many did not actually know what they were trying to achieve. Even now it could be argued that NPM does not essentially contain a developed view of strategic management in the same way that HRM does. Only quite recently has the NPM literature

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turned to a more explicit espousal of strategic management (see for example Pallot, 1997). However, if we accept Whittington’s (1993) view that strategy need not be conceived of purely in terms of classical longrange strategic planning of the ‘grand plan’ variety but may also include an incremental, processual, step-by-step approach, then NPM and HRM are perhaps converging in this respect too (see also Mintzberg’s 1989 work on ‘crafted strategy’). The final HRM goal is flexibility (see Legge, 1995a, pp. 139-73). Flexibility in acquiring, utilizing and disposing of human resources to improve their efficiency is seen as key to maximizing the contribution of human resources in the volatile environments within which organizations increasingly operate. This could mean so-called ‘numerical flexibility’ in the way people are ‘employed’ under a variety of different contractual arrangements, whether as self-employed contractors, consultants, or parttime and temporary employees, as well as the standard full-time permanent post. It could also mean so-called ‘functional flexibility’, with workers becoming ‘multi-skilled’, turning their hands to whatever task the employer requires. All these notions are examples of labour utilization practices that are contributing to Hood’s somewhat broader categories of ‘private sector management practices’ and ‘greater discipline and parsimony in resource use’. Also, elsewhere in the NPM literature (Dunleavy and Hood, 1994, p. 9) the call for the ‘opening up of provider roles to competition between agencies’ implies increasing flexibility in public service management.

In short, there is a considerable correspondence between the HRM and NPM models, in terms of both practices and underlying values. Taken together, they provide a coherent set of principles, derived ultimately from ‘New Right’ thinking, which is summarized in Table 9.1. Table 9.1

Key elements of NPM and HRM philosophy compared

Principle

HRM

NPM

Importance of line manager Emphasis on performance and its measurement Employee commitment through individualism/ incentivization Strategic integration

Explicit Explicit

Explicit Explicit

Explicit at level of employee

‘Disaggregation’ at organization level

Explicit and highly developed Employee flexibility numerical and functional

Implicit, and not well developed Discipline and parsimony in resource use

Flexibility

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COMMON CRITIQUES OF NPM AND HRM AND PROFESSIONAL ‘SELF-INTEREST’ Given this degree of correspondence between NPM and HRM thinking, it is not surprising that critiques of the two models also show similarities. Space does not permit a full review, but I will highlight the key areas of criticism and provide references for further reading: 1.

2.

3.

Whilst both are part of the agenda of the ‘New Right’ as outlined above, they are both presented as politically neutral ‘good practice’ in order to win broad support. Thus they ignore the dynamics of power relations within organizations (for NPM see Pollitt, 1990, p. 49; for HRM see Keenoy and Anthony, 1992, p. 235; see also Heeks and Mundy’s chapter in this volume - Chapter 10). Both NPM and HRM initially claimed a universal application, which is misplaced in that it ignores the importance of the context of application (for NPM see Aucoin, 1990, p. 134, and Osborne and Gaebler, 1992; for HRM see Pfeffer, 1994). While both NPM and HRM aspire to a ‘strategic’ approach, some of their practices, such as the separation between policy (‘steering’) and implementation (‘rowing’) in NPM, militate against clear strategic direction (for NPM see Pallot, 1997; for HRM see Legge, 1995b).

Given these substantial criticisms of both NPM and HRM, one is left to wonder why such dubious ideas have so often been hyped as panaceas for complex organizational problems. The simple answer, in my view, is that they represent an attempt to challenge the professional self-interest of previously dominant occupational groups such as doctors and personnel specialists. In a brief review of the sociology of the professions, Brown (1998) focuses on the negotiation of professional status as a political phenomenon. Emergent occupational groups are seen as vying with each other to establish their claims to a unique body of knowledge and expertise, one that will enjoy credibility with potential clients. Managers are an example of such an emergent profession. Such attempts do not always succeed because knowledge that is relevant today may be irrelevant tomorrow. Before the introduction of HRM, for example, the personnel specialist’s claim to professional status was based on being ‘managers of the collective consensus’ between management on one hand, and employees and their representatives on the other. With the shift to the Right in the 1980s, collective consensus was seen as less important, and thus personnel specialists began to reinvent themselves as ‘strategic change agents’ in the HRM mould in order to regain their waning influence (see Storey, 1995). Legge puts this point succinctly:

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The use of the language of HRM to express new orthodoxies, it is suggested, owes as much to the functions it serves for interested parties [academics, line managers, and personnel managers] seeking legitimacy and survival in a changed and increasingly competitive world. (Legge, 1995b, p. 34)

In public management, although the issues have been somewhat different, a similar process of competing groups trying to establish authority through the promotion of ideas can be discerned. NPM can be seen as an attempt to break the power of longstanding professional groups in the public sector, such as doctors, by the elevation of general management processes. In the new environment that developed through the 1980s, an association with discredited notions of public administration and ‘traditional’ personnel management did not offer a viable professionalization strategy to aspiring professionals. An alternative occupational ideology was required (see Watson, 1995, p. 226), and NPM and HRM represent just such an ideology.

APPLICABILITY OF HRM THINKING TO PUBLIC SECTOR ORGANIZATIONS IN LESS DEVELOPED COUNTRIES (LDCS) As already noted, HRM, in common with NPM, derives its inspiration from the notion of ‘enterprise culture’, and locates the source of excellence and ‘best practice’ in the private sector in the developed world. Both models are assumed to be globally transferable. Few writers challenge this assumption (for NPM see Hughes, 1998, p. 206; for HRM see Adler and Boyacigiller, 1995, p. 1). Seeking to apply these approaches to public sector organizations in LDCs is thus an attempt to cross two sectors - from private to public sector organizations, and from developed to developing countries. The general problems of applying notions of private sector management to public sector organizations will not be discussed here: Hughes (1998) provides a useful discussion. Instead, we will focus on the particular situation of public sector organizations in LDCs, which are not only subject to the problems that Hughes discusses, but also have distinctive characteristics that make it very difficult to apply HRM thinking. I set out below four contingent variables that appear to influence the applicability of HRM thinking in public sector organizations in LDCs. In the interests of brevity, my analysis only covers three of the five elements of HRM thinking outlined earlier.

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Downplaying of Market Mechanisms and Contractual Relationships In advanced capitalist societies, property rights, the enforceability of contracts, and the almost univeral acceptance of impersonal, arm’s-length market mechanisms as the major medium of economic activity have been established over a long period and are enshrined in law and culture. In LDCs, by contrast, these notions tend to be less well accepted. Although organizations may ostensibly be bureaucratic and tightly controlled, in reality an informal social system determines their operation, their use of resources and the distribution of rewards. Whilst most LDCs also possess a ‘modern’ sector, of which the public sector is a part, this is generally quite small relative to the size of the population and is itself influenced by these wider norms of informality. In his analysis of why LDCs should not attempt to emulate New Zealand’s NPM reforms, Schick (1998) argues that the continuing influence of informality has prevented the emergence of an impartial civil service where rules and procedures are followed consistently. This is seen to be an essential requirement before adopting the NPM approach, which gives public sector managers more discretion: ‘they must abide by uniform rules before they are authorized to make their own rules; they must operate in integrated centralized departments before being authorized to go it alone in autonomous agencies’ (ibid., p. 130). The argument here is that public sector organizations in LDCs should learn to ‘walk before they run’ by establishing sound bureaucratic principles as an essential first stage in their development before, following a period of consolidation, moving on to the more ambitious NPM (or HRM) reforms. (This issue is also discussed in Polidano’s chapter in this volume - Chapter 3.) Not only does the weakness of markets and preference for informality influence the overall operation and culture of the civil service; it also affects the nature of the employment relationship and thus the applicability of HRM thinking. In LDCs only a small percentage of the population works under a formal contract of employment. Typically, work activity under a formal contract of employment is highly structured, time-driven, subject to control and external specification, and separated from family and community commitments. Most fundamentally, its terms are determined by the market for labour (Watson, 1995). In contrast, most work activity in LDCs is influenced by a ‘traditional’ work culture, one that is structured by longstanding social norms rather than the needs of a ‘rational’ and specialized production system. This ‘traditional’ work culture does not place a high value on time management but tends to be reactive to events and fatalistic. Moreover, work activity is less likely to be seen as separate from other aspects of social life both in terms of time and the extension of social obligations into work activities. The boundary

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between work and non-work is thus much less clear than in developed countries (Udy, 1970). Since a very large proportion of the population in LDCs still works under such a ‘traditional’ work culture, it is difficult to establish an arm’s-length formal contract of employment. Even though contracts exist in the ‘modern’ sector which superficially resemble the employment relationships in developed countries, a closer examination usually reveals a hybrid system of ‘bureaucratic feudalism’ (Munishi, 1987). LDC employees stand at the interface of ‘modern’ and ‘traditional’ societies, and display a consequent ambiguity in their approach to employment: on the one hand they have to accept the tenets of ‘modern’ employment; on the other hand they yield to the power of ‘traditional’ obligations. The preference for informality is in part due to the continuing importance of ethnic, tribal and family support systems which encourage partiality and nepotism. Industrial development requires varying degrees of labour mobility. In the West the development of the nuclear family has facilitated this mobility by loosening the ties of many workers to a particular locality where under previous social arrangements the extended family exerted a strong inertial force. The typical family unit in developed countries is somewhat mobile and flexible. This, coupled with greater social and career mobility, loosens dependence on local family support systems. The advent of state welfare systems acting as a ‘safety net’ has also reduced the importance of the extended family. Developments in communications, the provision of mass education, the culture of consumerism, and changing social attitudes (for example sexual attitudes) have all further loosened family and community ties and encouraged a more ‘atomized’ society. Such changes have occurred incrementally over many decades and will not spread quickly to LDCs. LDCs tend to retain social arrangements based on extended family support systems whereby family members accept responsibility for relatives in terms of financial assistance, job search and other support. In addition, there may also be a wider commitment to a tribal or ethnic group, rarely seen in industrialized societies. Despite the influence of Western values on LDCs, the continued existence of these quite powerful ethnic, tribal and family support systems creates an important countervailing force to Western forms of the employment relationship. These factors, I suggest, contradict HRM thinking in the following ways:

•

They set up alternative sources of commitment to the organization and its goals. The HRM literature does not address how commitment to the organization is related to commitments to family or community. HRM is sociologically naïve in believing that commitment to the organization can be brought into being by manipulating internal policies alone.

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Employees have a number of commitments, of which commitment to work is only one. Whilst this is a general critique of HRM, it is especially relevant to LDCs, given the family, ethnic and tribal responsibilities which we have discussed. The LDC organization has greater competition for the commitment of its employees than its industrialized-country counterpart. This partly external locus of commitment generates an instrumental orientation among employees, who view the organization as a way of promoting the interests of family or tribe. This subverts the organization’s formal policies regarding recruitment, promotions and rewards. It follows from the above that the HRM notion of individualism is not likely to prosper in situations where complex social collectivities heavily influence the behaviour of employees.

Labour Market Issues In LDCs, labour markets do not operate as efficiently as in developed countries. Often there is a large pool of unskilled labour chasing a relatively small number of unskilled jobs, while at the same time, due to lack of training and education facilities at higher skill levels, there are acute shortages of skilled workers. Both these features appear to inhibit the application of HRM thinking in the following ways:

•

•

They frustrate strategic planning, especially human resource planning. It is difficult to see how organizations, no matter how good their planning mechanisms, could bring into existence the necessary skills to meet their strategic aims. Organizations often find themselves having to appoint underqualified staff; or appointing trained and capable employees knowing that they will be lost to the ‘brain drain’. Given the general shortage of resources, the investment that is required for effective training and retention strategies is simply too costly for many LDC organizations. They discourage commitment. The scarcity and desirability of jobs for those outside the system means that there are unlikely to be any sophisticated notions of commitment either demanded from employees or offered by employers. For low-level jobs characterized by exploitative low-trust relations (see Fox, 1974), keeping labour costs low is crucial and close control and supervision rather than an appeal to commitment is the preferred strategy. Moreover, in the public sector successive retrenchment exercises have jeopardized any lingering prospect of commitment. Hence for this sector of LDC employment the ‘commitment recipe’ may be premature. Again, in the case of skilled

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professionals predominantly employed in the public sector, there appears to be little evidence of a public service ethos (Taylor, 1992), but rather an opportunistic approach to maintaining the elite status which their scarcity value provides. The public sector organization comes to be seen as a basic training ground before departure to parastatals or the private sector, or possibly emigration to the developed world. Shortage of managerial skills prevents the devolution of responsibility to line managers. The problem of a poor skills base has inhibited the development of professionalism in LDC organizations and is often used as one explanation for their poor performance. It is doubtful whether giving managers extra responsibility without basic professional competence would be of great value to LDC public sector organizations. Moreover, in many public sector organizations in LDCs careers are built on specialization rather than generic skills; some would argue that the benefits of specialization and professional competence have not yet been fully realized. Thus HRM notions of flexibility are diametrically opposed to the skill needs of these organizations.

Broader Economic Issues In addition to these specific labour market factors, it is possible to identify some broader economic influences which may go part way to explaining why NPM/HRM thinking is more difficult to apply in LDCs where there are higher levels of economic stability than in developed countries. This affects the applicability of HRM thinking as follows:

•

•

Strategic planning and integration become problematic. Uncertainty about the future makes strategy formulation little more than hopeful guesswork since it is impossible to be confident about future revenues and costs. For many organizations, therefore, the only real strategy in the face of this uncertainty is day-to-day survival rather than a forwardlooking strategy of people management. Given high inflation and low salaries, it is difficult to see how employees can develop a commitment to the organization when their real wages are being cut year after year. That hoary old chestnut of Western motivation theory, Herzberg’s two-factor theory (Herzberg, 1966) holds that positive motivation will not occur unless ‘hygiene’ factors such as pay are attended to. It is no use appealing to employees in LDCs to develop a commitment to the organization when the organization does not provide a basic living wage. Although often condemned by Western observers, it is the wholly understandable desire to earn a basic living that drives many employees in LDCs to

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supplement their basic salaries by corrupt practices, outside businesses and ‘moonlighting’. All these activities hardly suggest commitment to the main employer and in fact represent a shortfall in basic compliance. Lack of Ownership Due to Donors and Structural Adjustment Structural adjustment programmes (SAPs) tied to aid assistance from the developed world to LDCs have provided a direct conduit for the export of recent economic and managerial thinking from donor countries to LDCs. Economic reforms implemented in the West favouring lowered trade barriers, the ending of subsidies and price controls, an end to restrictions on capital movements, privatization, deregulation, increased competition, reductions in public expenditure coupled to civil service retrenchment and reform, plus more recent political reforms in the form of ‘good-governance’ programmes, have all served to underline the hegemony of Western thinking. This lack of ownership of the reforms taking place in LDCs by the affected organization is emphasized by Polidano and Hulme: ‘the power of the purse, plus some quite definite ideas regarding what sort of reforms are desirable, has led donor agencies to take centre stage in the design of reform initiatives’ (Polidano and Hulme, 1999, p. 128). Whether public sector organizations would undertake these reforms without the impetus from the need to secure aid is questionable. This appears to contradict HRM thinking under several headings:

•

They do not encourage genuine strategy formulation. One would expect SAPs to support the idea of organizations formulating clear and realistic strategies, and indeed some programmes do require this. However, there are a number of problems. First, donors vary in their sensitivity in promoting new strategies. Some present ready-made solutions based on Western thinking and insist on their implementation without involving local management in any meaningful way. Second, donors don’t always focus on strategy but prefer to concentrate on the less messy areas of introducing specific system improvements, for example information systems, HR systems, procurement systems and so on. Whilst these may be valuable in their own right, they may be unrelated to any broad strategy. Third, as Jorgensen (1995, p. 6) points out, IMF/World Bank loans are not ‘patient capital’, and the time pressures that they impose preclude a long-term strategic approach. Fourth, too often SAPs are associated with little more than another round of retrenchment exercises to cut costs without considering wider organizational strategies or the social consequences of retrenchment (McCourt, 1998). Finally, it should also be noted that the language of structural adjustment doesn’t

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encourage strategic thinking. ‘Capacity-building’ and ‘institutional development’ are essentially recipes that relate to organizational inputs rather than the desired outputs, which are the goal of strategy formulation. They do not foster commitment. It has been noted with a sense of irony that some organizations pursue policies of retrenchment and downsizing while at the same time implementing culture change programmes aimed at increasing commitment to the organization. It seems unlikely in the face of retrenchment exercises resulting from SAPs that employees will respond to the reduced job security, increases in work loads without extra rewards, and the diminution of promotion prospects by becoming more committed to their employers. Any ‘commitment’ that is generated is likely to be superficial and fuelled by fear rather than a genuine sharing of the organization’s values and mission.

Table 9.2 summarizes the foregoing arguments by showing how the contextual variables impinge on the three elements of HRM thinking which we have focused on here. Table 9.2

LDC contexts and NPM/HRM thinking Line manager ‘ownership’ of staff management

Informality and continued importance of ethnic, tribal and family support systems Labour market issues Economic issues Lack of ownership due to structural adjustment

Commitment and individualism

Strategy

X

X X

X X X

X X

CONCLUDING DISCUSSION I have argued that NPM and HRM, while masquerading as managerial common sense, are closely connected with ‘New Right’ ideology, serve the interests of powerful groups and are inappropriate in an LDC context. In this final section I review the extent of the actual implementation of HRM (and also, to some extent, NPM) thinking in LDCs, and the extent to which it is evolving to respond to a complex reality.

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The Reality of People Management in LDCs Evidence about the actual implementation of these approaches is, in fact, sparse. Almost ten years ago I undertook a review of public sector personnel management in three African countries (Kenya, Tanzania and Zimbabwe), and found that personnel management was ‘a largely reactive administrative operation ... lacking a strategic role in the organization’ (Taylor, 1992, p. 193). Since then, of course, there have been plenty of reform initiatives in the public sector generally and in employment reform in particular. What difference have these reforms made? McCourt (forthcoming) has carried out a useful review of employment reform in LDCs during the period of the late 1980s to the mid-l990s by reviewing the reform literature produced by the World Bank and the IMF, and by a series of country case studies. The dominance of reform by external donors as indicated earlier is confirmed, but more importantly he reveals the narrow cost-driven approach to reform adopted by these institutions, which has consisted of crude civil service headcount reductions coupled with the intention to raise the wages of the ‘survivors’, especially the higher paid. This simplistic rationale, which left untouched the issues of the purposes and goals of public service and detailed strategies for their efficient provision, were not even successful in their own terms. Abed et al. (1998) reported that in 22 countries where the IMF had provided assistance, only a 0.5 per cent drop in staff numbers had been achieved overall (although this may mask more successful individual cases). Moreover, instead of the increase in wages, Abed reported an overall 1 per cent decrease in real wages for civil servants. In the face of this failure, these institutions have embarked on a ‘second generation’ of reform measures which are intended to include ‘wider staffing issues’ such as appraisal, rewards, better integration between Finance and Public Service Ministries, and the introduction of a more ‘strategic’ approach. Their success remains to be seen. McCourt’s country case studies in Ghana, Malaysia, South Africa, Sri Lanka, Uganda and the UK reveal that the ‘failure of reform may be even more serious than the reform studies [produced by the WB and IMF] report’ (p. 11). Generally, political reluctance and lack of capacity in the public sector institutions prevented the development of a strategic approach. Donors could reinforce political commitment and ownership where it already existed but could also jeopardize it by being heavy-handed and creating a focus for opposition to reform (as for example in Sri Lanka). Participation by staff in the reform process was ‘occasional at best’ but more successful when it was used (for example in Ghana). Other issues which McCourt highlights are mistrust between Finance and Public Service Ministries (several countries), poor recruitment control (Ghana), and lack of coordination of HR plans (Uganda).

