New Public Management in Developing Countries - Essay Example

New Public Management In Developing Countries Public Sector Management Public sector management deals with the management of public sector agencies. The public sector is divided into organizational units which are central agencies and line departments. Public sector reform is a process of improving the way the public sector functions. Such reforms are necessary because of inherent inefficiencies in the public sector. Problem such as having fewer resources than what is required to handle governance, poor organization and poorly designed public services are issues addressed by public sector reforms. In the light of public sector management, the concept of new public reforms has come about, which deals with the implementation of reforms in the working of public sector agencies. Such reforms have been successfully implemented in many developed countries of the world such as the United Kingdom, The United States and Canada, to name a few. This paper researches into how successful the implementation of New Public Management has been in public sector agencies in developing countries. New Public Management – An Introduction New Public Management is a management philosophy, which aims to modernize the public sector. It was adopted by many governments during the 1980’s with the intention of enhancing the efficiency of the public sector and the control that the government exercised over public sector enterprises. In order to improve the public sector, the New Public Management philosophy seeks to apply the concept of organization to public sector enterprises and also emphasizes on following economic and leadership principles for improvement. It strives to make public sector enterprises more market-oriented to improve their cost-efficiency, without such changes affecting the other objectives and considerations of the organization. New Public Management sets an agreement between the public and the government on the one hand and the public and the public service received by them from the government on the other hand. It defines such changes for the public sector that it will turn them into organizations which give better performances. This is essential because both the public and the public sector officials are demanding for high-quality public services and better performance by public sector organizations. These notions are best described by the words of former Vice President Al Gore in which he says that people want a ‘Government that works better and costs less’ (Gore 1993). In order to set this in motion, public sector agencies must be given more managerial autonomy and provided with the necessary human and technological resources (i.e., training and information technology) so that they can achieve their intended goals. The major characteristics of New Public Management are stated as follows: To provide for high-quality service which citizens of the country want and greatly value. Reduce government controls on public sector agencies in order to bring managerial autonomy into them. Provide the necessary human and technological resources, so that managers in public sector agencies will have resources which put them on par with private sector agencies and using such resources they will be able to achieve their performance targets. Make the public sector open to competition and bring in transparency in the activities performed by public servants as opposed to the private sector or non-governmental organizations (Borins 1995: 5-11). The reason why the New Public Management philosophy has been adopted in many developed countries and is also being considered in many developing countries in the world is because of pressures such as public hostility to government, shrinking budgets, and the imperatives of globalization. New Public Management is a concept which has been announced by many practitioners and academics as a new paradigm (Osborne and Gaebler 1992; Borins 1994; Hughes 1998). The public are looking to better work out from public sector agencies and if public servants do not improve their performance, the politicians and the public are willing to introduce competition into the public sector, or they seek to transfer activities from the public sector agencies to the private sector or into NGOs, to get the performance they expect. The management techniques and practices of New public management (NPM is drawn from the private sector, and it emphasizes moving away from traditional public administration to taking up public management. It’s implementation involves decentralizing management within public services and in doing this it is necessary to create autonomous agencies and bring about a devolution of budgets and financial control. The notion of markets and competition has to be introduced into public sector, so as to bring in the options of sub-contracting in order to increasing the emphasis on performance, outputs and customer orientation. In the developed world, the ideas of New Public Management have been successfully implemented and have provided considerable benefits to the people of such countries. In the developing world, New Public Management is being implemented in a selected way. In the following part we critically evaluate it’s impact and how it has benefited the countries of the developing world or has it brought into such countries new problems, in addition to their existing ones. The impact and benefits of New Public management in developing countries New public management is a concept that’s being feature prominently in the vocabulary of civil service reform all around the