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“New Public Management” (NPM) is a
slippery label. Generally, it is used to describe a management
culture that emphasizes the centrality of the citizen or customer,
as well as accountability for results. It also suggests
structural or organizational choices that promote decentralized
control through a wide variety of alternative service delivery
mechanisms, including quasi-markets with public and private service
providers competing for resources from policymakers and
donors. NPM does not claim that government should stop
performing certain tasks. Although the New Public Management
often is associated with this policy perspective, NPM is not
about whether tasks should be undertaken or not. It is about
getting things done better.
NPM was conceived as a means to improve
efficiency and responsiveness to political principals. Its
origins were in Parliamentary democracies with curiously strong
executive powers, centralized governments, and little administrative
law. In this archetypal setting, NPM seems to embody the idea
of a cascading chain of contracts leading to a single (usually
Ministerial) principal who is interested in getting better results
within a sector portfolio over which he or she has significant and
relatively unchallenged authority.
One area of reform that illustrates many
of the NPM principles is the creation of semi-autonomous agencies
for service delivery (Aucoin 1996). The NPM argument for
agencies is that service providers should concentrate on efficient
production of quality services, with the distractions of evaluating
alternative policies removed. The discussion of the creation
of “executive agencies” in the UK and the similar developments in
Australia, Canada, France, Iceland, New Zealand, and Norway has been
replete with references to clear, well-defined targets that allow
providers to concentrate on their core business. Similarly,
policy-making is seen to be more focused, more rigorous, and
sometimes even more adventurous if it can be made without the
undertow of concern for the existing service providers. And
once purchasing has been detached from policy-making, there are
opportunities for creating contract-like arrangements to provide
performance incentives.
Has the NPM
won? [
TOP ]
In the late 1980s and early 1990s NPM was
presented as “a public management for all seasons” (Hood 1991) or
the “one-best way” (Gendron, Cooper, et. al. 1999). Many
managerial innovations are well packaged, but NPM was distinctive in
that it carried overtones of the end of history, suggesting that we
were lucky to be in public management at a time when the truth had
been discovered (Osborne and Gaebler 1992).
Undoubtedly, NPM has left its mark.
Yet measured against its self-proclaimed universal relevance, NPM
clearly has not become the predominant public management
paradigm in developing countries. Any review of public
management developments in any less developed country demonstrates
that hierarchical bureaucracies have not been replaced substantially
by chains of inter-linked contracts. Certainly, there have
been very significant reforms, particularly in the water and health
sectors, that have drawn from the NPM menu (Minogue, Polidano, et.
al. 1998; Batley 1999). But most government functions are
still performed by vertically integrated bureaucracies functioning
pretty much as Weber imagined.
Did it
work? [
TOP ]
While there is
relatively little NPM to be found in developing countries when
compared to the early predictions, there is even less evaluation of
NPM’s impact. The most comprehensive overview of NPM type
reforms is offered by Batley (1999). Summarizing the
conclusions from a 5-year review of “the changing role of government
in adjusting economies” in South Asia, Sub-Saharan Africa and South
America, Batley finds that the effect of NPM reforms has been mixed,
at best, with some improvements in efficiency and mixed effects on
equity. On the downside, he notes that the transaction costs
of radical reforms to autonomize service delivery agencies tend to
outweigh the efficiency gains of unbundling, and that reforms that
seek to separate purchasers from providers sometimes reduce
accountability.
Autonomization stories are common, but
success seems relatively rare. (See Difficulties
with Autonomous Agencies). Extensive creation of
arms-length agencies is reported by Mukherjee and Wilkins
(1999). However, severe problems have been reported in Central
and Eastern Europe, and in the former Soviet Union. The use of
autonomy as an attempt to escape inevitable closure rather than as a
device for improving efficiency is reported in Africa (Ives 1998).
Case studies of the autonomization of agricultural research
organizations in Africa, Asia and Latin America found “serious
problems in achieving the desired goals” (Nickel 1998).