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South Africa was seen as a major exception in this comparative analysis in that it was able to move from a crude job-cutting exercise to a ‘sophisticated review methodology’. However, it could be argued that this is the exception that proves the rule, in that South Africa possesses significant advantages over other LDCs in being stronger in terms of at least some of the factors I discussed earlier, such as market mechanisms and labour markets and skills. It was noted earlier that devolution of responsibility to line managers was a part of both HRM and NPM thinking. I suggested that this was an inappropriate response to LDCs for a number of reasons, including inadequate managerial skills and the prevalence of favouritism. Larbi (1998) supports this analysis, showing how Ghana maintains a strong centralized recruitment process to offset favouritism, despite its bureaucratic slowness. McCourt (forthcoming) offers a similar analysis for Nepal and Tanzania, and Nunberg (1995) reaches a similar conclusion. Zimbabwe’s experience is striking in this respect. A government workshop in 1991 set out a vision for the transformation of the public service which was to consist of customer satisfaction, performance standards, results orientation and performance management, among others. However, according to one independent analysis: the [government] has totally failed to reform its public services ... efficiency is well below the expected standard for a modern state ... the public service is still very much unresponsive to both the general public and the business sector ... bureaucracy in its most deplorable connotations is still alive and active [and] the public service is still safely insulated against public scrutiny and criticism. (Makumbe, 1997, pp. 20-1)

The failure of NPM/HRM thinking in Zimbabwe was attributed to political factors, lack of skill and institutional capacity and failure to rationalize functions of ministries with cost-cutting activities (that is, a non-strategic approach). In particular, the introduction of performance management failed because the freedom to manage that it requires could not be matched by the trust necessary to delegate authority to senior, let alone junior, civil servants. A Contingency Approach to the Application of NPM/HRM Thinking in LDC Public Agencies This brief review of the implementation of NPM/HRM thinking, although limited, appears to support our earlier analysis. However, it can be argued that both NPM and HRM are now starting to become more flexible and pragmatic. An element of my initial critique was that in pursuing the goal of efficiency at the expense of other valid goals, they both came to offer rigid recipes which were insensitive to particular contexts. There is thus a requirement for a

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contingency approach in developing these models, and also some evidence that such an approach is emerging. With NPM, for example, there have been calls for a better balance between results and efficiency on the one hand (the NPM agenda) and control and ‘due process’ on the other (the older public administration agenda) (see OECD, 1991, p. 13; and Minogue et al., 1998, p. 5). The exact balance between these concerns is to be determined by the contingencies of the particular situation. I tentatively offer in Figure 9.1 a model of three contingencies which may affect where on the continuum between ‘accountability’ and a ‘results’ orientation a public management reform agenda might be located. I do not wish to suggest that there might not be other contingencies. Nevertheless, the model illustrates the point that each situation has to be analysed in the light of specific contingencies. Accountability Low ‘bureaucratic capital’ Corruption endemic Capacity-building agenda Figure 9.1

Results High ‘bureaucratic capital’ Corruption exceptional Cost-cutting agenda

A contingency model of public sector reform in LDCs

‘Bureaucratic capital’ (see Schick 1998) refers to the extent that the norms and values of an impartial, transparent and accountable public service have been internalized. ‘Corruption’ refers to the extent to which corruption is systemic or exceptional. The third element refers to the policy emphasis of public sector reform. The argument here is that LDCs, in so far as they have low bureaucratic capital, endemic corruption and a capacity-building agenda, should emphasize accountability in their reform efforts before turning to the concerns of efficiency and results. There are also some signs of a more sensitive, contingent approach to HRM. In outlining HRM philosophy earlier I used a ‘strong’ rather than ‘weak’ definition of HRM, one that implies a highly specific and utilitarian set of practices (see Storey, 1992). Such a ‘strong’ definition may have created a niche for HRM in an overcrowded academic ‘marketplace’, but the discipline has needed to become more contingent in order to address a wider audience. There is evidence that general models of HRM are indeed becoming more contingent (Stace and Dunphy, 1991; Brewster and Tyson, 1992; Beardwell and Holden, 1997; Lees, 1994). This more sensitive application of HRM thinking to differing contexts is now, after a slow start, beginning to be directed at the specific problems of LDCs (see Saunders, 1995; Jaeger and Kanungo, 1990; Austin, 1990; Kanungo and Mendonca, 1994). Finally, specific analyses of particular countries are now emerging. Space does not

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permit a full review, but some recent articles are Lin (1997) on Taiwan; Budhwar and Sparrow (1997) on India; Baldacchino (1997) on the Seychelles; Khan (1993) on Barbados; Warner (1993) on China; Kamoche (1992) on Kenya; Jain (1991) on India; Lesueur and Plane (1994) on public utilities in Africa; Tung and Havlovic (1996) on Poland and the Czech Republic; Blunt and Jones (1991) a broad review of HRM in LDCs; and Warner (1997) with a review of HRM in Greater China. Thus, in short, there is evidence that both NPM and HRM thinking are attempting to become more contingent and flexible. Implications for Practice As there is not a great deal of evidence that the above findings have been taken on board by policy-makers, advisers and practitioners, I will offer what I believe are a number of practical lessons from the above analysis. Given my argument about the need for a contingency approach, this is not a list of absolute managerial ‘dos’ and ‘don’ts’, and it should be interpreted in the light of particular circumstances. The first two points deal with analysis and diagnosis, while the remaining points deal with some specific practice issues in LDCs:

• • • •

•

Critically review where notions of managerial ‘common sense’ come from and whose interests they promote. Assess the validity of such managerial ‘knowledge’ before attempting to apply it. Reject universalist and ideologically driven panaceas in favour of specific contingency analysis. The ‘environmental scanning’ aspect of strategic analysis is particularly important in seeking to apply developed-country thinking in LDC organizations. Strengthen line managers’ skills and reduce opportunities for corruption and favouritism before devolving power to line managers. At the same time, strengthen professional expertise in support functions, especially human resources. Use a more flexible, process model of strategy, one in which strategy emerges from everyday operations. Many LDC organizations do not have the capacity to engage in strategy formulation of the classical preplanned, ‘top-down’ variety. Strategy should be used to encourage strategic thinking to seize strategic opportunities as they arise. Secure basic organizational ‘compliance’ before seeking the ‘holy grail’ of commitment. Basic compliance questions are: does the person exist? Does the job need to be done? How should the job be designed and related to the overall structure and goals of the organization? What are the basic performance parameters of the job? Do the basic pay and other

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rewards for doing the job provide, first, a sufficient pool of talent from which to recruit, and second, a ‘felt fair’ system of internal pay relativities? Build the ‘public service ethic’ by striving for impartiality in selection, promotion and appraisal. This may require a more centralized approach than is recognized by the NPM and HRM literatures.

These recommendations may appear to be out of step with NPM/HRM orthodoxy as previously described and, if adopted, they would represent a departure from current reform attempts. However, given the failure of so many reform programmes, this is arguably timely and necessary. It may be that a ‘back to basics’ approach will bear more fruit than attempts to emulate uncritically the ‘best current practice’ of developed countries. In any case it is necessary to carry out a specific analysis, without preconceived notions of whatever kind, of the contextual variables in any given situation before decisions are made about the direction of reforms.

REFERENCES Abed, G. et al. (1998), Fiscal Reforms in Low Income Countries: Experience Under IMF-Supported Programs, Washington, DC: IMF Occasional Paper No. 160. Adler, N. and N. Boyacigiller (1995), ‘Going beyond traditional HRM scholarship,’ in Saunders (1995), pp. 1-13. Aucoin, P. (1990), ‘Administrative reform in public management’, Governance, 3, 115-37. Austin, J.E. (1990), Managing in Developing Countries: Strategic Analysis and Operating Techniques, New York: Free Press. Baldacchino, G. (1997), ‘A clash of human resource management cultures: a micro case study’, International Journal of Human Resource Management, 8 (4), 506-18. Beardwell, I. (1992), ‘The new industrial relations: a review of the debate’, Human Resource Management Journal, 2 (2). Beardwell, I. and L. Holden (1997), Human Resource Management: A Contemporary Perspective, London: Pitman. Beer, M., B. Spector, P. Lawrence, D. Mills and R. Walton (1985), Human Resources Management: A General Manager’s Perspective, New York: Free Press. Blunt, P. and M. Jones (eds) (1991), ‘Human resource management in developing countries’, International Journal of Human Resource Management, 2 (1), 1-111. Brewster, C. and S. Tyson (eds) (1992), International Comparisons in HRM, London: Pitman. Brown, D. (1998), ‘Professionalism, participation, and the public good: issues of arbitration in development management and the critique of the neo-populist approach’, in Minogue et al. (1998), ch. 8. Budhwar, P.S., and P.R. Sparrow (1997), ‘Evaluating levels of strategic integration and devolvement of human resource management in India’, International Journal of Human Resource Management, 8 (4), 476-94.

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Coopers and Lybrand (1985), A Challenge to Complacency: Changing Attitudes to Training, London: MSC/NEDO. Dunleavy, P. and C. Hood (1994), ‘From old public administration to new public management’, Public Money and Management, July/September, 9-16. Fombrun, C., N.M. Tichy and M.A. Devanna (1984), Strategic Human Resource Management, Chichester: John Wiley. Fox, A. (1974), Beyond Contract: Work Trust and Power Relations, London: Faber and Faber. Guest, D. (1987), ‘Human resource management and industrial relations’, Journal of Management Studies, 24 (5), 503-21. Hendry, C. and A. Pettigrew (1990), ‘Human resource management: an agenda for the l990s’, International Journal of Human Resource Management, 1 ( 1). Herzberg, F. (1966), Work and the Nature of Man, New York: Staples Press. Hood, C. (1991), ‘A Public Management for all seasons?’, Public Administration, 69, Spring, 3-19. Hughes, O.E. (1998), Public Management and Administration: An Introduction, London: Macmillan. Jaeger, A.M. and R.N. Kanungo (eds) (1990), Management in Developing Countries, London: Routledge. Jain, H.C. (1991), ‘Is there a coherent human resource management system in India?’, International Journal of Public Sector Management, 4 (3), 18-30. Jorgensen, J.J. (1995), ‘Restructuring public enterprise in East Africa: the human resource dimension’, in Saunders (1995), pp. 35-66. Kamoche, K. (1992), ‘Human resource management: an assessment of the Kenyan case’, International Journal of Human Resource Management, 3 (3), 497-521. Kanungo, R.N. and M. Mendonca (eds) (1994), Work Motivation: Models for Developing Countries, New Delhi: Sage. Keenoy, T. and P. Anthony (1992), ‘HRM: metaphor, meaning and reality’, in P. Blyton and P. Turnbull (eds), Reassessing Human Resource Management, London: Sage, pp. 233-55. Khan, J. (1993), ‘Human resource development in the public sector: a developing country experience’, International Journal of Public Sector Management, 6 (1). Larbi, G. (1998), Implementing New Public Management Reforms in Ghana: Institutional Constraints and Capacity Issues: Cases from Public Health and Water Services, University of Birmingham, UK, doctoral thesis. Lees, S. (1994), ‘HRM and the legitimacy market’, International Journal of Human Resource Management, 8 (3), 226-43. Legge, K. (1995a), Human Resource Management: Rhetorics and Realities, London: Macmillan. Legge, K. (1995b), ‘HRM: rhetoric, reality and hidden agendas’, in Storey (1995), ch. 2. Lesueur, J.-Y. and P. Plane (1994), ‘Human resource management and the restructuring of public utilities: water and electricity in Africa’, International Labour Review, 133 (3), 369-84. Lin, C.Y.Y. (1997), ‘Human resource management in Taiwan: a future perspective’, International Journal of Human Resource Management, 8 (1), 29-43. Makumbe, J.M. (1997), The Role of Government in Adjusting Economies: The Zimbabwe Civil Service Reform Programme, Paper No. 16, Development Administration Group, University of Birmingham, UK. McCourt, W. (1998), ‘Civil service reform equals retrenchment? The experience of

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rightsizing and retrenchment in Ghana, Uganda and the UK’, in Minogue et al. (1998), ch. 9. McCourt, W. (forthcoming), ‘Towards a strategic model of employment reform: explaining and remedying experience to date’, International Journal of Human Resource Management. Minogue, M., C. Polidano and D. Hulme (1998), Beyond the New Public Management: Changing Ideas and Practices in Governance, Cheltenham, UK and Northampton, USA: Edward Elgar. Mintzberg, H. (1989), Mintzberg on Management, New York: Free Press. Munishi, G. (1987), ‘Bureaucratic feudalism, accountability, and development in the Third World: the case of Tanzania’, Public Administration and Development, 7, 153-65. Nunberg, B. (1995), Managing the Civil Service: Reform Lessons from Advanced Industrial Countries, Washington, DC: World Bank. OECD (1991), Serving the Economy Better, Paris: Occasional Papers in Public Management, OECD. Osborne, D. and T. Gaebler (1992), Re-inventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, Reading, MA: Addison Wesley. Pallot, J. (1997), ‘Newer than new public management: financial management and collective strategy in New Zealand’, in L. Jones, K. Schedler and S. Wade (eds), Advances in International Comparative Management: International Perspectives on the New Public Management, Greenwich, CT: pp. 125-43. Peters, T. and Waterman, R. (1982), In Search of Excellence: Lessons from America’s Best-Run Companies, New York: Harper and Row. Pfeffer, J. (1994), Competitive Advantage Through Peop1e: Unleashing the Power of the Workforce, Boston, MA: Harvard University Press. Polidano, C. and D. Hulme (1999), ‘Public management reform in developing countries: Issues and outcomes’, Public Management, 1 (l), 121-32. Pollitt, C. (1990), Managerialism and the Public Services: The Anglo-American Experience, Oxford: Basil Blackwell. Saunders, D.M (ed.) (1995), New Approaches to Employee Management, Greenwich, CT: JAI Press. Schick, A. (1998), ‘Why most developing countries should not try New Zealand’s reforms’, World Bank Research Observer, 13 (1), 123-31. Sisson, K. (1990), ‘Introducing the Human Resource Management Journal’, Human Resource Management Journal, 1 (1), 1-11. Stace, D. and D. Dunphy (1991), ‘Beyond traditional paternalistic and developmental approaches to organisational change and HR strategies’, International Journal of Human Resource Management, 2 (3). Storey, J. (1992), Developments in the Management of Human Resources, Oxford: Blackwell. Storey, J. (ed.) (1995), Human Resource Management: A Critical Text, London: Routledge. Taylor, H. (1992), ‘Public sector personnel management in three African countries: current problems and possibilities’, Public Administration and Development, 12 (2), 193-207. Tung, R.L. and S.J. Havlovic (1996), ‘Human resource management in transitional economies: the case of Poland and the Czech Republic’, International Journal of Human Resource Management, 7 (1), 1-18.

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Udy, S.H. (1970), Work in Traditional and Modern Society, Englewood Cliffs, NJ: Prentice Hall. Warner, M. (1993), ‘Human resource management with Chinese characteristics’, International Journal of Human Resource Management, 4 (1), 45-65. Warner, M. (ed.) (1997), ‘Human resource management in Greater China’, Special Issue of International Journal of Human Resource Management, 8 (5), 565-755. Watson, T.J. (1995), Sociology, Work and Industry, London: Routledge. Whittington, R. (1993), What is Strategy and Does it Matter?, London: Routledge.

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10. Information systems and public sector reform in the Third World Richard Heeks and David Mundy RELATING INFORMATION SYSTEMS TO PUBLIC SECTOR REFORM Government is the single largest collector, user, holder and producer of information. Information is a central resource for all staff levels and for all activities of the public sector: ‘In pursuing the democratic/political processes, in managing resources, executing functions, measuring performance and in service delivery, information is the basic ingredient’ (Isaac-Henry, 1997b, p. 132). The work of the public sector is thus very information-intensive, and four main types of formal information are identifiable:

•

• •

•

Information to support internal management This includes information about staff for personnel management, and information about budgets and accounts for financial management. Like the other three types of information, it can be used for everything from day-to-day operational implementation to long-term policy analysis and planning. Information to support public administration and regulation This includes information that records the details of the main ‘entities’ in any country: people, business enterprises, buildings, land, imports/exports. It is used for a variety of purposes such as legal, commercial and fiscal. Information to support public services This information differs according to the particular public service. Examples include education (such as school staff records), health (such as patient records), transport (such as passenger movement information) and public utilities (such as customer billing information). Information made publicly available This includes three main types (POST, 1998): first, information government wishes to disseminate, such as press releases, consultation papers, details of policies, laws 196

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and regulations, and details of benefits and entitlements; second, information government collects that it may make available such as demographic or economic statistics; finally, information that public sector organizations are required to supply such as performance indicators, audited accounts, internal policy documents and correspondence, and responses to requests from citizens or journalists or politicians. Information such as this is organized in information systems (IS): systems of human and technical components that accept, store, process, output and transmit information. They may be based on any combination of human endeavours, paper-based methods and information technology (IT). In turn, we may define IT as computing and telecommunications technologies that provide automatic means of handling information. The focus of this chapter will be on IT-based information systems. Given the public sector’s information intensity, changes in information systems must be an essential part of all reform initiatives. If information runs through everything the public sector does, then changing anything in the public sector must mean changing information, which must mean changing information systems. Given that the essence of reform is change in the public sector, then new information systems are essential to all public sector reform. For example:

• • • • •

Increased efficiency In the USA, the Social Security Administration re-engineered a series of work processes and internal information systems in order to increase the efficiency of its client services (Laudon and Laudon, 1998). Decentralization In the UK, a fundamental redesign of information systems and relocation of information and information responsibilities was required in order to support the devolution of budgets from local government to individual public schools (Levacic, 1992). Increased accountability In India, new information flows from government to people in Rajasthan and new forms of information presentation were used to increase the accountability of rural public works managers (The Hindu, 1997). Improved resource management In the USA, the Housing Revitalization Support Office of the US Army created a new information model to improve decision-making about the management of Army housing (Forgionne, 1998). Marketization In the UK, new information systems were introduced throughout public health care in order to cope with the creation of an ‘internal market’ that divided health care purchasers from health care providers (Ballantine and Cunningham, 1999).

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But what about information technology: is it an essential part of all public sector reform? In practice it is not: many reforms are undertaken without the need for computers (see, for example, Lovell, 1994; Osborne and Plastrik, 1997). None the less, given the need for ever-greater amounts of information to be handled in the public sector, IT does play an increasingly enabling role in a number of reforms. For example:

•

•

•

•

•

Increased efficiency IT can increase efficiency by automating existing human processes. In Ghana, the Controller and Accountant General’s Department introduced and linked up more than 150 computers in order to reduce data-gathering and communication costs and thus to increase the efficiency of the government’s personnel management function (Cain, 1999). Decentralization IT can provide support for more efficient and effective decision-making at decentralized locations and create new information flows that incorporate those locations. In Ireland, the Department of Social Welfare created more than a dozen computerized applications in order to support the decentralization of responsibilities from Dublin to outlying offices (Cooney and O’Flaherty, 1996). Increased accountability IT can create new information about public servants’ decision-making and can deliver that information to new recipients, providing more efficient or effective accountability. In Sweden, the World Wide Web and other Internet-enabled applications were used to increase the accountability of local government in Göteborg by providing citizens with greater access to information on the workings of that government (Ranerup, 1999). Improved resource management IT can create new performance information and deliver it to decision-makers, providing more effective managerial control over government resources. In Malaysia, government development authorities collaborated to develop a computerized system to facilitate land resource management (Raman and Yap, 1996). Marketization IT can supply the new information necessary for the establishment of market relations, and can also form the conduit for delivery of new forms of public service. ‘In Spain and Portugal, smart cards are issued to people to claim unemployment benefit at kiosks, and to check on job vacancies and training opportunities’ (Gosling, 1997, p. 69).

However, we must not lose sight of the fact that information systems especially computerized information systems - also constrain public sector

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reform. Where existing systems are computerized, they can represent an ‘electronic concrete’ that renders reform outcomes practically impossible. This was the case with decentralization of managerial control in some UK social services departments in local government, which was constrained by the existing centralized information systems: Probably the most serious problem facing social services in these changes is the inadequacy of their information systems. Most social services departments rely for much of their financial and management information on mainframe systems run by and for the local authority’s central departments. These systems are not geared up to organizations with a large number of decentralized units making their own resource management decisions ... There is a minimum investment requirement of about £100-£200 million over three years or so to bring social services information systems up to some minimum standard of what is required to effectively manage devolved care systems ... Many politicians are unwilling to make the investment required. (Warner, 1992, pp. 191-2)

Indeed, many IT investments have tended to reinforce existing vertical and horizontal boundaries within government. Computerization has therefore been making it harder, not easier, to achieve more information-driven, boundarycrossing reforms such as improved delivery of public services. This has been the case in US welfare services, where prior state-level computerization made inter-state tracking of welfare recipients more difficult rather than easier (Ragan, 1997). The relationship between information systems, IT and public sector reform can therefore be summarized, as in Figure 10.1.

Information system

Always Enables Sometimes

Information technology

Constrains

Changes

Figure 10.1

The IS-IT-reform relationship

Public sector reform

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Approaches to IT and Reform Figure 10.1 presents a theoretical model of the role of IS and IT in public sector reform, but the actual approach to public sector reform has often differed from this model. Of course, every public sector organization, even every public servant, uses a different approach to information technology, information systems and change. However, over recent years there has been significant growth in what can be described as the ‘idolize’ approach. In this approach, public officials can be described as ‘semi-literates’. They use computers and overestimate IT’s potential. They believe that IT can transform the business of government (or at least transform their own career prospects if they are seen to initiate a high-profile IT project). They are dimly aware that information is something important. As a result, the public sector becomes awash with IT-driven reform projects which place technology at the heart of the change process. Information technology, far from having simply an enabling role in reform, is thus increasingly made a central component of new public management (Hood, 1991; Bellamy and Taylor, 1998). We find evidence of this worldwide, for example in the UK (Isaac-Henry, 1997b) and Australia (Milner, 1997). It is also growing in developing countries with governments in a number of countries creating and implementing IT-centric reform plans. Examples include South Korea (Yoong-Gil, 1996), the Philippines (NITC, 1997) and India, which asserted: ‘use of IT can be maximized in the Government at all levels, so as to make its functioning people-friendly, transparent and accountable’ (PMO, 1998). Such ‘idolizing’ initiatives have spread along with the policy fall-out from early epicentres: notably the USA but also Singapore (Karlsson, 1996). But what has sustained the ‘idolize’ approach? We can posit a number of reasons: The image of IT as reform solution Alongside negative reports about IT, there is a rather louder fanfare of success stories. These promote an image of IT as a solution to reform problems. IT vendors are in the vanguard of this promotion since, like all firms, they must keep selling their products or services in order to survive. They provide constant IT-oriented pressure on public sector managers, with their assertions that (a) IT can solve government’s problems, and that (b) this year’s IT can solve government’s problems better than last year’s. But it is not just the IT firms that have a vested interest in promoting this image. To their number we can add all the IT consultants whose jobs depend on IT; all the training companies that survive through IT training; all the journalists and other workers who produce IT magazines, newspapers and Web sites; and all the staff within government IT departments whose jobs depend on IT.