world (Thomas 1996). Therefore, we can see it being implemented in many developing countries around the world. Before we understand how this can be done, we need to do a little background research in the scenario of developing countries and their interest in adopting NPM. In this context there are four questions to be posed. The first question is whether developing countries are fully committed about implementing New Public Management reforms. If they are completely interested in implementing new public management reforms then we come to our second question, which is are these New Public Management reforms being adopted because adopting it is part of the worldwide quest towards achieving greater efficiency and cost savings in public sector agencies or (see Minogue 1998), or are they seeking to implement it because of reasons specific to their situation. The next question is are developing countries really implementing public sector reforms or is it simply a philosophy that politicians are taking about. Fourth, are certain reforms simultaneously being undertaken in the developing countries, which run counter to the notions set under new public management reforms or indeed runs counter to its principles? The final question is can the elements specified in new public management reforms work in the developing world? In answering all these questions, we can understand to what extent, New Public Management reforms have made an impact in the workings of public sector agencies in developing countries. A look at the developing countries which have implemented NPM reforms New Public Management reforms are being adopted by many developing countries in an experimental way.. Taking Malaysia as an example, it was seen to experiment with total quality management (Common 1999), another example is the results-oriented management initiative in Uganda (Langseth 1995). In Chile the government set of a process which completely restructured the Chilean education system in it’s internal market lines, which is quite a radical change, something more than what the UK would have tried. (Parry 1997). Now, the question which arises is, do these cases represent a general trend towards public sector reforms in the developing world. Well, nto so because what is understood when we look into the levels of public sector reforms implementation in developing countries is that they have undertaken some elements of the NPM agenda, but have not adopted the entire package. The volume of privatizations is something that has not taken place significantly to make a substantial dent on the overall share of the public sector in the GDP of developing countries (Cook and Kirkpatrick 1997; Ramamurti 1999). Looking into which elements of the NPM agenda that developing countries have adopted, it is seen that most countries take to adopting the policies of privatization and downsizing as a form of introducing reforms in the public sector. In the early 1990’s Uganda, cut its civil services by more than half and this helped them to cut cost, but clearly this is not enough because civil services have carried out certain actions which governments can find difficult to plug them all in properly. (McCourt 1998b). Another element of the NPM agenda which developing countries seek to implement is corporatization or the process of converting civil service departments into free-standing agencies or enterprises, within the civil service or outside it. Corporatisation can take place as a means to achieve greater efficiency, cost savings or service quality improvements.This is an element of NPM reforms which is implemented in developed countries such as the UK and New Zealand and their style of reforms has been followed by developing countries such as Jamaica, Singapore, Ghana and Tanzania (Brown 1999; Common 1999; Dodoo 1997; Mollel 1998). Countries in Africa like Ghana, Kenya, Malawi, Tanzania, Uganda and Rwanda have merged their customs and income tax departments into corporatised national revenue authorities. This action has enabled them to increase wages, remove staff who have not contributd productively to the work place and hire better-qualified staff in their, provide staff with bonuses in order to motivate them to achieve revenue targets and to operate on a self-financing basis (Chand and Moene 1999). In countries Kenya, Uganda, Zambia, South Africa, Malawi and Zimbabwe, the health sectors are undergoing the process of corporatising (Larbi 1998; Mills 1997; Russell et al. 1999; Chimphamba 1999). During this process, hospital in these countries will be converted into free-standing bodies run by their own boards of directors, very much on the lines of how the health service in the UK operate. Results of the implementation of NPM reforms in developing countries Examining the results of implementing the NPM elements of corporatisation, what is seen are mixed results. In Ghana, the creation of the National Revenue Service enabled the government to remove corrupt staff and raise the pay of remaining to reduce the temptation to take bribes. Other anti-corruption mechanisms were adopted such as the introduction of a public complaints facility (Chand and Moene 1999; de Merode and Thomas 1994: 166). Likewise in Tanzania, the customs and tax officials lived a life of bribery and who lifestyle was way beyond what their government jobs paid them were not taken on by the new revenue authority. In Ghana revenue authorities have dramatically increased tax income as was seen in the revenue intakes which were raised from 4.5 to 17 per cent of GDP between 1983 and 1994 (Chand and Moene 1999: 1137). In Uganda, the