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Thanks to this image-making, IT therefore becomes an icon for modern, new public management, turning use of IT within reform into an end in itself rather than a means of improving public service. Pressure from other external institutions For providers of political and financial support - such as politicians, central government and other funding agencies - IT represents a very tangible sign of money spent and of changes being made. Politicians find it much easier to be photographed by the media standing next to a new set of computers than next to a new performance appraisal scheme. This, too, pressurizes government organizations to have a central focus on IT within the reform process. As an example, state welfare agencies in the USA have been more successful in obtaining federal funds if they use a management information system (MIS) for tracking clients. Independent evaluation of these MIS rated them ‘relatively useless’, but for the organizations, ‘The presence of a computer system enhanced their image as an effective administrative unit’ (Burns, 1984, p. 190). There have also been an increasing number of IT-oriented reform initiatives deriving - with funding attached - from national and international agencies (Heeks and Davies, 1999). These encourage, or sometimes force, public sector organizations to play along with the IT game. Such pressures have been particularly noticeable in developing countries, where significant sums for public sector reform from international donors are earmarked for spending on IT. ‘Me-too’ attitudes Through word of mouth, visits and the mass media, public managers are becoming increasingly aware of staff in similar organizations at home and abroad who are using IT in reform initiatives. Senior staff in particular often translate this awareness into a desire that they or their organizations should also be using IT for reform. By so doing, they gain membership of a powerful club: ‘those who have control over the workings of a particular technology accumulate power and inevitably form a kind of conspiracy against those who have no access to the specialized knowledge made available by the technology’ (Postman, 1992, p. 9). The lure of imitation and club membership reinforces an IT focus for reform.

THE PRACTICAL EXPERIENCE OF IT-BASED SYSTEMS IN PUBLIC SECTOR REFORM If the approach used within the public sector is often divorced from the true requirements of reform, then the image is also often divorced from the reality of practical experience with IT-based systems. Even though there are many

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information-technology-based systems successes in the public sector, the reality is that there are more failures. Analysis of initiatives in India indicates four different types of information systems failure (Heeks, 1998b):

•

•

•

•

The total failure of an initiative never implemented or in which a new system is implemented but immediately abandoned. For example, the Director of Adult Education in the National Literacy Mission Authority was smitten by the potential of IT to improve the management of literacy programmes (Jain, 1994). Having seen a software firm’s demonstration, and despite glaring technical and data constraints, he commissioned a complex executive information system that soon fell squarely into the ‘total failure’ category. The partial failure of an initiative in which major goals are unattained or in which there are significant undesirable outcomes. For example, part of the Income Tax Department’s tax system was computerized. The project ran into difficulties due to political antagonisms between various groups; notably between regional tax commissioners and the central tax board, and between management and unions. As a result, only parts of the information system and only a sub-set of intended process reforms became operational, and even these were resisted by staff. There was therefore only very limited achievement of reform objectives (Singh, 1990). The sustainability failure of an initiative that succeeds initially but then fails after a year or so. For example, a computerized decision support system (DSS) was created for the Narmada Irrigation Project Authority (Rama Rao, 1990). The system was initially used to increase efficiency by helping engineers save time in their cost estimations of canal engineering work. However, the system was never properly used for its main intended purpose, the production of improved canal design. Upon the retirement of the Chief Engineer who had championed use of the DSS, even the estimation use was discontinued. The replication failure of an initiative that succeeds in one place but cannot be repeated elsewhere. For example, a computerized management information system was developed in Surendranagar district, Gujarat state, to demonstrate the feasibility of providing computer support to planning and monitoring tasks at the district level, thereby enabling decentralization (Bhatnagar, 1992). Although the system proved useful, it was never adopted elsewhere because other district officers had a ‘not invented here’ mentality that rejected innovations made by anyone other than themselves.

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Having defined failure, we can move on to ask, how prevalent is it? Failure is widespread in the public sector of industrialized countries. For example, research on information systems in the UK public sector estimates that 20 per cent of all information technology expenditure is wasted, while a further 30-40 per cent leads to no net benefits accruing (Willcocks, 1994). Even the biggest spender of all, the US government, has problems: ‘Despite spending more than $200 billion on information management and systems in the last 12 years, the government has too little evidence of meaningful returns’ (General Accounting Office, 1994, p. 7). Failure is also widespread in the public sector of developing countries. Thus a survey of all African public sector IT projects funded by the World Bank pointed to extensive failures, concluding: ‘in the majority of cases, several factors have constrained organizations from effectively using the technology and the information it provides, or have proved to be constraints on the sustainability of IT’ (Moussa and Schware, 1992, p. 1750). Independent reports from individual developing countries (for example World Bank, 1993; Oyomno, 1996) and case study collections (for example Bhatnagar and BjornAndersen, 1990; Bhatnagar and Odedra, 1992; Roche and Blaine, 1996; Odedra-Straub, 1996) find failure to be the dominant theme. There are also many individual cases that particularly highlight shortcomings when the ‘idolize’ approach is adopted in developing countries. Benjamin (1999), for instance, cites two problem cases from South Africa: first, the introduction of an intranet (an internal computer network making use of Internet technology to provide services such as Web pages) into Johannesburg Metropolitan Council’s one-stop property information centre. A year after implementation, the system was little used because its introduction had been technology-focused, ignoring the skills, information needs and communication preferences of relevant stakeholders. Second, a project to introduce touch-screen kiosks into rural communities in South Africa’s NorthWest Province. This focused mainly on the imagery and ‘gee-whizzery’ of kiosk technology. It failed to consider community information needs and was soon scrapped, having contributed nothing to broader decentralization or democratization agendas. Of course, the public sector is not alone in this. Surveys in the US private sector, for example, indicate that ‘the success rate for software projects is only 27%’ (James, 1997, p. 1). Nevertheless, there is a particularly yawning gap between the positive potential for IT-based information systems to contribute to the work of government and the largely negative reality. Huge sums of money are being invested but a large proportion is going to waste on unimplemented or ineffective IS initiatives. This is undoubtedly more problematic for developing countries because of the higher opportunity costs of wasted investments.

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We therefore need to understand why these failures occur and why, less frequently, there are successes. Explanatory frameworks have already been offered (for instance from Horton and Lewis, 1991; and Sauer, 1993). What follows is one particular approach based on the work of Heeks (1998c). Understanding Success and Failure of Reform Information Systems Rather than a standard prescriptive ‘cookbook’ approach, the starting-point for understanding failure and success in this chapter is a classic contingency model (Lawrence and Lorsch, 1967; Poulymenakou and Holmes, 1996; Paré and Elam, 1998). Contingency sees no single blueprint for success and failure in organizational change. Instead, it recognizes that there are situation-specific factors for each public sector information system which will determine success and failure and, hence, strategies for success. Contingency implies the adaptation of information systems to the environment in which they are deployed. In the context of information systems, too, there is an ‘environment’ to which the information system can be adapted. The environment incorporates not just technological but also social and organizational factors, including the perceptions of key stakeholders (Butler, 1991; Hirschheim and Klein, 1989; Heeks and Bhatnagar, 1999). However, there is a major problem here: if the information system were to exactly match its environment, it would not change that environment in any way. Yet the formal purpose of information systems is to support and bring about organizational change in order to improve the functioning of public sector organizations. There must therefore be some degree of change that an IS introduces. Indeed, a greater degree of change may bring greater organizational improvements (though there is no necessary link between size of change and size of benefits). On the other hand, the greater the degree of change, the greater the risk of failure (Dodd and Fortune, 1995). Thus there is a trade-off between change and risk for the information system. Reducing the degree of change may increase the likelihood of success, but also reduce the organizational benefits. Conversely, increasing the degree of change may reduce the likelihood of success but also increase the organizational benefits if the change is successful. Putting all these ideas together, we see that central to public sector information system success and failure is the amount of change between ‘where we are now’ and ‘where the information system wants to get us’. The former will be represented by the current realities of the particular context. The latter will be represented by the model or conceptions and assumptions that have been incorporated into the new information system’s design. Putting this a little more precisely, then, we can say that success and failure depend on

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the size of gap that exists between ‘current realities’ and ‘design conceptions of the information system’. A set of international case studies of IS initiatives in the public sector has been gathered to illustrate this conception-reality gap concept (Heeks, 1999b). Two cases will be summarized here. Salazar (1999) describes the introduction of an information system to support decentralization of public health management in Ecuador. This initiative was a failure because a significant gap existed between the conception of the information system and the realities of the context into which it was introduced. Gap dimensions included:

• •

a structural dimension: the information system design assumed a centralized management structure. There was a major gap between this conception and the decentralized realities of Ecuador’s district health centres; a process dimension: the IS design assumed a rational and objective approach to implementation processes. There was a major gap between this conception and the reality of a very politicized implementation process.

By contrast, Benjamin (1999) describes a successful intranet-based system introduced by Johannesburg Metropolitan Council in South Africa (different from the one-stop property example described above). This initiative succeeded because it was conceived in a way that matched Council realities. Matched dimensions included:

• • • •

an information dimension: the new system provided just the kind of information that Council users wanted, creating little gap between conceived and actual information needs. a technology dimension: the system relied mainly on existing technology within the Council, creating little gap between conceived and actual technology. a people dimension, consisting of two parts: first, system developers had the necessary skills to produce the system; second, developers had the necessary motivation to produce the system. Overall, there was therefore little gap between conceived and actual ‘people factors’. a resource dimension: the system was set up cheaply and incrementally, without particular time pressures, creating little gap between conceived and actual resource requirements.

Analysis of these and other information systems cases (Heeks and Bhatnagar, 1999) indicates that seven dimensions - summarized by the

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ITPOSMO acronym - are necessary and sufficient to provide an understanding of conception-reality gaps:

• • • • • • •

Information Technology Processes People: Objectives, values and motivations People: Staffing and skills Management and structures Other resources: money and time.

Of these, perhaps the middle one - objectives, values and motivations - is the most important since it incorporates issues of culture and politics that are seen to be so crucial to public sector reform (see Elcock and Minogue’s chapter in this volume - Chapter 5).

CONCEPTION-REALITY GAPS Conception-reality gaps described by the ITPOSMO model can arise in any situation, but we shall highlight three gaps that are particularly likely to make public sector information systems in developing countries more prone to failure. Rationality-Reality Gaps Rational models assume logic and objectivity to underlie the workings of organizations (Heeks, 1998c; Andersen, 1999). Alternative political models (also called behavioural models) of organizations have subsequently been developed. They assume factors such as self-interest, personal objectives and subjectivity to underlie the workings of organizations, with processes of conflict, bargaining and compromise. These differences can be summarized using the ITPOSMO model (Table 10.1). Despite the development of political models, many public sector reform initiatives are still based on models of organizational rationality. This seems to be particularly true of information systems initiatives (Avgerou, 1990; Dhillon, 1998). In part this may occur because of the continuing emphasis on IT within information systems change. Technology is conceived by the average public sector stakeholder as an objective and rational entity, not as something that incorporates particular cultural and political values. Reform initiatives associated with that technology are themselves therefore likely to be conceived according to an objective and rational model.

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Table 10.1 Differences between rational and political models of organizations Dimension

Rational model

Information

Emphasis on standardized, Emphasis on contingent, formal, quantitative information informal, qualitative information A simple enabling mechanism A complex, value-laden entity: status symbol for some, tool of oppression for others Stable, straightforward and Flexible, complex, constrained formal; decision outcomes as and often informal; decision optimal solutions based on outcomes as compromises logical criteria based on ‘power games’ Formal organizational Multiple, informal, personal objectives objectives

Technology Processes

Objectives, values and motivations Staffing and skills Management and structures Other resources: time and money

Political model

Staff viewed as rational beings

Staff viewed as political beings

Emphasis on formal, objective processes and structures Used to achieve organizational objectives

Emphasis on informal, subjective processes and structures Used to achieve personal objectives

The problem is that such rationality is more often an ideal than a reality. In reality, in many public organizations a façade of organizational rationality covers a seething mass of very different political realities (Heeks, 1998c). The sum result is frequent and significant gaps between rational conceptions and political realities. The outcome, inevitably, is failure. Mexico’s National Health Information System provides an example (Macias-Chapula, 1996). The information system was conceived by designers with a limited understanding of the actual workings of the Mexican health system. They created the design in a prescriptive and top-down manner according to a rational, theoretical model of how they thought the health system ought to work. This theoretical rationalism mismatched organizational realities on a number of the ITPOSMO dimensions. For instance, along the information dimension, the IS design assumed a strong base of formal health data on which to build the information system, and a strong requirement for formal information in health decision-making. In reality, though, very few formal data were available within the health system, in part because decisions were taken largely on the basis of informal, qualitative information. There was thus a significant gap between information conceptions and information realities. The IS design also assumed that the health system and, hence, health staff and their work processes, were driven by a limited set of formal organizational

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objectives. In reality, though, formal organizational objectives were either unclear or absent, and work was driven largely by self-interest and ‘internal politics’. The result was a significant gap between conception and reality along the objectives, values and motivations dimension. Together with other conception-reality gaps, this led to an information system failure, and the system objectives were not achieved. Private-Public Gaps A central theme of reform is that the public sector could improve if only it would knuckle down and start behaving more like the private sector. Such ideas may be based on flawed understanding of the private sector: Those arguing for the introduction into the public sector of better - private sector management practice often fail to address the mixed record of private sector organizations on both IT and non-IT issues, and often fail to point to the considerable long-standing debate on how far private sector management practice needs to be improved. (Willcocks, 1994, p. 16)

The ideas may also be based on flawed understanding of the public sector: ‘Government is not a business. Forcing government managers into private sector thinking usually causes more problems than it solves’ (Goddard and Riback, 1998). Despite the attempts of various governments and commentators to prove otherwise, the public sector remains fundamentally different from the private sector in a number of ways (Pollitt and Harrison, 1992; Isaac-Henry, 1997a). These can be summarized within the ITPOSMO model:

•

•

Information: lack of competition in the public sector means it makes less use of strategic information than the private sector. Public sector organizations also tend to place less emphasis on financial cost information and more emphasis on broader performance indicator information than private sector organizations due to different regulatory requirements. Related to this, private sector organizations tend to understand their customers merely in terms of what those customers buy. By contrast, the public sector values information on virtually every aspect of a person’s life: their location, health, education, finances, criminal record, children, business activities and so on. Technology: public sector organizations tend to have a more limited and older technological infrastructure than that found in private sector organizations. Technology also tends to be viewed more negatively in the risk-averse public sector than in the private sector, where competition forces innovation.

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•

•

•

• •

209

Processes: public sector organizations undertake processes, such as policy-making, socio-political consultation, and reporting to the government and legislature, that are largely absent from the private sector. The public sector environment is also unstable in a way that differs from the ‘continuous change’ environment of the private sector. An environment of constant discontinuous changes in legislation, policy initiatives, political parties and questions from politicians creates shortterm processes in the public sector to which considerable resources have to be devoted. Objectives, values and motivations: public sector objectives are typically broader than those in the private sector, encompassing social and political and economic factors rather than exclusively financial factors. In the private sector, too, there tends to be greater insecurity about jobs, units and even whole organizations. Self-interest in the form of preserving one’s own job therefore plays a larger part in personal decision-making. This forces a greater convergence between personal motivations and organizational objectives than is found in the public sector. By contrast, formal organizational objectives in the public sector often relate to the objectives of a group (the public) which is not directly represented within the organization, and these objectives are often unclear. Staffing and skills: there tends to be less labour flexibility within the public sector. As a result, there may be greater residual staffing in ‘traditional’ skill areas and more limited staffing in new/emerging skill areas. The latter will be particularly found in situations where general labour market demand outstrips supply, or where the public sector’s typically lower pay creates recruitment and retention problems. Management and structures: typical private sector organizations will have management and structures relating to accounts receivable, sales, marketing and production. Typical public sector organizations will not. Other resources: in the public sector there are more limited resources and more limited pressures of competition on performance. As a result, the public sector tends to have more time and less money than the private sector.

These differences arguably push private sector organizations more towards the rational model described above, and public sector organizations more towards the political model. They will thus tend to differ according to the ITPOSMO differences described in the previous section. For example, the public sector’s broader but fuzzier objectives make policy-making a thoroughly political process based on the political strengths and opinions of

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individuals and different stakeholders. In short, given the above differences, information systems developed for private sector use will often fail to match public sector realities. They will therefore be prone to failure. The application of an information systems strategy and implementation of related information systems in a Latin American public sector enterprise provides an example. The enterprise’s new IT manager had undertaken private-sector-focused training during which he was introduced to IS strategic planning. IS strategic planning was first developed in the private sector and it has therefore come to incorporate a number of design assumptions that can easily be private-sector-specific. The manager’s plan was based on private-sector-oriented conceptions, including clear, unitary organizational objectives, apolitical decision-making, and the presence of skilled support for implementation. These conceptions did not match the realities of the public sector enterprise, creating a gap along several of the ITPOSMO dimensions. For example, in reality, decisionmaking was not apolitical in the enterprise. Despite its apparent autonomy, the enterprise continued to be partly politically driven. Executives ‘continued to rely on the old, partly bureaucratic and partly informal information channels and planning mechanisms’ (Avgerou, 1996, p. 112). Similarly, the organization in reality had unclear organizational objectives that encompassed not just economic but also social and political components. It also had only limited skills available for IS implementation. The result of these and other mismatches was a large gap between system conceptions and organizational realities. The outcome was an ineffective process of strategic planning that frustrated enterprise managers and hindered the development of even the most fundamental information systems. We may note that such problems, and the attendant likelihood of failure, are likely to increase if the private-sector-oriented reform agenda of new public management takes hold in the public sector. Country-context Gaps Information systems developed in a particular country will incorporate national assumptions. This can cause problems in the transfer of information technologies and systems between industrialized countries. For example, a patient information system was developed in the USA to support improved health resource management. When this IS was introduced in the UK, it ran into difficulties. British nurses found it hard to use the new information system because of the US-inspired assumptions it made about the planning and costing of patient care (Westrup, 1998). Even greater can be the problems of transfer from an industrialized to a less developed country (LDC). Such countries differ in many ways, which can

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again be summarized using the ITPOSMO model (adapted from Bhatnagar, 1990; Lind, 1991; Ojo, 1992; and Haque, 1996):

• • • • •

• •

Information: formal, quantitative information stored outside the human mind is valued less in LDCs. Technology: the technological infrastructure (telecommunications, networks, electricity) is more limited and/or older in LDCs. Processes: work processes are more changeable in LDCs because of the more politicized and inconstant environment. Objectives, values and motivations: DCs are reportedly more likely to have cultures that value kin loyalty, authority, secrecy and risk aversion. Staffing and skills: DCs have a more limited local skills base in a wide range of skills. This includes IS/IT skills of systems analysis and design, implementation skills, and operation-related skills including computer literacy and familiarity with the Western languages that dominate computing. It also includes a set of broader skills covering the planning, implementation and management of IS initiatives. Management and structures: DC organizations are more hierarchical and more centralized. Other resources: DCs have less money. In addition, the cost of IT is higher than in industrialized countries, whereas the cost of labour is lower.

Of course, these are stereotypes, and one can find many cases in which they do not apply. The Third World is not a computer desert. Countries like Iran, India and Morocco introduced computers in the mid-1950s and have continued to develop their use. Developing countries are producers as well as users of IT, exporting some US$3bn-worth of software in 1998, from locations as diverse as Chile, Barbados, Egypt, South Africa, India and China (Heeks, 1998a). Vast gulfs also exist within industrialized countries: compare Beverly Hills with South Central in Los Angeles, for instance. None the less, there is a major problem with the ‘If it works for us, it’ll work for you’ mentality being peddled by IT multinationals, international consultants and aid donor agencies. Transferring ideas from one context to another can save waste by stopping the recipient from ‘reinventing the wheel’. But - to continue the analogy - this approach fails when the recipient needs a motorcycle wheel and is instead offered a wheel from an American train. In the Philippines, for instance, an aid-funded project to introduce a field health information system in the public sector assumed the presence of skilled programmers, skilled project managers, a sound technological infrastructure, and a need for information outputs like those used in an American health care

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organization (Jayasuriya, 1995). In reality, none of these was present and the information system failed. Jayasuriya (ibid., p. 1604) concludes: ‘The alignment of IT to the organizational systems in developing countries tends to suffer from the assumption that models developed for developed countries are appropriate. This does not recognize the idiosyncracies of these systems.’

CONCLUSIONS AND RECOMMENDATIONS Our argument is that the success or failure of any public sector information systems initiative depends on the extent to which the initiative matches the realities into which it is introduced. This can be assessed along seven main dimensions, described above in the ITPOSMO model. Given that failure is naturally more of a concern than success, and given that IS initiatives fail more often than they succeed, three conception-reality failures were presented which occur:

• • •

when systems and techniques derived from rational models of organization clash with a political reality; when systems and techniques developed for the private sector are transferred inappropriately to the public sector; when systems and techniques developed in one country are transferred inappropriately to another country.

The fact that all three failures apply particularly strongly in the context of the public sector in developing countries provides, we believe, a powerful explanation for the widespread failure of IS initiatives in this context. What is the remedy for this failure? One starting-point is analysis of the conception-reality gap. There is no straightforward method for analysing the gap between current reality and the conceptions assumed within a proposed new information system. One approach, based on Checkland’s soft systems methodology (Checkland and Scholes, 1990), is to analyse current reality, and the design of the new information system. The seven ITPOSMO dimensions of change can be used as a framework for analysis (Figure 10.2). Soft systems methods often view gaps as opportunities for change, which can then be discussed in participative forums to identify those which are desirable and feasible. Where gaps are identified by participating stakeholder groups as both desirable and feasible changes to current reality, they may well be successfully implemented. These gaps represent obstacles to successful implementation. However, if stakeholders are helped to recognize such gaps, the proposed system can be adapted so that the obstacles are surmounted.

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Current reality

213

Design proposal for new system

Information Technology Processes Objectives, values and motivations Staffing and skills Management and structures Other resources

Information Technology Processes Objectives, values and motivations Staffing and skills Management and structures Other resources

Reality

Conception Gap

Figure 10.2

The ITPOSMO dimensions of change

Closing Conception-Reality Gaps It is clearly desirable to prevent large gaps arising in the first place, or to reduce them once they have been identified. There are many ways in which gap prevention or gap reduction can be achieved (see, for example, Heeks, 1999a). We present six of them here. Legitimizing and mapping organizational reality An integral part of successful public sector IS implementation must be a proper understanding of current realities. IS project leaders can help by ‘legitimizing reality’: by encouraging participants to articulate the difference between rational, prescriptive models of what they should be doing and real, political depictions of what they are actually doing. Techniques for exposing and mapping organizational realities play a role here. Self- and third-party observation helps expose realities. Use of soft systems tools such as ‘rich pictures’ helps map realities (Checkland and Scholes, 1990). Prototyping of IS - the use of a working model of the final system, which users can see, comment on and revise before the final version is produced - is also beneficial, particularly in helping users to understand their real information needs. Incrementalism Where a major set of changes is planned as part of a new public sector information system, incremental implementation will increase the likelihood of successful system introduction.

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Change agentry The ITPOSMO model is a reminder that a focus on technology is too narrow and that information systems must be seen as part of a multidimensional process of change. Public sector IT professionals must therefore see themselves as change agents (Markus and Benjamin, 1996). They may become facilitators by increasing the capacity of others to change, or they may become doers who take responsibility for implementing change along the identified dimensions. In either case, their technology skills will be complemented by those of change management and of communication, negotiation and advocacy. To support this, there must be a change in the public sector organization structures and management processes that deal with information systems, away from the old ‘central IT unit’ model. End-user development Many of the gaps described in this chapter are gaps between IS design and IS operation; that is, they are gaps between developers and users. One way to close these gaps almost entirely is through end-user development which vests all - or almost all - information systems development roles in a single person. This will close the conception-reality gaps of information needs, and of objectives, values and motivations. It can significantly reduce the money and time resource requirement, and end users are most unlikely to create unmanageable levels of change for themselves on the other ITPOSMO dimensions. As such, end-user development should greatly increase the chance of producing a successful information system. Participation Where end-user development is not feasible, conceptionreality gaps can be reduced through participatory approaches that allow the world-views of a range of stakeholders to be incorporated into information systems design. This will help to close gaps along the objectives, values and motivations dimension. Hybridization ‘Hybrids’ are staff who understand both the context and work of a public sector organization and the role, management and jargon of information systems. They are able to contribute fully to processes of IT-enabled reform and, thanks to seeing ‘both sides of the coin’, they are able to help close conception-reality gaps. The previous three techniques (change agentry, end-user development and participation) all require some form of ‘hybridization’. IT professionals need to be hybridized into broader change agents who combine IS and IT skills with an understanding of the public sector context and of change management. Public sector managers need to be hybridized towards a broader skill set that includes an understanding of information systems and information technology (especially the latter for end-user developers). There are thus two main sources for creation of hybrids in the public sector (Figure 10.3). This clearly has extensive implications for training provision. For example, it has taken the authors’ own institution - the Institute for Development Policy

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Functional manager

Gap of knowledge, skills and attitudes

Hybrid information systems professional

Computing professional

Figure 10.3

Creating hybrids for the public sector

and Management at the University of Manchester - more than four years to ‘hybridize’ its training programmes and provide the requisite mix of knowledge, skills and attitudes. Yet this remains the exception rather than the rule. Much of the current training supply for the public sector - both short professional programmes and undergraduate and postgraduate programmes is focused on technical tasks: the use of specific IT components. As a result, there is too little provision of training covering the broader organizational processes of which IT is only one part. Thus the majority of training currently available is not enabling staff to engage effectively in the process of information-systems-enabled public sector reform. Conception-Reality Gaps and Implementation Techniques Finally, we must issue a caveat about the techniques described above. We began by saying that a contingent approach is required. However, our focus in this chapter has been on contingency of information system content (the ‘what’) rather than information system process (the ‘how’). In other words, we have focused on matching the final information system to its context but have not thought about matching IS implementation techniques to their context. We must now do the latter in order to avoid presenting the listed techniques in a prescriptive, ‘cookbook’ manner. We must therefore not say, for instance, ‘Participative approaches will always be part of successful public sector IS implementation.’ Instead, we must say ‘First analyse the situation to see if

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these particular conditions hold; if they do, then participation is more likely to be of value; if they do not, then participation is less likely to be of value.’ For example, user-participation techniques are unlikely to work well where:

• • • • •

users lack information about participative techniques and about the new information system (information dimension); the values of the organization are authoritarian and hierarchical (objectives and values dimension); users lack the skills and confidence necessary to engage in participative processes (staffing and skills dimension); organizational structures are highly centralized (management and structures dimension); the organization lacks the time and money to invest in participative approaches (other resources dimension).

In short, implementation techniques are less likely to work where there is a large gap between the assumptions they make and the realities of the organization in which they are applied. Moreover, the conception-reality gap model presented in this chapter can be used to assess not just the feasibility of a particular information system design, but also the feasibility of particular IS implementation techniques. As such, it represents a powerful management tool for those involved in processes of public sector reform.

REFERENCES Andersen, K.V. (1999), ‘Reengineering public sector organizations using information technology’, in Heeks (1999b). Avgerou, C. (1990), ‘Computer-based information systems and modernization of public administration in developing countries’, in Bhatnagar and Bjorn-Andersen (1990). Avgerou, C. (1996), ‘Transferability of information technology and organizational practices’, in Odedra-Straub (1996). Ballantine, J. and N. Cunningham (1999), ‘Analyzing performance information needs: using framework approaches in a UK public healthcare organization’, in Heeks (1999b). Bellamy, C. and J.A. Taylor (1998), Governing in the Information Age, Buckingham, UK: Open University Press. Benjamin, P. (1999), ‘Community development and democratisation through information technology: building the new South Africa’, in Heeks (1999b). Bhatnagar, S.C. (1990), ‘Computers in developing countries’, in Bhatnagar and BjornAndersen (1990). Bhatnagar, S.C. (1992), ‘Using information technology in rural development: lessons from the Indian experience’, in G. Cyranek and S.C. Bhatnagar (eds), Technology Transfer for Development, New Delhi: Tata McGraw-Hill.

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Bhatnagar, S.C. and N. Bjorn-Andersen (eds) (1990), Information Technology in Developing Countries, Amsterdam: Elsevier Science. Bhatnagar, S.C. and M. Odedra (1992), Social implications of Computers in Developing Countries, New Delhi: Tata McGraw-Hill. Burns, A. (1984), ‘Information technology - for better or worse?’, in A. Burns (ed.), New Information Technology, Chichester, UK: Ellis Horwood. Butler, R. (1991), Designing Organizations, New York: Routledge. Cain, P. (1999), ‘Automating personnel records for improved management of human resources: the experience of three African governments’, in Heeks (1999b). Checkland, P.B. and J. Scholes (1990), Soft Systems Methodology in Action, Chichester, UK: Wiley. Cooney, M.J. and B. O’Flaherty (1996), ‘Structural change via information technology in the Irish civil service’, in Odedra-Straub (1996). Dhillon, G. (1998), The Clinical Information System: A Case of Misleading Design Decisions, Case paper l-98-IT06, Hershey, PA: Idea Group Publishing. Dodd, W. and J. Fortune (1995), ‘An electronic patient record project in the United Kingdom: can it succeed?’, in R.A. Greenes, H.E. Peterson and D.J. Protti (eds), Medinfo ’95, Edmonton: Healthcare Computing and Communications Canada. Forgionne, G. (1998), ‘HRSOS: A decision support system to facilitate the privatization of military housing’, draft paper, Baltimore, MD: Information Systems Department, University of Maryland. General Accounting Office (1994), Improving Mission Performance Through Strategic Information Management and Technology, Washington, DC: General Accounting Office. Goddard, T.D. and C. Riback (1998), ‘The eight traits of highly successful public officials’, The Hill, 6 May. Gosling, P. (1997), Government in the Digital Age, London: Bowerdean. Haque, M.S. (1996), ‘The contextless nature of public administration in Third World countries’, International Review of Administrative Sciences, 62 (3), 315-29. Heeks, R.B. (1998a), ‘Flying software: is the information society heading south?’, Insights, 25 (3). Heeks, R.B. (1998b), Information Age Reform in the Public Sector: The Potential and Problems of IT for India, Information Systems for Public Sector Management Working Paper No. 6, Manchester: IDPM, University of Manchester. Heeks, R.B. (1998c), Management Information and Information Systems, London: School of Oriental and African Studies, University of London. Heeks, R.B. (1999a), ‘Better information age reform: reducing the risk of information systems failure’, in Heeks (1999b). Heeks, R.B. (ed.) (1999b), Reinventing Government in the Information Age, London: Routledge. Heeks, R.B. and S.C. Bhatnagar (1999), ‘Understanding success and failure in information age reform’, in Heeks (1999b). Heeks, R.B. and A. Davies (1999), ‘Different approaches to information age reform’, in Heeks (1999b). The Hindu (New Delhi, India) (1997), ‘Making a song and dance of it’, 12 May, 4. Hirschheim, R. and H.K. Klein (1989), ‘Four paradigms of information systems development’, Communications of the ACM, 32 (10), 1199-215. Hood, C. (1991), ‘A public management for all seasons’, Public Administration, 69, 3-19.

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Horton, F.W. and D. Lewis (eds) (1991), Great Information Disasters, London: ASLIB. Isaac-Henry, K. (1997a), ‘Development and change in the public sector’, in K. IsaacHenry et al. (eds), Management in the Public Sector, London: International Thomson Business Press. Isaac-Henry, K. (1997b), ‘Management of information technology in the public sector’, in K. Isaac-Henry et al. (eds), Management in the Public Sector, London: International Thomson Business Press. Jain, R. (1994), ‘MIS for India’s literacy programme’, Information Technology in Developing Countries, 4 (1), 6-8. James, G. (1997), ‘IT fiascoes ... and how to avoid them’, Datamation, November. http://www.datamation.com/PlugIn/issues/1997/november/1ldisas.html Jayasuriya, R. (1995), ‘Health care informatics from theory to practice: lessons from a case study in a developing country’, in R.A. Greenes, H.E. Peterson and D.J. Protti (eds), Medinfo ’95, Edmonton: Healthcare Computing and Communications Canada. Karlsson, M. (1996), ‘Surfing the wave of national IT initiatives’, Information Infrastructure and Policy, 5 (3), 191-204. Laudon, K.C. and J.P. Laudon (1998), Management Information Systems (5th edn), Upper Saddle River, NJ: Prentice-Hall. Lawrence, P.R. and J.W. Lorsch (1967), Organization and Environment, Harvard, MA: Harvard University Press. Levacic, R. (1992), ‘Local management of schools’, in Pollitt and Harrison (1992). Lind, P. (1991), Computerization in Developing Countries: Model and Reality, London: Routledge. Lovell, R. (ed.) (1994), Managing Change in the New Public Sector, Harlow, UK: Longman. Macias-Chapula, C.A. (1996), ‘Mexico’s national health information system analysis: identification of a problem situation’, in Odedra-Straub (1996). Markus, M.L. and R.I. Benjamin (1996), ‘Change agentry: the next frontier’, MIS Quarterly, 20 (4), 385-407. Milner, E. (1997), ‘Uncertain growth after Labor’s pains’, Government Computing, 11 (10), 24-5. Moussa, A. and R. Schware (1992), ‘Informatics in Africa: lessons from World Bank experience’, World Development, 20 (12), 1737-52. NITC (1997), IT21 Philippines, Manila, Philippines: National Information Technology Council. http://www.neda.gov.ph/ Odedra-Straub, M. (ed.) (1996), Global Information Technology and Socio-Economic Development, Nashua, NH: Ivy League Publishing. Ojo, S.O. (1992), ‘Socio-cultural and organisational issues in IT applications in Nigeria’, in Bhatnagar and Odedra (1992). Osborne, D. and P. Plastrik (1997), Banishing Bureaucracy, New York: Plume. Oyomno, G.Z. (1996), ‘Sustainability of governmental use of microcomputer-based information technology in Kenya’, in Odedra-Straub (1996). Paré, G. and J.J. Elam (1998), ‘Introducing information technology in the clinical setting’, International Journal of Technology Assessment in Health Care, 14 (2), 331-43. PMO (1998), Notification of Constitution of National Taskforce on IT and Software Development, 22 May, New Delhi: Prime Minister’s Office. Pollitt, C. and S. Harrison (eds) (1992), Handbook of Public Services Management, Oxford: Blackwell.

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POST (1998), Electronic Government: Information Technology and the Citizen, London: Parliamentary Office of Science and Technology. http://www.parliament.uk/post/egov.htm Postman, N. (1992), Technopoly, New York: Vintage Books. Poulymenakou, A. and A. Holmes (1996), ‘A contingency framework for the investigation of information systems failure’, European Journal of Information Systems, 5, 34-46. Ragan, M. (1997), ‘Welfare reform in America’, paper presented at conference on ‘Integrated Service Delivery: Changing the Role of Government’, 26-30 October, Sydney, Australia. Raman, K.S. and C.S. Yap (1996), ‘From a resource rich country to an information rich country’, Information Technology for Development, 7 (3), 109-31. Rama Rao, T.P. (1990), ‘Decision support systems for development’, in Bhatnagar and Bjorn-Andersen (1990). Ranerup, A. (1999), ‘Internet-enabled applications for local government democratisation’, in Heeks (1996b). Roche, E.M. and M.J. Blaine (eds) (1996), Information Technology, Development and Policy, Aldershot, UK: Avebury. Salazar, A. (1999), ‘Evaluating information systems for decentralisation’, in Heeks (1999b). Sauer, C. (1993), Why Information Systems Fail: A Case Study Approach, Henley, UK: Alfred Waller. Singh, A. (1990), ‘Computerisation of the Indian Income Tax Department’, Information Technology for Development, 5 (3), 235-51. Warner, N. (1992), ‘Changes in resource management in the social services’, in Pollitt and Harrison (1992). Westrup, C. (1998), ‘What’s in information technology’, paper presented at conference on ‘Implementation and Evaluation of Information Systems in Developing Countries’, 18-20 February, Bangkok, Thailand. Willcocks, L. (1994), ‘Managing information systems in UK public administration: issues and prospects’, Public Administration, 72, Spring, 13-32. World Bank (1993), Turkey: Informatics and Economic Modernization, Washington, DC: World Bank. Yoong-Gil, R. (1996), ‘Korea’, paper presented at conference on Electronic Government in the Information Society, 6-10 October, Budapest, Hungary.

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11. Moving the public management debate forward: a contingency approach Willy McCourt This concluding chapter builds on the earlier substantive chapters in order to explore critically the options available to governments. In our preface we posed a number of questions, such as whether governments should keep providing most services themselves, or whether they should let private and civil society contractors in on the act; and whether the centre should cling to the reins of power so as to minimize corruption, or delegate downwards so as to ‘empower’ frontline staff and the communities whom they serve. Readers who have persevered to this point in our collection will not be expecting a straight ‘yes’ or ‘no’ answer to such questions. The contributors’ diversity of views, and the uncertain state of empirical research, commented on by McCourt (Chapter 6, this volume) and elsewhere (Polidano et al., 1998), precludes certainty. Moreover, and with the policy-makers among our readers especially in mind, we have no wish to use whatever influence we may possess to steer governments in any particular direction. Developing and transitional countries have had enough browbeating from donors, consultants and academics to last them a lifetime. However, the aim of our collection is to move the public management debate forward, and we hope that readers will find material in this and in our earlier chapters to help them to answer such questions. As we said in our preface, our collection had its origin partly in the experience of a number of the contributors (Heeks, McCourt, Minogue, Mundy and Polidano) as advisers to the Presidential Commission on the Transformation of the Public Service in South Africa (Government of South Africa, 1998). We hope that a little of the commitment, optimism and practicality of that undertaking has survived the transformation into this analytical and reflective format.

MANAGEMENT OR POLITICS? Elcock and Minogue’s chapter (5) criticizes an approach to public service reform, typified by early interventions in the post-Communist countries, 220

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which assumes that management operates in a political vacuum. It is an approach that is shared with - indeed it probably derives from - much of the private sector management writing, in which companies are treated as laws unto themselves. Writers on public management, Elcock and Minogue imply, cannot afford that luxury, but must address the crucial relationship between management and politics. Their analysis is corroborated in a very practical way by Heeks and Mundy’s chapter (10), which demonstrates how ignoring political realities has been at the root of the failure of many information systems interventions in the public sector. What, then, should be the relationship between politics and management? The traditional doctrine is that the two should be separate: the isolated politician hatches the policy and the disinterested official implements it (Kingdom, 1991), but political scientists have long since shown us that the world doesn’t always work that way. In a classic study of the UK Treasury in the early 1970s, for instance, policy emerged from a ‘community’ where politicians and officials mingled (Heclo and Wildavsky, 1981). That community could also expand into a ‘policy network’ in which interest groups and other outsiders participated (Marsh and Rhodes, 1992). Among developing countries, Ferguson (1990) has painted a picture of ‘development’ in Lesotho which serves the interests of bureaucratic state power at the expense of politics. Yet such writers usually end up wringing their hands over the very thing that they have taken such pains to outline: Heclo and Wildavsky (1981, p. lvii), for instance, bemoan ‘the subordination of policy to community, the original sin of public administration’ (see also Marsh and Rhodes, 1992, p. 268; and Kingdom, 1991, p. 368). No one believes that the public interest is served by a cosy and secretive policy cabal. But, like history in Auden’s (1971, p. 15) poem, it seems that political science ‘to the defeated may say alas but cannot help’.l As we contemplate the shift from the old public administration to the new public management, one of the themes of our book and of this chapter, we should at least try to prevent a bad situation from getting any worse. What difference do management methods make? In one way, they should not make any at all. Management likes to portray itself as an ‘objective’ set of techniques for the efficient delivery of any policy, whatever its ideological origins; just ‘good practice’. For many, however, management is irredeemably compromised, the Trojan horse in whose bowels the ‘New Right’ agenda has been smuggled into the citadel of government. Clarke and Newman (1997, especially ch. 3) argue this case in detail. But the case cannot be sustained, for four reasons: 1.