Uganda Revenue Authority raised income tax by 17 per cent (Livingstone and Charlton 1998: 510). This is not really helpful for the people living here. In Ghana the State Enterprise Commission does not impose penalties owing to ‘close political and personal ties between … [public enterprise] managers and the government’ (Christiansen 1998: 286). Many African health systems are seriously in shortage of funds this is a primary cause for them being not able to achieve the much necessary organizational change. Even if the reforms do bring out the needed efficiency gains, these alone are not sufficient or powerful enough to bridge the wide gap between resources need and their availability. Looking towards Bolivia, if we examine the case of reforms brought about in the Emergency Social Fund, which is a body set up by the government inn order to alleviate the social impact of structural adjustment by funding employment-creating projects in local areas, what was seen was that it highly underachieved during its first year. With reforms being introduced, it was headed by a new person from the private sector and he was able to hire people at private sector pay levels. This helped the agency to achieve the performance levels which are founding private sector agencies. He provided his staff with incentives to motivate them to get out of the capital city and into the rural areas where most of the funds needed to be disbursed. After two and a half years the funds had been efficiently disbursed. The amount disbursed was nearly $200 million through the creation of about 2,500 projects and about 20,000 jobs were created per month. All these activities were performed at an administrative cost which was less than four per cent per dollar (Klitgaard 1991: 146–52; 1997a: 1967). Looking into the reason why so many developing countries are taking to corporatization what is found is that developing countries have been corporatising their government functions for a long time and this trend gained strength with global perspectives on reforming the public sector. Only problem is that they are not able to get into the reforms in full swing because the government structure in developing countries is such that it is not able to bridge the gap between public and private sector efficiencies. For example in the case of the gaps which exist between the public and the private sector, these gaps have been so wide after years of restraint and when this situation is coupled with an increasing rate of inflation, it becomes impossible to employ and retain qualified staff (Cohen 1995; Colclough 1997a; Klitgaard 1997b). In Asian and Latin American countries, the government has brought in reforms in the public sector by the introduction of new staff appraisal systems. This system, however, has not been allowed to function fully. It seem that though a lot of fanfare was involved in implementing the new staff appraisal systems in such developing countries, and through the managers of public sector agencies were instructed to appraise their staff carefully and impartially, their judgment in promoting and rewarding people has not been given due weight age and even in many cases, not allowed to happen at all, due to the level of corruption in these agencies. This is seen in Zimbabwe, where 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: 10). Similarily in Uganda, though the implementation of results-oriented management in public sector agencies was emphasized strongly, yet when the point came to its implementation, the concept simply disappeared from the agenda (see Langseth 1995: 373) In the implementation of public sector reforms in developing countries, a peculiar situation has arisen. Governments want to hold a high degree of centralization in the civil service and at the same time are trying to corporatism many public sector functions so as to escape from the constraints of that centralization. In Uganda, during the process of introducing public sector reforms, the government actually recentralized the recruitment of temporary and non-pension able staff because this area ‘had been open to wide abuse’ (Wangolo 1995: 150). In other developing countries, which have tried to introduce reforms, the government has made it necessary for departmental heads to get a proper clearance from the central government so that they can proceed with the process of creating new positions, and fill vacancies in the already approved complement. In countries such as Honduras, Panama and the Philippines, the government has sought to carry out public sector recruitment on a more professional level by establishing a strong central personnel bodies and warding off political intervention (Klingner 1996; Varela 1992). Reason for problems in the implementation of NPM reforms in developing countries One of the problems that public sector agencies in developing countries face in implementing reforms is that many of them suffer from severe capacity limitations. The result of this such limitations is that it leads to a drain of talent from the public sector, as skilled employee move away to foreign corporations, non-government organizations and even agencies that are supposed to be helping governments rebuild their capacity (Wuyts 1996). Cohen (1995) brings out a framework for capacity-building in developing countries. This framework addresses all the problems faced by such counties such as improvement of salaries, upgrading of training institutions and so on, but it is not possible to implement all of the ideas in the framework due to corruption existing in such countries. What Cohen brings out in his agenda