Management has not been the exclusive property of the private sector or of any political tendency. Important management innovations have been

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made in the public sector: the discovery of incrementalism (Lindblom, 1959) and the development of psychometric personnel selection (McCourt, 1999) are just two examples; and it is an irony of political history that Vladimir Ilyich Lenin was one of the most enthusiastic advocates of ‘scientific management’, the apotheosis of hard-headed management (Figes, 1996; ‘scientific management’ is also discussed in Minogue’s chapter in this volume - Chapter 1). 2. Management is not in fact yoked to the ‘New Right’ ideology. On at least one important occasion, it was used as a smokescreen to cover a retreat from that very ideology. Faced with the public’s stubborn affection for its national health service, the UK’s Conservative government used managerial reforms in the mid-1980s to disguise the fact that outright privatization, their instinctive option, was no longer on the agenda (Cutler and Waine, 1994). 3. Management theory and practice are not monolithic in the way that much of the public management literature implies, and can actually be used to criticize public management orthodoxy. The stakeholder concept, deployed by Hutton (1995) to challenge the dominance of the private sector in the economy and enthusiastically adopted by development NGOs and the new government of South Africa, actually originated in the private sector itself (Freeman, 1984). Similarly, Pollitt et al. (1998) turn the management guns on the managerial devolutionists, pointing to the powerful tradition in management that sees organizational structure as contingent, and recognizes a variety of structures (Lawrence and Lorsch, 1967; Pugh and Hickson, 1976). (McCourt, forthcoming b, describes how this insight was used to persuade a bilateral aid agency not to proceed with a potentially disastrous devolution in Nepal.) 4. Just as political scientists were discovering the fusion of politics and administration, reformers were busy pulling them apart again. As Hood (1998) points out, the application of the NPM doctrine of ‘steering not rowing’ to the creation of arm’s-length devolved agencies responsible for policy implementation but not for policy itself (see Polidano’s chapter - Chapter 3) revives the classic separation of policy and administration. Is there nothing to worry about, then? On the contrary, there is a real problem, but it is caused by the application of ‘managerialism’ rather than by management as such. Managerialism, characterized by Pollitt (1993) among many others, was defined in McCourt’s chapter as the belief that every political problem has a management solution, so that the means of management substitute for the ends of policy. It is an ideology that allows the uncritical importation of private sector models and the privileging of

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managers’ interests over those of other public stakeholders, including policymakers and other employees. Evidence of managerialism, as opposed to management, abounds. On the substitution of means for ends, there is the extraordinary passage in Osbome and Gaebler’s influential book: For the last 50 years, political debate in America has centred on questions of ends: what government should do, and for whom. We believe such debates are secondary today, because we simply do not have the means to achieve the new ends we seek ... The central failure of government today is one of means, not ends. (Osborne and Gaebler, 1992, p. xxi; emphasis in original; see also Frant, 1997, p. 86)

(That the USA, the world’s richest country, should so abjectly lack the means to achieve its public ends will strike many readers as a bit far-fetched.) The uncritical importation of private sector methods has been noted many times (see Pollitt, 1993; Clarke and Newman, 1997). Here we confine ourselves to the example of total quality management (TQM) given in McCourt’s chapter (6). Bizarrely, the public sector, including that in Malaysia and other developing countries, has tended to take a more mechanical and prescriptive approach to TQM than the private manufacturing industries where the method originated. On the privileging of managers’ interests, we may note the fashion, discussed below in the context of what I call the ‘Washington model’, for increasing the gap between the highest- and the lowest-paid public employees, a fashion for which the charming euphemism of ‘salary decompression’ has been coined. We may also note the neglect of the heavy transaction cost which management methods represent. Methods need managers, and managers need money, which has to come from somewhere. Between 1989 and 1993, the number of managers in the UK National Health Service rose by about 16 000, from 4630 to 20 320, while the number of nurses fell by about 20 000, from 466 740 to 445 160. Not surprisingly, the number of patients looked after by the average nurse also rose, from 19.3 to 21.4 (Corby, 1996). Thus the answer to the question ‘management or politics?’ which we posed at the start of this section, is: ‘politics of course, management yes, but managerialism no’. Management practice, including the practice of private companies in industrialized countries, can improve public services in developing and transitional countries when it is properly subordinated to political objectives and is applied appropriately and critically. Even those who see the ‘New Right’ and all its works as ‘the devil’ must surely admit that there is no reason why that cloven-hoofed gentleman has to have ‘all the best tunes’. In order to check the growth of ‘managerialism’, moreover, we need a better, less monolithic understanding of management. With this in mind we now move on to review some models of management that are implicit in the other

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contributions to this volume, pausing first to discuss the puzzling absence of indigenous management models.

THE ABSENCE OF INDIGENOUS MODELS Many readers will have been surprised that contributors to this collection have leant so heavily on public management models that originated in industrialized countries. Are there no indigenous models (Marsden, 1991)? Very unfortunately, especially with the self-respect of developing-country public managers in mind, the short answer is no. Why is that? First, there is the discrediting of non-industrialized-country models which previously existed, especially the socialist planning model. The direction of movement, however fitful, is universally towards the market model: Vietnam is a striking example (Minogue, 1999; Rondinelli and Hung, 1997). Second, indigenous socialist models, always thin on the ground, have likewise imploded: Tanzania’s ujamaa socialism predeceased its inventor, Julius Nyerere, by several years. Why are developing countries not producing new models of their own? There are at least three reasons. The first is that the unique conditions of the independence struggle precipitated a critical mass of innovative nationalists, a group for whom producing indigenous models was part and parcel of nationbuilding. Except perhaps in South Africa, in a sense the last of Africa’s colonies to be liberated, those conditions have dissipated. The second is that the conditions of the 1980s and l990s increased the exposure of the former colonies to outside influences. From a positive point of view, they were by now secure enough in their independence to dispense with self-consciously non-Western approaches - to some degree, indeed, they were reacting against the failed autarchic policies of the post-independence period. From a negative point of view, what we have come to call ‘globalization’ constrained governments’ freedom of action, pushing them towards industrialized-country models. In particular, governments had to take account of the needs of the international market into which they were increasingly drawn: the reforms of the ‘Washington model’ had the explicit aim of facilitating private investment, in part by reducing the scale of government activity (Ó Tuathail et al., 1998; see also Bangura, 1999). More specifically, the economic weakness of many countries, now including a number of the former socialist countries of Central and Eastern Europe, made them dependent on the international donor agencies. For their part, the donors were no longer giving the benefit of the doubt to governments far from newly independent. Freed from the constraints of the cold war, donors’ new-found confidence manifested itself in loan conditionalities that

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reflected an industrialized-country analysis. Moreover, the currency of industrialized-country models was increased by their ever more rapid transmission through both print and broadcast media and networks of influence like the Commonwealth Association of Public Administration and Management (CAPAM). Ghana is a textbook case of all this: the first of Britain’s African colonies to become independent, with a healthy agricultural export economy, a GNP on a par with South Korea’s and a charismatic leader in the shape of Kwame Nkrumah determined to steer an independent course. By the early 1980s it once again had a charismatic leader in Jerry Rawlings, but one who, in contrast to his predecessor, enthusiastically accepted all the conditionalities that now went with donor money, such as an aggressive downsizing of the civil service (Larbi, 1998; McCourt, 1998). The third reason is perhaps less generally recognized. The innovative, but typically incoherent, piecemeal and unreflective practices of a reforming government only acquire the status of a model once articulated as such. The role of ‘think tanks’ and scholars is crucial. Bodies like the Brookings Institution in the USA and the Institute of Economic Affairs in the UK played a key role in giving Reagan’s and Thatcher’s early reforms a greater coherence than they possessed in their native form. Scholars such as Hood (1991), Osborne and Gaebler (1992) and Giddens (1998, 2000) have licked successive innovations into shape, from the frank Reaganite hostility to the state through the equivocal policies of the new public management to the warm words of the self-styled ‘Third Way’. Such formulations (to change the metaphor) wrap reforms in a neat package suitable for onward transfer. Developing-country reformers seldom have such cheerleaders in attendance. While public administration or management is very widely taught in developing-country universities, the capacity of the latter to conduct research, never strong, was further weakened in the 1980s and 1990s, as a recent British government-funded study on Sub-Saharan Africa makes clear (Bennell, 1999; see also Saint, 1992). Thus most countries lack either the ginger group of scholars or the conditions necessary to support the development of models. The important large-scale project on participative management in developing countries, based on research in countries as widely separated as Algeria, Bangladesh and Yugoslavia and sponsored by the non-aligned movement (a body whose very title is an anachronism), is an exception that proves the rule (Prasnikar, 1996). The imbalance between indigenous and overseas research is graphically illustrated by the pattern of citations in relevant publications. To take an example that happened to be on my desk as I wrote, the World Bank’s (1994) authoritative review, Adjustment in Africa, cites 125 sources in its bibliography. The majority of them (68) are publications of the World Bank and the

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IMF themselves. Of the remainder, and excluding academic journals, 19 have a place of publication in the USA and 11 in Europe. A grand total of one was published in Africa (actually Botswana): its authors have the tell-tale African surnames of Perrings, Opschoor, Arntzen, Gilbert and Pearce! The sprinkling of expatriate African and (particularly South) Asian names among the authors cited, mostly writing under World Bank/IMF auspices, underlines the point I am making.2 In the absence of indigenous research, industrialized-country scholars might indeed play a surrogate role. There have been distinguished individual contributions: Leonard’s (1988) investigation of what makes individual African senior managers effective; and Grindle’s (1997) identification of factors which make developing-country public organizations effective, a study whose emphasis on organization-level factors neatly complements Leonard’s focus on individual managers. Most notably, there is Tendler’s (1997) pioneering and widely cited study of the reforming administration of Ceará province in Brazil. But in a latter-day trahison des clercs, those scholars who have taken an interest (there are not many of us), often using donor funding, have mostly preferred to study the application of easily recognizable Western models rather than to embark on a search, with no assurance of success, for emerging indigenous models. The contributors to this volume, with the partial exception of Hulme, are probably representative. What is to be done? First of all, we depend on reforming administrations coming to power determined to steer a distinctive course: South Africa’s postapartheid government is perhaps the outstanding contemporary example, one which has been surprisingly little studied (though see Harrison-Rockey, 1999). Second, there needs to be a dramatic improvement in the conditions for research in developing-country universities and other research bodies. Third, industrialized-country scholars need to turn to seeking indigenous initiatives and generalizing from them, preferably in collaboration with developingcountry scholars. The ferment of discussion among Tanzanian intellectuals that has accompanied the rise of multi-partyism is one example of such an initiative. Of course an indigenous provenance is no guarantee of a model’s value; but it would at least be instructive to have a model that would stand systematic comparison with the imported versions.

THREE MODELS OF PUBLIC MANAGEMENT In the meantime, developing-country reformers probably have to make do with what exists in a systematic enough form to be studied and implemented. I suggest, with some inevitable simplification, that there are three currently viable models, which I shall review in turn. (Later on I shall also outline a

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further emergent ‘strategic’ model.) The first is the classic public administration model, still very widely practised and retaining, as we shall see, some unexpected advantages. The second is what I shall call the Washington model, a label chosen to echo the ‘Washington consensus’ epithet coined to characterize the approach embodied in World Bank and IMF structural adjustment loans (Williamson, 1993). It is the expression in public management of the philosophy of structural adjustment. The third is NPM, about which a great deal has already been said in this collection but about which I will say a little more. Although all of them are currently practised, I shall treat them in the chronological order in which they emerged. The public administration model has been around since the early twentieth century, as Minogue points out in his chapter; the Washington and NPM models emerged in the early and late 1980s respectively. I consider that the three models are analytically separate in that each of them has a distinctive and coherent body of practices and a supporting critical literature. It is encouraging that our taxonomy corresponds to the first three of the four phases of public management which Pallot (1997) has identified in New Zealand, seen by many as a leading reform country. Although aspects of the models, particularly NPM, have already been discussed in earlier chapters, I will provide a thumbnail characterization of each of them.

SIX TESTS OF APPLICATION I shall subject our models to six tests, which represent six contingencies: like Taylor and Heeks and Mundy in their chapters (see also Turner and Hulme, 1997), I am aligning myself with the contingency tradition in management studies (Lawrence and Lorsch, 1967; Pugh and Hickson, 1976). The tests are the following: 1.

2.

Performance An ideal model will facilitate the delivery of effective services. I am well aware of the conceptual difficulty of ever reaching consensus on a definition of ‘effectiveness’, and the practical difficulty of being able to measure it even if we could define it (see Cutler and Waine, 1994, ch. 2 for a critical account). But a discussion of management models that took no account of performance would be artificial. Capacity An ideal model will recognize the existing capacity of government. Governments are often reluctant to admit that their reach may exceed their grasp. Capacity problems have been recognized from the early days of development administration: Rondinelli (1992) provides a multi-country study of problems which lack of administrative capacity has created.

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3.

4.

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Integrity Like problems of capacity, poor standards of personal behaviour among politicians and officials are not unique to developing countries. It was, after all, Chicago’s celebrated former mayor, Richard Daley, who, when pressed on allegations of nepotism, replied, ‘It’s a father’s duty to help his sons!’ (quoted in Clark, 1994). But corruption in some developing and transitional countries has become so entrenched that reformers are obliged to consider what effect their reforms are likely to have on levels of corruption, or indeed whether those levels are such as to prevent reforms from being implemented. Neutrality A public management model should lend itself to achieving different, even opposite policies. In the tradition that runs from Weber to Eberhart et al. (1981), I reassert the classic primacy of politics over administration which we discussed in an earlier section, and its implication that public management is properly concerned with means rather than ends and neutral, therefore, as between the latter. I know that this flies in the face of some critiques, which identify biases such as an inbuilt centralist or ‘continuity’ bias in civil servants (Hennessy, 1989, ch. 11; Maheshwari, 1984); and more particularly of several developing-country critiques, which point to the self-serving nature of much administrative behaviour (Clay and Schaffer, 1984; Ekeh, 1975; and Ferguson, 1990 among others). Most interestingly, Crook’s (1989) analysis of Côte d’Ivoire shows how, under President HouphuetBoigny, effective official performance was still possible despite officials’ blind loyalty to government policy. However, Côte d’Ivoire, where the military was in control at time of writing, is perhaps a limiting case rather than the general rule. If we make partiality rather than neutrality the norm, we become unable to cope with changes of government without a wholesale clearout of administrators from the ancien régime. Sometimes a new government will feel obliged to do just that: Nepal and South Africa are recent examples. But this derives from either the bias of the civil servant or the prejudice of the politician, and is not inherent in the neutrality principle. The alternatives to neutrality, in fact, are either blind loyalty or bureaucratic self-interest. It is not surprising, therefore, to find Collins observing that the aim of the transitional countries of Eastern Europe emerging from communism was ‘to provide for a legal framework ... which is politically neutral’ (1993, p. 331). Is this a counsel of perfection? In some countries like China (Burns, 1993) it probably is, in the short term. However, bureaucrats, like the rest of us, are complex creatures, able to espouse contradictory principles at the same time, such as neutrality on the one hand and loyalty to kin or village on the other: Caplan (1975) demonstrates this in his subtle analysis of administrative

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behaviour in the strongly patrimonial setting of Nepal. This creates a crucial space in which, while we recognize the difficulties, we may take action to strengthen neutrality. In short, it seems important to review the impact of our three models on neutrality. Dependence This is fairly self-explanatory. New approaches will only be sustainable if they do not require long-term dependence on outside help. Emulation If reformers are obliged to import their management models, they might as well be models which offer concrete examples of implementation from which policy-makers can learn, rather than the ‘castles in Spain’ which may appeal to academics and other outsiders. (Langseth’s (1995) service delivery survey methodology is an example of such an initiative which, as Clarke and Wood’s chapter concedes, has not really caught on in the countries for which it was developed.)

5.

6.

We now go on to review the three models, in the chronological order in which they emerged.

THE PUBLIC ADMINISTRATION MODEL The public administration model in developing countries is essentially the classic Weberian model of bureaucracy harnessed to the needs of the developmental state. Let us recall its main features as outlined in Minogue’s chapter:

• • • • • •

There is a separation between politics and elected politicians on the one hand and administration and appointed administrators on the other. Administration is continuous, predictable and rule-governed. Administrators are appointed on the basis of qualifications, and are trained professionals. There is a functional division of labour, and a hierarchy of tasks and people. Resources belong to the organization, not to the individuals who work in it. Public servants serve public rather than private interests.

One implication is that administration becomes highly centralized, since the model posits an unbroken hierarchical chain from the top (in the capital) to the bottom (in the remotest outpost of government). A secondary implication, in budgetary terms, is that the model focuses on inputs, in the sense of the efficient management of resources, rather than outputs, in the sense of the goods and services that the resources are used to produce.

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Capacity, Dependence and Emulation As the most familiar and well-established of our three models, the public administration model presents the fewest problems of capacity. However, as Hulme points out in his chapter in this volume (Chapter 7), the public administration model assumes that services will be provided by the state, ignoring the existence of both private, for-profit and civic, not-for-profit service organizations like schools and hospitals. In many countries the latter were well established even before independence and continue to play an important role, compensating for lack of public service capacity. Applying two of our other tests, the public administration model creates few problems of dependence. The model has taken firm root in most developing countries, even though particular elements, such as the stricture that officials should serve public and not private interests, may not have done in many places. Similarly, there are many examples of the model available for emulation. Performance In other respects, the public administration model fares less well. As Minogue points out in his chapter (1), the emphasis on predictability means that the role of the public official becomes one of following the rules rather than maximizing performance, leading to inflexibility and other ‘bureaucratic pathologies’. (It may be more accurate to say that satisfactory performance is implicitly defined as following the rules.) ‘Top-down’ centralized implementation, similarly, tends to lead to bad results. However, this poor showing has been mitigated by the continuing professionalization of public services which is inherent in the public administration model, as developing countries have continued their post-independence investment in the training of teachers, health workers and so on. Integrity In theory the public administration model, with its emphasis on rule-following and the public interest, and its separation of public and private resources, should militate against corruption. There is support for this view in a number of recent studies of devolution in both industrialized and developing countries (Doig, 1997; Larbi, 1998; McCourt, forthcoming b). On the other hand, the inherent inflexibility of rule-based administration may give officials a chance to demand a fee to grease the administrative wheels (Langseth and Pope, 1999). Thus, as Polidano notes in his chapter (3), fighting corruption has sometimes been an explicit rationale for devolution to ‘enclave’ revenue authorities and the like (the success of such initiatives is discussed below).

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Neutrality The classic Weberian separation of politics and administration theoretically ensures neutrality. However, in the public choice analysis, bureaucrats are seen as intrinsically self-seeking, oversupplying public goods so as to build empires whose rewards include higher salary and status (Niskanen, 1973). Alternative accounts of bureaucrats’ motivation exist, however, and empirical evidence for the public choice analysis is thin (Dunleavy, 1991). The emphasis on neutrality has been attacked from the Left as well as from the Right. The former has tended to see administrators as elitist and remote, leading to steps to make administrators more directly answerable to politicians. Thus Tanzania set up a quasi-political cadre system in parallel with the regional administration (Max, 1991), and Sri Lanka brought its Public Service Commission, the body responsible for civil service recruitment, under the direct control of the Cabinet (De Silva, 1993). It is interesting that in both cases the damage done by politicization of the administration was belatedly recognized, and both countries have tried to restore the separation between politicians and officials (McCourt, forthcoming a; McCourt and Sola, 1999). Summary and Conclusion To sum up, the public administration model has a poor record for delivering effective public services, although the gains from professionalization are significant and there is something to be said for a model that is widely applied and understood. But it does not follow that inertia and vested interests are the only reasons why governments continue a centralized, rule-driven model of administration. Bureaucrats’ concerns about weak capacity and creating fresh opportunities for corruption, genuine even while self-serving, are forces for conservatism. There are indeed circumstances in which this very wellestablished model is more appropriate than its modern challengers, to which we now turn our attention.

THE WASHINGTON MODEL What I am calling the Washington model is the public management branch of what has been called the ‘Washington consensus’ in development economics. As country after country embarked on reform after Ghana’s bell-wether programme began in 1982, a blueprint emerged in which a reduction in the size of the public sector, spurred on by World Bank and IMF loan conditionalities, contributed to reducing overall government expenditure with the aim of restoring macroeconomic stability and facilitating growth through

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reducing the ‘crowding-out’ effect of government overspending on private investment (World Bank, 1989). Crucially, in other words, this was - and remains (Nunberg, 1997) - a cost-driven model of reform. We should not be surprised by this: in the final analysis, the World Bank is a bank, likewise the IMF. In the public enterprises, as Cook’s chapter (8) makes clear, the model calls for privatization of the public enterprises, or at least, since the actual scale of privatization has been limited, for a reduction in government subsidies to make them pay their own way. In relation to the provision of public services, it advocates the use of contracting and the introduction of user fees (see McCourt’s chapter on these - Chapter 6). In the core civil service which is the subject of Polidano’s chapter (3), it leads to a call to reduce public expenditure, and particularly payroll spending, which has the lion’s share of most departments’ budgets. The management instruments for achieving pay and employment reform feature payroll audits to determine the size of the public workforce, the elimination of ‘ghost workers’ - a colourful phrase that refers to the practice, widespread in SubSaharan Africa (Nunberg, 1994), of interpolating fictitious names into a payroll so that wages can be diverted fraudulently - enforcing retirement ages and the like. They also feature, as a kind of consolation prize, increasing the pay of senior civil servants (the ‘salary decompression’ referred to earlier): their salaries are judged inadequate to motivate and retain them (Lindauer and Nunberg, 1994). Other measures are also mainly financial in nature: tax reform, improving the composition of public expenditure and so on. There is a striking resemblance between the Washington model and the ‘New Right’-inspired civil service reforms of the early 1980s, especially in the USA, which had ‘rolling back the frontiers of the state’ as an implicit aim (see McCourt’s chapter). In the USA, the emphasis on cost-cutting was clear: the official title of the Grace Commission, set up to reform the federal civil service by Ronald Reagan in 1982 and serviced entirely by private sector managers, was ‘The President’s private sector survey on cost control (PPSSCC)’ (Grace, 1984). The report recommended, among other things, a reduction in the size of the workforce and in generosity of pension benefits. It also recommended the use of contracting and the introduction of user fees (Levine, 1985). Despite its preoccupation with costs, the Commission proposed increasing the pay of top executives by 20 to 30 per cent (PPSSCC, 1983). Finally, one may note that, like the Washington model (see below), the Grace Commission led ironically to increased, not decreased spending, as McCourt points out in his chapter (6). It is perhaps to be expected that the World Bank and IMF, which have their headquarters in Washington, will be influenced by developments there. But parallels also exist with the reforms carried out by the New Zealand and UK

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governments in the same period (Pallot, 1997; Metcalfe and Richards, 1990). What is also striking is that the Bank and the IMF continue to commend this generation of reforms to their developing-country clients, and have been equivocal about the later NPM reforms. The contrast between Nunberg (1995) and World Bank (1997) on the subject of managerial devolution, and the debate between Bale and Dale, and Schick (both 1998) in the World Bank Research Observer, are instructive. Peformance In a study of health reform in five African and Asian countries subject to structural adjustment, Russell et al. (1999) note a severe decay in government performance, including the performance of basic administrative functions (see also Bangura, 1999). They found that efficiency only improved because of resource cuts rather than better management (see Nickson, 1999, for a similar finding from the water sector). This perhaps should be attributed to the effects of economic crisis to which donor intervention was a response. But if application of the Washington model has not been the problem, it has scarcely been the solution either. In some cases, as in the 1997 World Development Report, there is concern for the effect that all this will have on service provision or on human development indicators; but quite often there is not: a footnote acknowledging a worsened pupil-teacher ratio in African schools is the sole reference in one review (Lienert and Modi, 1997). Another report rails against Kenya’s perverse insistence on increasing the number of its teachers (presumably improving the pupil-teacher ratio), and against its excessive spending on milk distribution to primary children (World Bank, 1994, p. 128). Perhaps the model should not be criticized for failing to achieve what was never its objective. But while there are examples of success, in many countries the model has failed even in its own terms. Expectations have not been met in either privatization, as Cook’s chapter (8) shows, or pay and employment reform, where recently the Bank rated no fewer than 40 per cent of its own projects as unsatisfactory at completion (Nunberg, 1997; see also Abed et al., 1998). Capacity The World Bank and the IMF have generally respected the capacity of their clients. Although the recommended computerization of the payroll leaves administrations liable to fall into the information technology traps which Heeks and Mundy reveal in their chapter (10), by and large the management instruments of choice require no great sophistication, and there is a sensible emphasis on making existing systems work better.

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Neutrality The Washington model is a recipe for a shrinking state, and the prominence in it of privatization and civil service reduction make it hard to see how it could be adapted to serve any other political end. The ‘dogmatists in dark suits’ (Green, 2000) are apt to frown on countries which decide, like Sri Lanka, to go their own, more gradual way (McCourt, forthcoming a). Dependence The extensive staff redundancies inherent in the Washington model create dependence in the familiar sense of dependence on outside cash. Privatization, public enterprise reform and civil service reform usually entail expensive staff retrenchment programmes, which are often only feasible with donor support. Davis (1991) reports how public enterprise reform ground to a halt in Ghana when the government realized that it did not have the money to make workers redundant; Tanzania (Kamukwamba, 1999) has had the same experience. The irony of failing to save money through staff redundancies because public agencies lack the money to implement them will not be lost on the reader. More broadly, it is questionable whether any pluralist democracy will implement the Washington model without donor support or pressure. The experience of pay and employment reform illustrates this. Chile, Ghana and Uganda, shining examples of the model, all had governments which came to power in coups (in Uganda, ironically, donors actually helped to tone down President Museveni’s initial righteous determination to weed out the ‘malingerers’ and ‘drunkards’ among his employees: McCourt, 1998). Countries that declined to accept World Bank assistance, notably Malaysia and South Africa, or opted out after an initial phase, like Sri Lanka, took a quite different course. Malaysia held employment steady, granting real-terms pay increases to civil servants before (Government of Malaysia, 1991) and even after the East Asian downturn. South Africa did act to extirpate ‘ghost workers’, but at the time of writing had still to tackle overstaffing in its impoverished former ‘homelands’ in the Eastern Cape and elsewhere. It also raised salaries considerably during Nelson Mandela’s presidency before the minister of public service (ironically a Communist) in Thabo Mbeki’s new administration faced down a civil servants’ pay strike in 1999. Sri Lanka, having burnt its fingers badly with an expensive but futile voluntary redundancy scheme under Bank auspices, regrouped with a circumspect programme of management reviews from which job reductions might obliquely emerge. In the meantime salaries continued to rise (McCourt, forthcoming a). Even among countries which did accept World Bank/IMF help, it was easier to get the horse to water than to make it drink. According to the World Bank’s

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own analysis, the main reason why so many of its reform programmes have failed is the lack of commitment of its developing-country clients to swallowing the bitter pill (Nunberg, 1997). In short, the Washington model has only worked in authoritarian regimes which depended on Washington’s assistance. Emulation The Washington model scores highly here. The model itself is extensively documented by the IMF and the Bank (see, for instance, Stevens’s 1994 practical account of its pay and employment reform component), and countries like Ghana and Uganda which have followed the model are hospitable to a fault to delegations from countries just starting on reform. Summary and Conclusion Overall, the Washington model has at best allowed government performance to stagnate, though it might be argued that emphasizing the ‘administrative fundamentals’ allows governments to step back in order to jump forward better. The Washington prescriptions respect the capacity of developingcountry governments, and are technically easy to imitate. The model’s weaknesses, however, are that it is yoked to a small-state ideology, and that it has only been implemented with the Bank and IMF’s support - and, more often than not, not even then.

THE NEW PUBLIC MANAGEMENT MODEL (NPM) Several of the contributors, particularly McCourt, Minogue, Polidano and Taylor, used their chapters to examine one or other facet of what has become known as the new public management (NPM), the model which currently dominates the public management scene. While their overall views on NPM differ somewhat, with Minogue and Taylor generally critical and McCourt and Polidano prepared to concede at least some value to the model, all of them identify shortcomings both with the model itself and with its applicability to developing and transitional countries. What does the model consist of? Some authors use NPM as a shorthand for ‘whatever it is that Reagan and Thatcher did to the public sector’ or even, improbably, ‘whatever it is that the World Bank did to the public sector’ (Batley, 1999, is an example of the latter). Clearly this is inadequate, if only because what all those illustrious reformers did over a decade or more was bound to be a moving target: at the start of Margaret Thatcher’s second term in office in 1993, for instance, privatization was still a minor activity. I use

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here the version that appears in the OECD’s (1995) review of public management developments, which is based on an empirical survey and has an operational form. It has the following elements:

• • • • • • • •

devolving authority, providing flexibility ensuring performance, control and accountability developing competition and choice providing responsive service improving the management of human resources optimizing information technology improving the quality of regulation strengthening steering functions at the centre.

We can add to this list the characteristic NPM focus on the outputs of government - what government actually does - typically expressed in numerical terms as performance indicators (see Minogue’s, McCourt’s and Polidano’s chapters on the latter). NPM has been described as ‘truly a global paradigm’ (Borins, 1997, p. 65), whose spread is impeded only by bureaucratic isolationism (Thompson, 1997, p. 13). However, I suggest that the finding in this collection (see chapters by Minogue, McCourt, Polidano and Hulme) of quite low take-up in developing countries for the NPM model, a finding which echoes that of a large research project conducted by the University of Birmingham (Batley, 1999), is more reliable. There has, though, been some interest in its competition element, with a number of countries experimenting with client-contractor models of provision. In developing countries, the prominence of civic organizations and other non-governmental organizations (NGOs) in development thinking makes them an obvious service partner for governments. But David Hulme’s chapter shows just how different reality is from the image in the public management literature. While it has strengths as a service provider - in a few countries, such as Bangladesh, somewhat in advance of the public sector - the civic sector has been used by donors to bypass the state rather than to work on its behalf (see also Desai and Imrie, 1998). Only in Latin America, with its long history of private involvement in public provision, is there evidence of government reaching out to civic organizations in this way. Moreover, Hulme suggests that civic organizations may be more effective as critics than as providers of public services. Capacity Administrative devolution is arguably the central element of the NPM model, and occupies pride of place in the OECD’s (1995) authoritative survey of

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industrialized-country experience. Yet although it has been a centrepiece of many reform programmes, in Britain, a supposedly ‘mature’ public administration, financial management reformers were obliged to tread water for two crucial years in the mid-1980s because the accountancy expertise needed to implement the reforms was simply lacking (McCourt, 1998). Nunberg (1995) notes the heavy demands which devolution will make on agile administrations, suggesting that a paradoxical consequence could be to increase the demands that the centre makes on the agencies to which it has devolved, in its anxiety to know what is actually happening (see also Batley, 1999). Corruption I have already referred to fears that administrative devolution, sometimes introduced as a curb on corruption, might be abused to create personal empires, ethnic enclaves even; Polidano refers to those fears in his chapter. Admittedly they are self-serving when held by a central government bureaucrat clinging to power: Elcock and Minogue’s chapter notes the tendency for decentralization programmes to end up increasing the power of the centre. But in Uganda it was the donors who insisted, for this very reason, that staff retrenchment in local authorities should be managed centrally, even though central government itself was perfectly happy to delegate (McCourt, 1998). Moreover, in Nepal experience bore out the fears: a World-Bank-inspired devolution of staffing responsibility to the public enterprises in the early 1990s succeeded only in turning them into a patronage playground for politicians (McCourt, forthcoming b; see also Larbi, 1998 for Ghana’s experience). Here again the appropriate policy prescription is a contingent one: devolution has co-existed with corruption in some places, but has elbowed it out in others. The experience of the proliferating enclave revenue authorities of SubSaharan Africa is a good example. Their general success in increasing tax revenue is noted by both Polidano and Clarke and Wood in their chapters. Clarke and Wood, however, report that they have not succeeded in eliminating corruption. Neutrality NPM is less clearly identified with a particular political programme than the Washington model. Its elements have been espoused by parties of the Left (New Zealand) and the Right (the UK). As Minogue notes in his chapter, its principles have been modified rather than abandoned following the change of power from Conservatives to Labour in the UK: contracting out, for instance, is no longer compulsory, but its scope has been extended even to the

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management of state schools. However, the model assumes a major role for the private and civic sectors, albeit providing services on behalf of rather than as an alternative to the state. Certainly the mechanical preoccupation in some NPM texts with performance, performance indicators, quality and the like allows efficiency to become an end in itself, a ‘managerialist’ weakness to which American writers like the already-cited Osborne and Gaebler seem particularly prone. Moreover, client responsiveness, in the NPM version, tends to be on management’s rather than the client’s terms. However, one can envisage an adjustment that would make those techniques rather more flexible more ‘empowering’, perhaps - than they have been up to now. This could be done, for instance, by adding an element of participatory appraisal (Chambers, 1997) which, when practised sensitively, has the potential to prioritize clients’ views. Less mechanically, it is possible that these approaches are compatible even with mass political mobilization strategies such as those which characterized the development of public health and education in the Indian state of Kerala, where parties of the Left have been so influential (Sen, 1992). Dependence The cash costs of the NPM methods may be more significant than they appear at first sight. There is an often overlooked cost in the army of administrators and managers who will probably be needed to implement them: we saw this earlier in the example of the UK’s National Health Service. There are also additional transaction costs in such areas as the setting up of multiple agencies, and the creation of a bureaucratic apparatus to monitor the performance of the agency or contractor to whom the service has been devolved (Batley, 1999). Thus cash-strapped administrations may need to depend on external funding for implementation. Moreover, the techniques are quite sophisticated, creating openings for expensive consultants to introduce elaborate methods liable to collapse on the consultant’s departure. Job evaluation, a private sector technique for determining pay introduced with UK government assistance in Lesotho and South Africa, is an example of this. But Malaysia’s experience shows that outside assistance can be confined to information-gathering visits by officials to countries which are practising the methods. Emulation There are by now many industrialized-country administrations practising NPM, notably the ‘Old Commonwealth’ countries of New Zealand, the

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UK (discussed in detail by Minogue in his chapter), Canada (Aucoin, 1995) and Australia. Among developing countries, however, it is a case of all roads leading to Kuala Lumpur. Malaysia, with its use of performance indicators, Citizen’s Charters and total quality management, has been the favourite destination for study groups from other developing countries, even though the reforms may have been superficial, as Common (1999) suggests. Summary and Conclusion Overall, the dearth of evaluation evidence on the NPM innovations, even in developed countries (Pollitt, 1995), and the limited scale of implementation in developing countries, make it difficult to pronounce confidently. This leads Minogue to argue in his chapter for extreme caution in introducing reforms whose success even in industrialized countries is unproven, especially in view of the transaction costs which the reforms probably entail. There is, to be sure, some evidence of experience with managerial devolution in developing countries, but it is contradictory, as we have seen in the case of the enclave revenue authority model. However, from the industrialized-country evidence reviewed in McCourt’s chapter, we can state with some certainty that governments should steer clear of the ubiquitous charters, quality circles, the more prescriptive quality management approaches, and also contracting out of professional services, all of which have failed to deliver in OECD countries. On the other hand, the same evidence suggests that there may be mileage in the use of performance indicators and contracting out of manual services, although even here there will probably be a period of trial and error before governments get them right.

STRATEGIC MANAGEMENT: AN EMERGING MODEL? We said earlier that the three models reviewed here correspond roughly to the first three of the four phases of public management in New Zealand identified by Pallot (1997). The fourth and current phase is what she calls the strategic management phase. Strategic management, yet another concept that originated in the private sector, is starting to appear in a number of countries. In essence, it is the process of identifying the aims of an organization (its ‘mission statement’), the objectives which follow from them and the resource allocations and activities that will realize the objectives. Strategic management entails, among other things, a commitment of resources, not easily reversible, for a long period (Johnson and Scholes, 1993).

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In New Zealand, strategic management has been introduced for two reasons: 1.

To address the fragmentation which has been a perverse result of NPM devolution, and which has made it hard for autonomous agencies to cooperate on matters of common concern (Matheson, 1996; Pallot, 1997; Pollitt et al., 1998). 2. To implement policies that cut across agency boundaries. Policies on the environment, which have major implications for health, agriculture and planning functions among others, are an example (Matheson, 1996). Such policies may also need the participation of the private sector and civic society. Thus New Zealand produced a national strategy, called ‘Path to 2010’, on the basis of which ‘strategic result areas’ were drawn up, defined as the key contributions which the public sector is expected to make to the national strategy over the following three years. These led finally to the production of ‘key result areas’, which are the annual objectives for each unit of government which are familiar from the NPM performance management model (Irwin, 1996). Something resembling New Zealand’s ‘strategic result areas’ can be seen in the 600 targets introduced by the UK government in 1999, including even a target for the number of suicides (see McCourt’s chapter). The UK government reasons that citizens look beyond the individual initiatives of government to their impact on national life: the number of suicides means more to citizens than, say, the number and speed of referrals to public mental health services. Thus government might as well have a mechanism for addressing their expectations. (The alternative, of course, would be to damp down the expectations. Even New Zealand has balked at setting such ambitious targets: Irwin, 1996.) So the strategic management model as applied to government is potentially distinctive in three ways: 1.

It extends the strategic management technique from the level of individual agencies (the level at which it is applied in NPM) to the level of government as a whole. 2. It emphasizes partnerships across government and between government and private and civic organizations (World Bank, 1996). 3. Unlike NPM, it focuses on the outcomes rather than the outputs of government activity. Outcomes refers to the impact of government activity on society as a whole; outputs, defined earlier in the section on NPM, refers to the goods and services that government produces. In the

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example just used, government’s impact on the number of suicides is an outcome, whereas referrals to mental health services is an output. (There is thus a neat progression from the focus on inputs in the public administration model, through outputs in the NPM model to outcomes in strategic management.) It is worth noticing that while the first of these merely brings government into line with the longstanding practice of private management, the second and third are distinctive to the public sector. In a sense, strategic management is not at all new to the public sector. The UK government was experimenting with it as long ago as 1970 (Matheson, 1996). Earlier still, strategic planning was the keystone of socialist management of the economy, but was also widely practised in the market economies, as in the structure plans produced by UK local authority planning departments from the late 1940s onwards (Elcock, 1996). Moreover, individual agencies within government have increasingly developed their own strategies, especially where NPM-style managerial devolution has increased their freedom to do so. Indeed, the performance management technique, a major element of NPM, presumes that such a strategy already exists as the basis for performance indicators. The US government’s 1993 Performance and Results Act, which requires agencies to produce strategic plans covering a period of at least six years (Groszyk, 1996), is a classic example. It is at this level that developing countries like Uganda (Government of Uganda, 1994) and Malaysia (Sarji, 1995) have introduced strategic management. How likely is strategic management to catch on? Certainly it is promising in some ways. With pay and employment reform, for instance, a major activity for developing countries that have received structural adjustment loans, there is a convergence on the need for a strategic approach to counteract the negative impact of reform on organizational performance. This view draws on both developing-country public, and industrialized-country private, sector experience (Cameron, 1994; McCourt, forthcoming c; Nunberg, 1997). Its implications have led to a significant adjustment in the way that South Africa has handled employment reform (Government of South Africa, 1998). Moreover, Hulme’s chapter discusses the view that development efforts in general are moving towards a ‘strategic’ approach. It is significant that Clarke and Wood’s chapter (see especially Figure 4.1) shows that the next phase of reform in Tanzania, still to be implemented at the time of writing, is based on a strategic planning model which readers will recognize from our description in this chapter; and Swaziland was going down the same road at the time of writing (Government of Swaziland, 1999). However, at the moment there are some formidable obstacles:

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•

•

• •

•

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Teething troubles: although Pallot’s analysis is persuasive, a slightly earlier study of New Zealand indicates that the early reality was not particularly strategic (Boston et al., 1996), and the UK government’s understanding of strategic management in the mid-1990s was idiosyncratic (Cabinet Office, 1995). So it is not surprising that practice is rudimentary in countries outside the NPM heartland, rarely going beyond cosmetic mission statements at the level of individual departments, as Clarke and Wood’s chapter points out in relation to Uganda (see also Government of Uganda, 1994; Sarji, 1995 for Malaysia; and Commonwealth Secretariat, 1998 for Singapore). The structure of government: McCourt and Ramgutty-Wong (2000) show how difficult strategic integration is even in the small island state of Mauritius, and in relation to the single functional area of staff management. Responsibility there for civil service recruitment, pay management and staff training is divided between line departments on one hand, and (respectively) the Public Service Commission, the Ministry of Finance and the Institute of Public Administration and Management on the other. Such a balkanization can be very hard to change. The difficulty of maintaining a strategy over the several years which strategy requires, given the problem of agreeing strategic aims, the possibility of strategy being reversed by an incoming government (Elcock, 1996) or blown off course by events. The history of failure of strategic planning, including in the development context (Bond and Hulme, 1999), and of earlier strategic efforts such as the Programme, Planning and Budgeting System in the USA (Groszyk, 1996). Their close family relationship with strategic management cannot be disguised. The hostages to fortune that will be given by setting performance indicators in terms of outcomes rather than outputs, since outcomes are only partially in government’s control (Irwin, 1996).

From previous experience, we can anticipate that other developing countries will join Tanzania in implementing full-blown strategic management. Academics could usefully provide evaluation and guidance ahead of such applications, rather than wringing our hands later over the debris of failure, as we more typically do.

MODELS OF PUBLIC MANAGEMENT For clarity, the main points of our review are summarized in Table 11.1.