clearly puts forth the extent of organizational problems faced by many developing countries. These include administrative structures, which are weakly institutionalized, thereby making the public sector prone to ‘penetration’ by party politics and corruption. Corruption is a problem which largely exists in developing countries of the world and it drastically reduces the efficiencies of the public sector agencies in these countries. Here, it is seen that all kinds of public transactions, major or minor, will be carried out only after the concerned government official has received payment in the form of bribes. One way of tackling corruption is to establish an anti-corruption commission. This commission should be invested with necessary powers so that they can receive and thoroughly investigate public complaints or allegations about corruption. If we take countries Hong Kong and Singapore, as example such commissions claim to have all but eradicated corruption over the years since their creation (Pope 1995). However, in many developing countries where efforts have been made to set up such anti-corruption commissions, a common allegation against them is that they are simply a smokescreen and have been put up by governments with no real intention of tackling corruption. If anti-corruption commissions have to work, then the prosecutor’s office and the courts must be staffed by people with integrity and efficiency. It is the lack of integrity and efficiency, which destroys the commission’s public credibility (Polidano and Hulme 1997). Looking towards the NPM element of decentralization and its implementation in developing countries, what is seen is that in many developing countries, decentralization means the devolution of political power to lower levels of government. In the context of the New Public Management philosophy, decentralisation means giving line managers in government departments and agencies greater managerial authority and responsibility .However, in order for decentrazation activities to be effective, it is necessary that the problem of low-capacity in public sector organization be removed, but what is happening in this part of the world is that local governments suffer from the same or worse capacity constraints as the central government. Capacity-building efforts are seen to be no more successful when implemented at the local level than when they are implemented at the national level (Crook and Manor 1998; Smith 1998). Thus, what can be understood from the initiatives involved in undertaking NPM reforms in developing countries is that though substantial reforms have been implemented, the reforms taken up have been selective in nature. It is not a dominant paradigm in the developing world and there have also been the implementation of certain reforms in these countries which are simply not related to the concept of new public management. This gives rise to the question as to whether the elements of new public management are really appropriate for developing countries to adopt. In order to answer this question, what we need to ignore is the output stage of public sector reforms which is its implementation (where most reforms currently fail), instead we should look at outcomes (which is the end results of successfully implemented changes). Many countries in the developing world, have not implemented an efficient information systems and this means that it is difficult to develop complex structures such as internal markets or sophisticated performance monitoring systems in these regions. Though there are enough rules and regulations required for efficient public sector agency functioning, there exist a sharp difference between formal and informal rules in the public sector governance in developing countries, and there is the predominance of the informal realm in their activities. Another issue is that where New Public Management calls for giving more power to local government authority, in developing countries it is seen that there is an implementation of central controls on local governments because there is a need to check on abuse of power by government officials. There are also success stories in the implementation of NPM reforms in developing countries, such as Ceará, which is a northeastern Brazilian state. This is a country which faced problems of inefficiency and clientelism in the public sector, but a drought which occurred in the mid-1980s, led the government to introduce a series of innovative poverty alleviation initiatives that brought about a turnaround in the activities of the public sector and gained the state international acclaim. This was the result of a judicious blend of old-fashioned centralization and NPM-style decentralization. Another program which the government of Ceará, implemented was one which sought to improve the health of the rural population and this program required that about 3000 health assistants be recruited to serve in localities throughout the state. This actually posed a problem, given the level of clientelism that existed in local authorities in the country, but the state government was strong on its standing to introduced reforms. It kept a tight central control over recruitment and recruited people who were highly efficient after making a through search for such people. This course of action enabled them to get efficient health teams, up and running The government laid down a set of rules for the staff they had recruited which were that they had to live in the locality they served, they had to visit each household once a month, and they must not canvass in local elections. Members of the public were invited to report those who broke these rules and so the public was given a chance to have their say in matters concerning the working of this public sector initiative. Since the central government was so committed to introducing reforms , the implementation turned out to be successful so much so that during a period of five years it brought about a dramatic turnaround in public health. There was a reduction in infant mortality by a third and vaccination coverage for diseases such as measles and polio came down from 25 to 90 per cent of the population (Tendler 1997: 21–2). Conclusion The implementation of public sector reforms in developing countries depends on the attitude of the government officials in these countries. The success of the NPM reforms in such countries depends on the character of the various public bodies involved in each reform initiative, whether they are dynamically reformist or of they are passive and moribund and the orientation of centre and line in the public sector agencies of these countries. If we take Ceará as an example, we see that line organizations or local authorities were bodies which were patronage-ridden mayoral fiefs, but the centre government standing was on bring about reforms in a serious manner and they set themselves out to be dynamic reformers by introducing radical change. The government’s vigor could be seen in the way it handled the recruitment of health assistants and in doing this it did not adopt the usual passive, procedure-bound pattern, even though it was a centralized exercise. Factors such as corruption or poor administrative capacity, affect the performance of governments in developing countries in a negative way, but the problem existing in local public sector agencies are also important determinants of the success or failure of individual reform initiatives. If developing countries have to successfully implement public sector reforms they should focus on establishing effective mechanisms of implementing central control over functions such as staffing or finance, because this is the precursor of any eventual delegation (Holmes 1992; Nunberg 1995). Steps should also be taken by government staff on a personal level to carry out their responsibilities as public servants in a manner on part with private sector staff so as to rule out the problems of corruption. In the view of fighting corruption ‘Transparency International’, which a non-government organization, states that governments should concentrate their anti-corruption efforts on important public sector areas such as revenue collection or law enforcement. In doing so they would be establishing public sector bodies, which are managed autonomously and these will turn into islands of integrity within government. The aim would be to gradually expand these islands to form an archipelago (Pope 1995). The fight against corruption and nepotism which are part of the factors going against full implementation of public reforms in developing countries must start from people within the organization. It is only when the staff of government agencies have sufficient integrity and efficacy that this problem can be rooted out in it’s entirely. An example of this is seen in the creation of the National Revenue Service in the African country of Ghana, which was done to remove corrupt staff members. Staf who were retained had their pay increased in order to prevent them from taking bribes and other anti-corruption mechanisms were also put into place such a public complaints facility, so that government officials were aware that their activities were being monitored. (Chand and Moene 1999; de Merode and Thomas 1994: 166) Governments in developing countries should focus on capacity building as a way to bring in experienced and quality staff into the public sector agencies. If this has to be done they should increase the pay-scale of these staff on par with the pay-scale of private sector staff and bonuses and appraisal should be provided based on targets achieved and performance of the staff. It is only when qualified staff are part of the public sector agencies that they will be less prone to corrupt politics and institutional weakness can be ruled out. Such reforms have been implemented successfully in countries Botswana and Mauritius (Goldsmith 1999). Steps should be take to provide the public sector agencies in developing countries with adequate technological resources so that they can efficiently so their work. In doing so, they will become on par with private sector agencies, which have such resources easily at their disposal. Equally important is the implementation of performance-oriented staff appraisal systems to appraise the work of the staff of public sector agencies and an example of this is seen in Malaysia, which implemented throughout their public sector agencies (Kaul 1996). If NPM reforms have to work in developing countries they must adopt the entire framework necessary for its full implementation. This is not seen immediately now, because, Northcote–Trevelyan state. Northcote–Trevelyan reforms were reform which were introduced in the UK, but there was a gap of about a hundred-year gap between the Northcote–Trevelyan reforms, which enabled the creation of a unified, centralized civil service in mid-19th century on, from where government agencies changed their perspective through the implementation new Public Management reforms. In time, their structure will change and they will be seen to implemented and adopt NPM reforms as much as the developed countries of the world. 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