Outputs Uncertain High demands evidence of improvement

NPM

Low demands

Efficiency improved; services deteriorated

Costs

Washington model

Low demands

Performance Capacity Poor

Focus

Six tests of three public management models

243

Decentralization may facilitate corruption

No effect

Inflexibility breeds corruption

Integrity

Dependence

Geared to needs of adjustment loan programmes Assumes major role for private sector

Management ‘transaction cost’ may require funding

External funds and pressure needed

Qualified by No external bureaucratic input needed bias

Neutrality

‘Old Commonwealth’ and Malaysia

Most developingcountry administrations Many examples and good donor documentation

Emulation

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Model

Table 11.1

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CONCLUSION: A CONTINGENCY APPROACH TO PUBLIC MANAGEMENT In this concluding chapter I have tried to draw together some of the threads of the discussion in the main chapters without, I hope, unduly distorting fellow contributors’ arguments. I began by discussing the crucial interface between politics and management that was the central theme of Minogue’s and Elcock and Minogue’s chapters. Having regretted and tried to account for the absence of indigenous models, I went on to outline three management models and to conduct a review of them which is summarized in Table 11.1. Our book is aimed equally at our academic colleagues, our colleagues in the donor community and in developing-country governments, and at students of public management. For the former three groups we believe there are some practical implications that we would like to emphasize. For our academic colleagues, the message is a conventional one: more research is needed. Again and again contributors have regretted the dearth of empirical research. Recent contributions by Batley (1999) and his colleagues and by Tendler (1997) have done something to plug the gap. We need to build on their lead, preferably improving indigenous capacity by collaborating with developing-country colleagues as we do so. More specifically, in several chapters our contributors have taken a contingency approach, arguing for instance that choosing a model of information systems is a contingent matter. Here I echo Polidano’s call in his chapter for research into what those contingencies are. We need to understand why a more or less identical revenue authority model can control corruption in one country but not in another. We also need research on the application of NPM in developing countries: this is almost entirely lacking. Such research must demonstrate an awareness of the roots of many public management innovations in private sector practice, and of the political context in which those innovations are applied; it should also be sensitive to conditions in developing countries. These things are easy to say, but our academic readers will know just how hard they are to do, since they entail drawing on quite separate literatures and bodies of experience. Hence Minogue’s comment in his chapter on the ignorance of academics with a business background of the political context of public management. The collaboration of researchers with different disciplinary backgrounds might be one way to proceed. There is also, I think, an implication for our colleagues in the donor community, and especially in the World Bank and the IMF, whose loan conditionalities have allowed them to make so much of the running in developing-country reform. I repeat the tautology that the World Bank is a bank in order to remind them of the distortions to which an exclusive concern with money rather than management can lead. Despite their numerous,

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impressively referenced publications, oases of fact in a desert of conjecture, it is very rare to find mainstream management or even public management writers quoted, beyond ‘guru’ figures like Peters and Waterman (1982) and Osborne and Gaebler (1992). This may make it difficult for the Bank to come to terms with new models of management, including even the much chewedover NPM model about which, as we have seen, the Bank has still to make up its mind. It may also help explain why efficiency improvements in adjusting economies studied by Russell et al. and Nickson (both 1999) resulted from resource cuts rather than management improvements. The Bank, admittedly, does have a practical grasp of the reality of administration in many developing countries, and continually points its clients back to what McCourt’s chapter called the ‘administrative fundamentals’. But in our experience the Bank finds it hard to engage with concerns that do not have a financial dimension. The Bank was highly sceptical about a proposed decentralization in Sri Lanka which, while inevitably expensive, was an attempt to address a political rather than an economic problem, namely the government’s continuing war against the Tamil liberation movement (McCourt, forthcoming a). The Bank could usefully invest in a better grasp of developments in both public and private management, and of the appropriate relationship between politics, management and economics (not always one where the first two are subordinated to the third). All this, to give concrete examples, would help them realize the value of incrementalism (March and Olsen, 1989), emergent strategy (Mintzberg, 1989) and - this may be especially hard to stomach - sheer ‘muddling through’ (Lindblom, 1959). All of the latter, of course, cut right across the Bank’s usual project timescales, but they are crucial if the Bank is to address the important problem that ‘The negative impact of the absence of local ownership [of reform is] ... greatest precisely where it is easiest to score apparent successes in changing government policy’ (Batley, 1999, p. 762). My final remarks are directed at our colleagues in developing-country governments. As we saw with the varying fates of the enclave revenue authorities, an identical policy prescription can have quite different, and unexpected, consequences in different places. I would ask readers to reflect on this, and even more on their own experience. Only a tiny fraction of the experience of reform gets documented in the formal academic literature, or even in government and donor agency reports, yet that experience has much to tell us. In the week of writing, a senior Cameroonian official was on hand to describe how the privatization of the Cameroon Development Corporation (CDC) had been put on hold, not because of the anticipated cost of redundancy (unlike Ghana’s experience), but because of uncertainty over how to deal with the issue of ‘native land’ which CDC has held in trust for over 40 years. At the same time, an aid agency worker described how in one district council in

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Tanzania, there is a relationship between the council and local NGOs, as the NPM model enjoins, but it is largely parasitical, with NGOs battening on the council’s vehicles and other resources to carry out their own rural programmes. Academics tend to disapprove of such ‘travellers’ tales’, but leaving ourselves open to them, and the lessons of our own experience, helps us to understand how in public management, ‘Vice may be virtue uprooted’, in the words of the great Anglo-Welsh poet David Jones (1974, p. 56). So this final chapter concludes as it began, declining to give whatever credence an editorial imprimatur may bestow on any of the current models of public management. An instinctive preference for bolstering the ability of developing-country policy-makers to choose and implement from among the models on offer is perhaps supported by the current diversity of views. None of the three models (or four, if we include strategic management) reviewed in this chapter is a ‘straw man’: all are in current use, and all have serious arguments in their favour. While in the longer term we may hope to see the emergence of indigenous management models, in the meantime the interests of policy-makers are perhaps best served by a choice of international models, guidance on their advantages and disadvantages and a review of the experience of implementing them. Thus we hope that the chapters in our collection have done something to expand the range of informed choice available to policy-makers who, unlike their academic colleagues, cannot adopt a ‘plague on all your houses’ stance, but willy-nilly must act. Readers who return to Clarke and Wood’s chapter in the light of our analysis should notice how Uganda’s experience illustrates our argument. Public management there has come to resemble a patchwork quilt with elements of the three models, together with a couple of ‘strategic’ elements, added to or substituted for what already exists, as Table 11.2 shows. Table 11.2 Models of management in Uganda’s civil service reform programme Model Public administration Washington model NPM

Element in operation

Hierarchy and centralization Cutting payroll costs; raising teachers’ wages Devolving authority Ensuring performance through performance management Responsive service through service delivery surveys Strategic management Strategic planning Results-oriented management (ROM)

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Certainly this jumble of approaches reflects the unstable whims of government and, even more perhaps, of the very powerful donors. But it also reflects, as Clarke and Wood argue, a pragmatic readiness to adapt industrialized-country methods to developing-country needs: to illustrate their point they cite the different models used to set up the Revenue Authority, the Roads Agency and the Uganda Management Institute in line with their different circumstances. Perhaps, finally, there is a chance here for governments to turn the tables on the donors and others who purvey the models reviewed here. We are supposed to be living in a post-modern, eclectic world, one where the models of every age and every country are stacked up on the shelves of the policy supermarket to titillate the policy consumer’s jaded palate. Governments are constrained by global economic factors, among others, but not totally; they retain what has been called ‘room to manoeuvre’ (Clay and Schaffer, 1984) in the development literature and ‘strategic choice’ (Child, 1972) in the management literature. Thus as they attempt the perennial task of developing policies that address their citizens’ needs, they can exploit the promiscuous availability of models by making active, informed choices from the goods on offer. Government as active policy consumer rather than adventure playground for donors and consultants: that is the image which, pending the emergence of indigenous models, we would like to leave in the reader’s mind as we conclude this collection of studies of public management in developing countries. Donors, consultants and some academics may imply that ‘there is no alternative’ to whatever nostrum they happen to be peddling. There is always an alternative: models, to paraphrase a religious source, are made for man (and governments), not the other way round.

ACKNOWLEDGEMENTS Thanks to Martin Minogue and Marinus van Klinken for their helpful comments on an earlier draft of this chapter.

NOTES 1. 2

Ferguson (1990, pp. 279-88) does at least produce a practical epilogue. But he advises readers to work with progressive movements and to ignore government, which he regards (and not only in Lesotho) as an utterly hopeless case. The pattern of citations for this chapter is as follows: total citations, 114; place of publication in the USA or Canada, 29; in Europe, 43; in developing countries, 8 (excluding journals).

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Common, R. (1999), ‘Malaysia’s “paradigm shift”: the legitimisation of administrative change in a Southeast Asian state’, paper delivered at Third International Research Symposium on Public Management, Aston University, 25-26 March. Commonwealth Secretariat (1998), A Profile of the Public Service of Singapore, London: Commonwealth Secretariat. Corby, S. (1996), ‘The National Health Service’, in D. Farnham and S. Horton (eds), Managing People in the Public Service, London: Macmillan, pp. 149-84. Crook R. (1989), ‘Patrimonialism, administrative effectiveness and economic development in Côte d’Ivoire’, African Affairs, 88, 205-22. Cutler, T. and B. Waine (1994), Managing the Welfare State, Oxford: Berg. Davis, J. (1991), ‘Institutional impediments to workforce retrenchment and restructuring in Ghana’s state enterprises’, World Development, 19, 987-1005. Desai, V. and R. Imrie (1998), ‘The new managerialism in local governance: NorthSouth dimensions’, Third World Quarterly, 19, 635-50. De Silva, K (1993), ‘The bureaucracy’, in K. de Silva (ed.), Sri Lanka: Problems of Governance, New Delhi: Konark, pp. 83-98. Doig, A. (1997), ‘The privatization of the property services agency: risk and vulnerability in contract-related fraud and corruption’, Public Policy and Administration, 12 (3), 6-27. Dunleavy, P. (1991), Democracy, Bureaucracy and Public Choice, Hemel Hempstead: Harvester Wheatsheaf. Eberhart, J., R. Putnam and B. Rockman (1981), Bureaucrats and Politicians in Western Democracies, Cambridge, MA: Harvard. Ekeh, P. (1975), ‘Colonialism and the two publics in Africa: a theoretical statement’, Comparative Studies in Society and History, 17, 91-112. Elcock, H. (1996), ‘Strategic management’, in D. Farnham and S. Horton (eds), Managing the New Public Services, London: Macmillan, pp. 49-70. Ferguson, J. (1990), The Anti-Politics Machine: ‘Development’, Depoliticization and Bureaucratic Power in Lesotho, Cambridge: Cambridge University Press. Figes, O. (1996), A People’s Tragedy: The Russian revolution 1891-1924, London: Pimlico. Frant, H. (1997), ‘The new public management and the new political economy: missing pieces in each other’s puzzles’, in L. Jones, K. Schedler and S. Wade (eds), Advances in International Comparative Management: International Perspectives on the New Public Management, Greenwich, CT: JAI Press, pp. 71-88. Freeman, R. (1984), Strategic Management: A Stakeholder Approach, Marshfield, MA: Pitman. Giddens, A. (1998), The Third Way: The Renewal of Social Democracy, Cambridge: Polity. Giddens, A. (2000), The Third Way and Its Critics, Cambridge: Polity. Government of Malaysia (1991), Report of the Special Committee of the Cabinet on Salaries for the Public Sector, Kuala Lumpur: National Printing Department. Government of South Africa (1998), Report of the Presidential Commission on the Transformation of the Public Service in South Africa, Cape Town: Office of the President. Government of Swaziland (1999), National Development Strategy, Mbabane: Government of Swaziland. Government of Uganda (1994), Management of Change: Context, Vision, Objectives, Strategy and Plan, Kampala: Government of Uganda. Grace, J. (1984), War on Waste, New York: Macmillan.

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Green, D. (2000), ‘Dogmatists in dark suits’, New Internationalist, No. 320, January, 11-12. Grindle, M. (1997), ‘Divergent cultures? When public organizations perform well in developing countries’, World Development, 25, 481-95. Groszyk, W. (1996), ‘Implementation of the Government Performance and Results Act of 1993’, in OECD, Performance Management in Government: Contemporary Illustrations, Public Management Occasional Paper No. 9, Paris: OECD, pp. 71-86. Harrison-Rockey, S. (1999), ‘What stage has been reached in the transformation of the stuctures and systems of government? The case of South Africa’, International Review of Administrative Sciences, 65, 169-82. Heclo, H. and A. Wildavsky (1981), The Private Government of Public Policy: Community and Policy Inside British Politics, London: Macmillan. Hennessy, P. (1989), Whitehall, London: Fontana. Hood, C. (1991), ‘A public management for all seasons?’, Public Administration, 69, 3-19. Hood, C. (1998), The Art of the State: Culture, Rhetoric and Public Management, Oxford: Oxford University Press. Hutton, W. (1995), The State We’re In, London: Jonathan Cape. Irwin, T. (1996), ‘An analysis of New Zealand’s new system of public sector management’, in OECD, Performance Management in Government: Contemporary Illustrations, Public Management Occasional Paper No. 9, Paris: OECD, pp. 7-32. Johnson, G. and K. Scholes (1993), Exploring Corporate Strategy, London: PrenticeHall. Jones, David (1974), ‘The tribune’s visitation’, in David Jones, The Sleeping Lord and Other Fragments, London: Faber and Faber, pp. 42-58. Kamukwamba, M. (1999), Review of Manpower Reduction in Tanzania Zambia Railway Authority (1980-96), Manchester: Institute for Development Policy and Management, M.Sc. dissertation. Kingdom, J. (1991), Government and Politics in Britain: An Introduction, Cambridge: Polity. Langseth, P. (1995), ‘Service delivery survey: a diagnostic tool’, in P. Langse, S. Nogxina, D. Prinsloo and R. Sullivan (eds), Civil Service Reform in Anglophone Africa, Washington, DC: Economic Development Institute, pp. 239-64. Langseth, P. and J. Pope (1999), ‘Building integrity to fight corruption: learning by doing’, Washington, DC: World Bank, EDI Working Paper. Larbi, G. (1998), Implementing New Public Management Reforms in Ghana: Institutional Constraints and Capacity Issues: Cases from Public Health and Water Services, University of Birmingham: doctoral dissertation. Lawrence, P. and J. Lorsch (1967), Organization and Environment, Boston, MA: Harvard University Press. Leonard, D. (1988), ‘The secrets of African managerial success’, IDS Bulletin, 19 (4), 35-41. Levine, C. (1985), ‘Introduction’, in C. Levine (ed.), The Unfinished Agenda for Civil Service Reform: Implications of the Grace Commission Report, Washington, DC: Brookings Institution, pp. 1-14. Lienert, I. and J. Modi (1997), A Decade of Civil Service Reform in sub-Saharan Africa, Working Paper, Washington, DC: International Monetary Fund. Lindauer, D. and B. Nunberg (eds) (1994), Rehabilitating Government: Pay and Employment Reform in Africa, Washington, DC: World Bank.

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Index Abdala, M. 163, 168 Abed, G. 188, 233 Ablo, E. 76 accountability 52, 57-8, 75-7, 94, 197, 198 activity model 4 Adam, P. 163, 167, 171 Adams, C. 155 Adler, N. 181 administrative reform 56 advocacy 142-3 Africa health reforms 48-9 national revenue authorities 47-8 non-governmental organizations 137 agency problem 158 agents of change 214 Ambrose, W. 165 Andersen, K.V. 206 Angola 119, 141 Anthony, P. 180 Argentina 15 telecommunications sector 161-70 Asian Development Bank 119 Aucoin, P. 44, 180, 239 Auden, W.H. 221 Aufrecht, S. 36, 118 Australia, information technology 200 autonomous public bodies Tanzania 83-4 Uganda 83-4 Avgerou, C. 206, 210 Baldacchino, G. 191 Bale, M. 233 Ballantine, J. 197 Bangladesh local government 59 non-governmental organizations 137 Bangladesh Rural Advancement Committee (BRAC) 138, 140

Bangura, Y. 224, 233 Batley, R. 119, 235, 236, 237, 244, 245 Beardwell, I. 176, 190 Bebbington, A. 134, 136, 141 Beer, M. 176 Beetham, D. 56 Bellamy, C. 200 Benjamin, P. 203, 205 Benjamin, R.I. 214 Bennell, P. 153, 154, 155, 225 Bennett, A. 37, 39, 116, 117, 120, 121 Bennett, C. 27 Beschel, R.P. Jr 52 Bhatnagar, S.C. 202, 203, 204, 205, 211 Bishop, M.R. 24 Bissessar, A.M. 52 Bjorn-Andersen, N. 203 Blackburn 132 Blaine, M.J. 203 Blundell, B. 23, 30 Blunt, P. 191 Bolivia 47, 60 Emergency Social Fund 48, 140 performance contracts 117 Bond, R. 242 Borins, S. 44, 120, 236 Boston, J. 34, 110, 111, 112, 242 Boubakri, N. 153 Bouckaert, G. 111 Boyacigiller, N. 181 Boyett, I. 33 Boyne, G.A. 27, 28 Bradburd, R. 160 Bratton, M. 133, 144 Brazil 103, 116, 144 Ceará health programme 61, 62, 63, 121, 226 Brereton, M. 37 Brewster, C. 190 ‘Bringing the State Closer to the People’, World Bank Report 13 254

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Index Broadbent, I. 112 Broadbent, J. 37 Brown, D. 133, 180 Brown, L. 47 Bucek, J. 96 Budhwar, P.S. 191 Bun, S.L. 36, 118 ‘bureaucratic capital’ 190 bureaucratic model of public administration 3-4 critique 5-6 Burki, S.J. 70 Burnell, P. 6 Burns, A. 201 Burns, J. 228 business partnerships for development (BPDs) 147 Butler, D.E. 92 Butler, R. 204 Cabinet Office 16, 25, 26, 28, 29, 30, 31, 32, 33, 34, 242 Caiden, G.E. 56 Cain, P. 198 Cameron, K. 241 Cameroon, privatization 245 Campbell, A. 97 Canada 239 reform 38 capacity 120-21, 227, 230, 233, 236-7 capacity-building 53-4, 77-9, 102, 187 CAPAM (Commonwealth Association of Public Administration and Management) 39, 225 Caplan, L. 228 CARE 140, 149 Cashin, J. 72 centralization 58, 62 Chambers, R. 132, 238 Chan, H. 118 Chand, S. 48, 50, 60 Channel Tunnel 34 Charlton, R. 48 Chaudhry, S. 119 Checkland, P.B. 212 Cheema, G.S. 102 Child, J. 247 Chile 15 education 46 Chimphamba, B.F.S. 48

255

China 10, 36, 118 Chisari, O. 153 Christiansen, P.F. 58 Christopolos, I. 119, 141 Cielecka, A. 97 citizen ‘voice’ 75-7 Citizen’s Charter schemes 108, 109, 115 United Kingdom 30-31, 76, 112 civic organizations 14 direct service delivery 139 civic realm 129-31 demand-side role 142-6 and development 131-3 and service delivery 136-48 supply-side role 137-42 civil service 52-3, 232 politicization 53-4 reform 37, 44, 49-50 Tanzania 71-88 Uganda 71-88 restructuring New Zealand 28, 29 United Kingdom 28-30 CLAD (Latin American Centre for Development Administration) 53, 58, 59 Clark, D. 35 Clark, J. 136, 143 Clark, T. 223, 228 Clarke, J. 11, 72, 117, 221, 237, 241, 246 Clay, E. 228, 247 Clegg, S. 3 Cockroft, A. 74 Cohen, J.M. 49, 54 Colclough, C. 49, 119 Collins, P. 228 commitment 187, 191-2 Common, R. 9, 34, 46, 47, 109, 117, 239 Commonwealth Secretariat 27, 31, 33, 115, 116, 119, 242 guide to good practices 39 Communism 12, 95 Competing for Quality (1991 White Paper) 25 competition 110, 112, 236 compulsory competitive tendering 27, 93, 94 consumer surveys 112, 116

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contingency approach, in less developed countries 189-91 contingency model 204 contracting 37, 117, 182-4 Tanzania 86 United Kingdom 26-8 contracting-out 116, 120, 140 Conyers, D. 102 Cook, P. 14, 15, 24, 37, 47, 153, 154, 155, 156, 157, 162, 176, 232, 233 Cooke, B. 115 Cooney, M.J. 198 Coopers and Lybrand 176 Copestake, J.G. 134 Corby, S. 223 corporatization 47, 49-50 of the health sector 48 corruption 50, 54-5, 59, 186, 230, 237 in less developed countries 190 Cosset, J. 153 Côte d’Ivoire 228 Coulson, A. 27, 96, 97 Crawford, G. 6 Crook, R. 228 Crook, R.C. 55, 59, 102 Cunningham, N. 197 Currie, G. 33 Cutler, T. 27, 32, 108, 222, 227 Da Silva, M. 116 Dale, T. 233 Davey, K. 97 Davies, A. 201 Davis, D. 141 Davis, J. 234 De Guzman, R. 35 De Merode, L. 50, 62, 63 De Silva, K. 231 Deacon, B. 145 Deakin, N. 27 debt repayments 119 decentralization 55-6, 197, 198 defined 101 in developing economies 100-103 reforms 13, 90 deconcentration, defined 101 delegation, defined 101 Desai, V. 236 DETR 94

developed countries, and new public management reforms 8 developing countries 7, 36 decentralization 100-103 domestic influences 120-21 international influences 118 and new public management 9, 45-6, 56-60, 122-3 privatization 153-73 reform 12-13 regulation 153-73, 156-7 service delivery 115-22 development, and the civic realm 131-3 development management 20 developmental states 4 devolution 117, 230, 236-7 defined 101 DFID (Department of International Development) 6, 7, 73, 87, 123, 140, 149 Dhillon, G. 206 direct service delivery, by civic organizations 139 direct service organizations 93 divestment Tanzania 86 Uganda 86 Dodd, W. 204 Dodoo, R. 47, 52, 115 Doig, A. 50, 230 Dolowitz, D.P. 9, 35 donors 116, 119-20, 141, 186-7, 188, 224-5, 244, 247 Dunleavy, P. 20, 22, 34, 133, 179, 231 Dunphy, D. 190 Dunsire, A. 107 Eastern Europe 12, 95-100 Eberhart, J. 228 economic decentralization, defined 101 The Economist 118, 121 Ecuador, information systems 205 Edwards, D. 103 Edwards, M. 129, 133, 135, 137, 142, 148, 149 efficiency reforms, United Kingdom 25-6 Egyptian social fund 140-41 Ekeh, P. 228 Elam, J.J. 204

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Index Elcock, H. 12, 13, 37, 55, 91, 92, 93, 96, 98, 99, 112, 206, 220, 241, 242, 244 Eldridge, D. 116 electricity sector 15 regulation 157 employment 174-5 Ersson, S. 118 Ethiopia, non-governmental organizations 133 European Charter on Local Self-Government 97 Evans, P. 133 executive agencies 47 Tanzania 84-5 Uganda 84-5 United Kingdom 28, 29, 30 family support systems 183 Farrington, J. 134, 136 Ferguson, J. 221, 228 Ferlie, E. 27 Figes, O. 222 Fombrun, C. 176, 178 Forgionne, G. 197 Fortune, J. 204 Fowler, A. 130, 131, 137, 143, 146 Fox, A. 184 France 10, 111 reforms 35 Frances, A. 166 Frant, H. 109 Freedom of Information legislation 32 Freeman, R. 222 Gaebler, T. 4, 61, 79, 109, 180, 223, 225, 238, 245 Gains, F. 30 Galal, A. 153, 171 Gambia 141 Germany 110 Ghana 61, 62, 116, 198, 225, 237 executive agencies 47 Ministry of Health 57 National Revenue Service 48, 50, 60, 63 performance incentives 58 performance indicators 115 recruitment 189 revenue authorities 48

257

Gibson, J. 97 Giddens, A. 225 Gilbert, R. 153 globalization 1, 20 Goddard, T.D. 208 Goetz, A.M. 78, 79 Goldsmith, A.A. 54 Goldsworthy, D. 112 good governance 6, 9, 14 Goodhand, J. 142 Gosling, P. 198 government, definition of terms 2-3 government failure 5 Grace Commission 232 grass-roots organizations 102, 103, 129 Gray, A. 24, 25, 32, 34, 37 Gray, C. 157 Gray, J. 1-2 Gray, W. 22 Green, D. 108, 234 Green, S. 38 Greenaway, J. 50 Greer, P. 28, 110, 112 Griffith, J.A.G. 91 Grindle, M.S. 60, 119, 226 Groszyk, W. 241, 242 Guatemala 140 Guest, D. 176 Guinea 15 Guyomarch, A. 35 Gyford, J. 91 Hall, A. 144 Halligan, J. 34, 37 Haque, M.S. 211 Harrigan, J. 52 Harrison, S. 208 Harrison-Rockey, S. 226 Harteneck, G. 166 Havlovic, S.J. 191 Heald, D. 37 health reform 233 health sector 116 corporatization 48 Heclo, H. 221 Heeks, R.B. 16, 180, 201, 202, 204, 205, 206, 207, 233 Hendry, C. 176 Hennessy, P. 57, 228 Herzberg, F. 185

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Herzberg’s two-factor theory 185 Hickson, D. 222, 227 Hill, A. 163, 168 Hill, S. 111 The Hindu 197 Hirschheim, R. 204 Hirschmann, D. 49, 50 Hirst, P. 1 Hobsbawm, E. 1, 107 Holden, L. 190 Holland 132 Holmes, M. 34, 37, 52, 57 Homes, A. 204 Hong Kong, anti-corruption commission 55 Hood, C. 20, 22, 34, 44, 107, 133, 177, 179, 200, 222, 225 Hooper, D. 77 Horton, F.W. 204 Hughes, O.E. 3, 4, 44, 176, 181 Hulme, D. 14, 47, 54, 55, 103, 116, 129, 132, 135, 137, 138, 142, 144, 186, 227, 230, 236, 242 human resource management (HRM) 15-16, 174, 175-9 critiques 180-81 and new public management compared 179 and public sector organizations in less developed countries 181-7 Hung, L. 224 Hurd, Douglas 108 Hutton, W. 222 hybridization 214-15 ‘idolize’ approach to information technology and reform 200, 203 IDS 39 IMF 154, 188, 232, 233, 244 Enhanced Structural Adjustment Facility 86 Imrie, R. 236 incentive regulation 159 incrementalism 245 India 133 information systems failure 202 non-governmental organizations 144 indigenous initiatives 121 indigenous models 224-6

information system-information technology-reform relationship 199 information systems failure 203-4, 212 India 202 and public sector reform 196-201 reform information systems 204-6 information technology (IT) 16-17, 197-9 and less developed countries 211 and new public management 200 as a reform solution 200-201 Ingraham, P.W. 44 integrity 228, 230 international influences, on developing countries 118 internationalization, of new public management 10-18 Ireland 112 Department of Social Welfare 198 Irwin, T. 240, 242 Isaac-Henry, K. 196, 200, 208 Islam, N. 117 ITPOSMO model 206-10, 211, 212, 214 dimensions of change 213 Jaeger, A.M. 190 Jain, H.C. 191 Jain, R. 202 Jamaica executive agencies 47 public spending 52 James, G. 203 Jamieson, W. 24 Jayasuriya, R. 212 Jenkins, R. 78, 79 Jenkins, W. 22, 24, 25, 32, 34, 37 John, P. 92 Johnson, G. 239 Jones, David 246 Jones, L. 159 Jones, M. 191 Jordan, G. 30, 37, 92, 108, 116 Jorgensen, J.J. 186 Joshi, S. 144 Jun, J. 112 Kahn, E. 153 Kamoche, K. 191 Kamukwamba, M. 234

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Index Kane, M. 27 Kanungo, R.N. 190 Karlsson, M. 200 Kattermann, D. 116, 117 Kay, J.A. 24 Keenoy, T. 180 Kenya 48 civil service 54 non-governmental organizationgovernment relationships 134 personnel management 188 size and remuneration of government workforce 72 Khan, J. 191 Kiggundu, M.N. 56 Kikeri, S. 155 Killick, C. 155 Kingdom, J. 221 Kirkpatrick, C. 24, 47, 153, 154, 155, 156, 162 Kirkpatrick, I. 27, 113 Klein, H.K. 204 Klingner, D.E. 52 Klitgaard, R. 48, 49, 51, 53, 54, 63 Koike, O. 112 Kolankiewicz, G. 96, 97 König, K. 114 Korten, D. 141 La Porta, R. 158 labour markets 184-5 Lacey, R. 116 Lam, T. 118 Lane, J. 118 Langseth, P. 46, 51, 55, 71, 116, 120, 229, 230 Lansley, S. 91 Larbi, G. 48, 62, 115, 116, 189, 225, 230, 237 Latham, G. 110 Latin America 115, 133 non-governmental organizations 139 public sector pay levels 53 regulation 153 social funds 47, 48 Laudon, J.P. 197 Laudon, K.C. 197 Laughlin, R. 37, 112 Lawrence, P.R. 204, 222, 227 Lawton, A. 38

259

Lees, S. 190 Leftwich, A. 6 Legge, K. 179, 180, 181 Leonard, D.K. 133, 226 Lesotho 221 less developed countries (LDCs) 175 applicability of human resource management to public sector organizations 181-7 contingency approach 189-91 information technology 211 personnel management 188-9 see also developing countries Lesueur, J.-Y. 191 Letowska, Ewa 98 Levacic, R. 197 Levine, C. 114 Lewis, D. 204 Lewis, P.G. 96, 97 Lienert, I. 233 Lin, C.Y.Y. 191 Lind, P. 211 Lindauer, D. 120, 232 Lindblom, C. 222, 245 Lindquist, A. 38 line management 57, 177, 189, 191 Livingstone, I. 48 Livingstone, Ken 92 local government reform 37 Locke, E. 110 Lorsch, J.W. 204, 222, 227 Lovell, R. 198 low wages 53, 185 Lucio, M. 113 McCourt, W. 9, 13, 17, 47, 57, 103, 108, 115, 116, 117, 119, 120, 186, 188, 189, 220, 222, 225, 230, 231, 232, 234, 236, 237, 239, 241, 242, 245 Macdonald, M. 123 Macias-Chapula, C.A. 207 Mackintosh, M. 114 McMahon, B. 166 Maheshwari, S. 228 Mainwaring, R. 114 Mairal, H. 163, 169 Major, John 91 Makumbe, J.M. 51, 189 Malawi 48

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Malaysia 9, 15, 115, 116, 117, 118, 234 land resource management 198 performance indicators 239 staff appraisal systems 51 strategic management 241, 242 total quality management 46, 223 Malikova, L. 96 Mallon, R. 117 managerialism 222-3, 238 Manning, N. 20 Manor, J. 55, 59, 102 March, J. 245 market mechanisms 182-4 Markus, M.L. 214 Marsden, D. 224 Marsh, D. 9, 35, 221 Martin, S. 156 Martinez Lucio, M. 27 Mastronardi, P. 38 Matheson, A. 29, 34, 116, 120, 240, 241 Mauritius: Managing Success 7 Mauritius, strategic integration 242 Mawhood, P. 101 Max, J. 231 Mazower, M. 114 Megginson, W.L. 153 Mendonca, N. 190 Metcalfe, L. 233 Mexico, National Health Information System 207-8 Meyer, J. 111 Meyers, R. 116 Mills, A. 48 Mills, S. 116, 117, 121 Milner, E. 200 Minogue, M. 5, 6, 10, 12, 13, 34, 44, 45, 55, 139, 155, 177, 190, 206, 220, 224, 229, 236, 237, 239, 244 Mintzberg, H. 179, 245 Modernising Government (White Paper) 33 Modi, J. 233 Moene, K.O. 48, 50, 60 Mol, N. 113 Mollel, R.H. 47 Moore, M. 6 Mosley, P. 154 Mosse, D. 133 Moussa, A. 203 Mugaju, J. 71

Mundy, D. 16, 180, 233 Munishi, G. 183 Murdock, A. 23, 30 Myers, S. 158 National Performance Review 108 Nauriyal, B. 171 Nepal 237 devolution 117, 222 NGO coordination 135-6 recruitment 189 Netherlands 113 neutrality 228-9, 231, 234, 237-8 New Economics Foundation 149 new public management (NPM) 1-2, 6, 20, 44, 133, 174, 175-9, 190, 227 agenda for service delivery 107-15 critiques 180-81 and developing countries 9, 56-60 and human resource management compared 179 internationalization 10-18 lack of universality 56 model 235-9, 243 official literature 6-7 as a reform model 6-9 take up 46-9 United Kingdom 21-34, 36 new public management reform 44, 50-52 developed countries 8 developing countries 45-6 motives 49-50 ‘New Right’ agenda 17, 91, 99, 174, 175, 176, 180, 221, 232 New Zealand 10, 17, 34, 112, 157, 227, 232 civil service restructuring 28, 29 contracting 27 new public management 182, 237, 238 privatization 23 reform 37-8 service provision 110 strategic management 239, 240, 242 Newbery, D. 157 Newman, J. 112, 221, 223 Nickson, A. 233, 245 Niskanen, W. 231 NITC (National Information Technology Council) 200

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Index non-governmental organizations (NGOs) 14, 102, 103, 104, 129, 131, 132, 135, 136, 137, 139, 140-42, 143-5, 147 see also civic realm non-new public management approaches, service delivery 113-14, 115-17 non-new public management reforms 52-6 Northcote-Trevelyan reforms 57 Norton, P. 98 Nunberg, B. 36, 39, 46, 51, 57, 120, 147, 189, 232, 233, 235, 237, 241 Ó Tuathail, G. 224 The Observer 113 O’Conghaile, W. 112 Odedra, M. 203 Odedra-Straub, M. 203 OECD 6, 7, 34, 38, 109, 110, 114, 119, 190, 236 public service delivery reforms 108-9 OECD countries privatization 23 service delivery 115 Office for Public Service 25 O’Flaherty, B. 198 Ojo, S.O. 211 Olivier de Sardan, J.P. 59 Olsen, J. 245 Olson, D.M. 98 organizations, rational and political models 206-7 Osborne, D. 4, 61, 79, 108, 109, 180, 198, 223, 225, 238, 245 O’Shea, R. 112 O’Toole, B.J. 30, 37 OXFAM 145, 149 Oyomno, G.Z. 203 Pakistan 48 Pallot, J. 179, 180, 227, 233, 239, 240, 242 Paré, G. 204 Parker, D. 37, 156, 159 Parkinson, M. 91 Parry, T.R. 46 Parry-Williams, J. 144 partnerships 33-4, 146, 147

261

Paul, S. 116, 120 Peltzman, S. 160 performance appraisal 176 auditing 6 incentives 79-83 indicators 109-10, 236 management 51, 77-9 United Kingdom 32-3 performance improvement fund (PIF) 80 performance improvement model (PIM), Tanzania 80-82 Perry, G.E. 70 personnel management, in less developed countries 188-9 Peters, T. 177, 245 Petrazinni, B. 162, 168, 169, 170 Pettigrew, A. 176 Pfeffer, J. 180 Philippines, information technology 200, 211-12 Pinheiro, A. 156 Pisciotta, A.A. 164, 166 Plane, P. 191 Plastrik, P. 198 Podemski, K. 98 Poland 95-8, 99 ‘policy transfer’ 35 Polidano, C. 6, 10, 11, 14, 30, 37, 50, 52, 55, 58, 144, 182, 186, 220, 222, 230, 236, 237 political decentralization 55-6 politicization 53 civil service 53-4 poll tax 92 Pollitt, C. 32, 108, 111, 180, 208, 222, 223, 239, 240 Pope, J. 50, 55, 59, 230 POST (Parliamentary Office of Science and Technology) 196 Postman, N. 201 Poulymenakou, A. 204 Prasnikar, J. 225 price-cap regulation 160-61 prior options review, United Kingdom 25-6 Private Finance Initiative, United Kingdom 34 private sector 208-10, 221, 222, 223

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private sector involvement Tanzania 86-7 Uganda 86-7 privatization 14-15, 37, 47, 116, 176, 232, 234 developing countries 153-73 OECD countries 23 and regulation, theoretical aspects 157-61 United Kingdom 22-5 professional ‘self-interest’ 180-81 promotion, and performance 51 public accountability 37 public administration bureaucratic model 3-4 critique 5-6 reforms 20 public administration model 20, 227, 229-31 public management, contingency approach 244-7 public management models 226-7, 242-3 public management reforms 6 public sector organizations, applicability of human resource management 181-7 public sector reform and information systems 196-201 and information technology-based systems 201-6 public service 110-12 delivery reforms, OECD 108-9 ethics 6 improving the quality 30-32 new public management agenda for delivery 107-15 provision 14 see also service delivery Pugh, D. 222, 227 Putnam, R. 132 quality circles 116 quality initiatives 111 Queisser, M. 115 Ragan, M. 199 Rama Rao, T.P. 202 Ramamurti, R. 47, 164, 165 Raman, K.S. 198

Ramgutty-Wong, A. 242 Ranerup, A. 198 Rapacki 39 rate (revenue) support grant (RSG) 91 rate-capping 91-2 Reagan, Ronald 107 reform information systems 204-6 reform solution, information technology as 200-201 Reforma, M. 35 reform(s) 188 France 35 non-new public management 52-6 in public administration 20 regulation, developing countries 153-73 regulatory performance, assessing 160-61 Reichard, C. 110 Reid, G.J. 63 Reinikka, R. 76 responsive service 110-12 retrenchment 47, 186, 234 revolution 4 Rhodes, R. 23, 221 Riback, C. 208 Richards, S. 233 Riddell, R. 141 Robinson, D. 146, 147 Robinson, M. 48, 103, 129, 131, 133, 137, 139, 140, 146, 147 Roche, E.M. 203 Rondinelli, D. 101, 102, 224, 227 Ross, D. 160 Roth, G. 115 Rouban, L. 35 Rowan, B. 111 Rugumanu, S. 71 Russell, S. 48, 233, 245 Rwanda 48 Sader, F. 156 Saint, W. 225 Salamon, L. 129 Salazar, A. 205 Sanviti, G. 98 Sappington, D. 157 Sarji, A. 115, 116, 241 Sauer, C. 204 Saunders, D.M. 190 Save the Children Fund (SCF) 144, 149

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Index Schacter, M. 54 Schaffer, B. 228, 247 Schedler, K. 38 Schiavo-Campo, S. 45 Schick, A. 11, 34, 37, 38, 46, 57, 59, 116, 120, 182, 190, 233 Schneider, B. 156 Scholes, J. 212, 213 Scholes, K. 239 Schware, R. 203 scientific management 4, 222 Scott, G. 63 Sekhar, S. 116 Sen, G. 238 service provision 30 quality 111 service delivery 227 and the civic realm 136-48 developing countries 115-22 non-new public management approaches 113-14, 115-17 OECD countries 115 service delivery surveys, World Bank 117 Shand, D. 34, 37 Shaoul, J. 24 Shelley, I. 99-100 Shrestha, N. 136 Silone, Ignazio 114 Singapore 242 anti-corruption commission 55 executive agencies 47 information technology 200 Singh, A. 202 Sisson, K. 176 Skinner, Q. 3 Slater, D. 101, 102 Smith, B.C. 55, 101 Snape, S. 93 SOAS (School of Oriental and African Studies) 5 social funds, Latin America 47, 48 social psychology 4 socialist planning model 224 soft systems methodology 212 Sola, N. 231 South Africa 120-21, 142, 220, 224, 226, 234 employment reform 241

263

information systems 205 information technology 203 personnel management 189 South Korea, information technology 200 Sparrow, P.R. 191 Sri Lanka 119, 131, 140, 234, 245 devolution 117 reform 188 Srinivas, M. 118 Stace, D. 190 staff appraisal systems 51 stages of development thesis 57, 58 stakeholder concept 222 Standard Spending Assessments (SSAs) 91 state intervention 4 role and powers 3 state-civic organization relationships 133-6 Stern, P. 153 Stevens, C. 101 Stevens, M. 235 Stewart, J. 32, 37 Stewart, J.D. 94 Stoker, G. 37 Storey, J. 177, 180, 190 strategic management 239-42 structural adjustment programmes 186-7 subsidiarity 110 Sunday Times 115 Swaziland 241 Sweden, accountability 198 Swedish International Development Agency (SIDA) 140 Tanzania 11, 12, 48, 115, 224, 246 accountability 75-7 civil service reforms 71-5 divestment 86 executive agencies 47, 84-5 gross pay levels 82 health sector reforms 87 performance improvement model (PIM) 80-82 performance management 77-9 personnel management 188 private sector involvement 86-7 recruitment 189

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Internationalization of public management

retrenchment and government employment 73 Roads Agency 85 size and remuneration of government workforce 72 strategic management 241, 242 Tanzania Revenue Authority 50, 83 Taylor, H. 15, 16, 185, 188 Taylor, J.A. 200 Teka, T. 133 telecommunications sector 15, 153, 156 Argentina 161-70 Venezuela 161-70 Temple, M. 37 Tendler, J. 61, 103, 121, 133, 226, 244 Teskey, G. 77 Thailand 115 Thatcher, Margaret 91, 235-6 Thomas, C.S. 50, 62, 63 Thomas, P.G. 44 Thompson, F. 236 Thompson, G. 1 Tong, C.H. 36 Tonge, J. 92 total quality management (TQM) 111, 112, 116, 223 transitional economies 7 Transparency International 50 Trinidad and Tobago 116 Trosa, S. 30, 111 Tsao, K. 118 Tuathail, G. 224 Tung, R.L. 191 Turner, M. 47, 54, 132, 138, 227 Turton, G. 108 Tyson, S. 190 Udy, S.H. 183 Uganda 11, 46, 47, 48, 60, 115 accountability 75-7 ‘Child Law’ 144 civil service recruitment 52 civil service reform 71-88, 246-7 consultative policy and public services 77 decentralized government 73 delegating budgets 79 divestment 86 enhanced performance reporting 79 executive agencies 84-5

health, service delivery 74 performance management 77-9 performance monitoring 82-3 private sector involvement 86-7 results-oriented management 51, 78 size and remuneration of government workforce 72 staffing reduction/salary increases 72 strategic management 241, 242 Uganda Land Alliance 143 Uganda Management Institute (UMI) 11, 85 Uganda Revenue Authority 48, 83 UNCTAD 155 UNDP (United Nations Development Programme) 6, 7, 119 United Kingdom 10, 12, 17, 118 Citizen’s Charter Programme 30-31, 76, 112 civil service reform 57 civil service restructuring 28-30 competition 113 contracting 26-8 efficiency reforms 25-6 government targets 240 growth rate comparisons 24 health care 197 information technology 200 information technology expenditure 203 local government 90-95 National Health Service 223, 238 new public management 21-34, 36 non-government organizations 145 patient information systems 210 performance management 32-3 political decentralization 55-6 prior options review 25-6 Private Finance Initiative 34 privatization 22-5 public expenditure as a percentage of GDP 23 service quality 114 social services departments 199 strategic management 241, 242 Treasury 221 Urban Regeneration initiative 34 United Nations 100, 115 United States management information systems 201

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Index patient information systems 210 Performance and Results Act (1993) 241 United States Agency for International Development (USAID) 140 Uphoff, N. 130, 146 Van Vught, F. 111 Varela, A.P. 52 Venezuela 15 telecommunications sector 161-70 Vietnam 224 Vuylsteke, C. 156 Waine, B. 27, 32, 108, 222, 227 Wallace, T. 142 Wallsten, S. 153 Walsh, K. 27, 32, 37, 112, 113, 117 Wangolo, A.M. 52 Warner, M. 191 Warner, N. 199 Warrington, E. 120 Washington model 17, 107, 119, 223, 224, 227, 231-5, 243 Waterman, R. 177, 245 Watson, T.J. 181, 182 Weber, M. 3 welfare 4, 5, 132 Wellenius, B. 153, 169 Westerheijden, D. 111 Westrup, C. 210 Wheeler, J.R. 54 White, G. 48, 103, 129, 131, 133, 137, 146 Whittington, R. 179 Wier, S. 56

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Wildavsky, A. 221 Wilkinson, A. 111 Willard, K. 134 Williamson, J. 227 Willocks, L. 203, 208 Wilson, J. 32 Wilson, W. 3 Wood, D. 11, 117, 237, 241, 246 Wood, G. 141 World Bank 6, 7, 9, 16, 20, 36, 39, 52, 73, 76, 86, 100, 102, 103, 119-20, 123, 129, 140, 146, 154, 155, 156, 157, 188, 203, 232, 233, 234, 240, 244-5 Adjustment in Africa 225-6 ‘Bringing the State Closer to the People’ 13, 102-3 From Plan to Market 9 service delivery surveys 117 World Bank Research Observer 233 World Development Report 7, 233 World Trade Organization (WTO) 145 Worthley, J. 118 Wuyts, M. 53 Yap, C.S. 198 Yoong-Gil, R. 200 Young, R. 155 Zambia corruption 54 public spending 52 Zhou, X. 36 Zimbabwe 51, 116, 189 performance appraisal 115 personnel management 188