Meanwhile, the successes of autonomization in the health sector seem
to be predicted more than found, although clearly there are some
successes (Castaneda 1997; Harding and Preker 1999). On
balance it is difficult to disagree with Polidano’s (1999)
conclusion that evidence of the impact of NPM is “perplexingly
equivocal.” Polidano emphasizes the importance of contingency
factors, arguing that few generalizations are possible concerning
NPM.
Why has the
impact in less developed nations been so modest?
[
TOP ]
There are three likely explanations for
why NPM has delivered less in developing countries than initially
claimed. First, as many providers have remained in the public
sector alongside their purchasers, and since there consequently is
little or no chance of judicial intervention to resolve disputes,
many NPM “contracts” are intrinsically flimsy and need the backing
of a watchful public with high expectations for government
performance.
Second, Old Public Disciplines,
including a public service ethos, remain vital in the NPM era.
As Schick (1998) notes, NPM discussions of performance contracts and
decentralized authority all assume that budgets (whether or not
expressed in performance terms) function properly to constrain line
departments while committing central agencies to the provision of a
certain level of funding. The NPM debate also has assumed that
staff – although prone to self-interest and often scheming to
capture the policy process – are largely constrained by some clear
standards of behavior. Moreover, it assumes that policy is
authoritative and that conflicting or inconsistent ministerial
decrees do not undermine the credibility of government policy.
NPM proponents have not seen the need to spell out how these good
things come about – but clearly have relied on them as foundations
for their reforms.
In many developing countries, the Old
Public Disciplines were absent as NPM-like reforms were
launched. This is not a “stages of development” argument in
which a long period of tighter control by central agencies is the
prescription. It is an empirical observation that predictable
resourcing, credible policy, and credible regulation of staff are
pre-requisites for effective contract-like arrangements.
Perhaps there are some quick ways to get those disciplines in place
– in which case leapfrogging is a sensible strategy. But
regardless of how they are introduced, these disciplines are
fundamental to any conception of performance; and few reforms can
gain traction without them (Manning, Mukherjee, et. al. 2000).
A third explanation for the apparent
under-performance of NPM in developing countries is simply that the
impact of these reforms has been marginal under any
circumstances. Even in New Zealand it is difficult to
demonstrate precisely what has improved as a result of the systemic
changes (Boston 2000). Similarly nuanced findings are reported
in the UK (Pollitt, Birchall, et. al. 1998). As a tool for
greater efficiency, NPM seems to generate, at best, about 3% savings
year-on-year in running costs (see Scott and Taylor 2000).
Given that running costs are small relative to program costs, this
is a distinctly modest savings. In many less developed
countries, running costs represent a larger share of budgetary
expenditures than in the OECD, and thus a 3% savings would be more
significant. The big financial gains, however, have been
connected with privatization and the associated New Public
Policy.
Recommended
Readings [
TOP ]
- Allen, R.
1999. “’New Public Management:’ Pitfalls for Central and Eastern
Europe.” Public Management Forum 1(4).
- Aucoin, P.
1996. “Operational Agencies: From Half-Hearted Efforts to
Full-Fledged Government Reform.” Choices: Institute for
Research on Public Policy, 2(4).
- Batley, R.
1999. The Role of Government in Adjusting Economies: An
Overview of Findings, International Development Department,
University of Birmingham, Birmingham, Alabama.
- Boston, J.
2000. “The Challenge of Evaluating Systemic Change: The Case of
Public Management Reform.” Paper prepared for the IPMN Conference
"Learning from Experiences with New Public Management," Macquarie
Graduate School of Management, March 4-6, Sydney.
- Castaneda, T.
1997. “Health Sector Reforms in Chile: Deconcentration of Hospital
Services and Decentralization of Primary Health Care.” Paper
prepared for HDD, World Bank.
- Dunleavy, P.,
and C. Hood 1994. “From Old Public Administration to New Public
Management.” Public Money and Management (July – Sept.):
9-16.
- Flynn, N. and
S. Pickard. 1996. Markets and Networks: Contracting in
Community Health Services. Buckingham, UK: Open University
Press.
- Gendron, Y.,
D. J. Cooper, et al. 1999. “In the Name of Accountability: State
Auditing in the Province of Alberta and New Public Management.”
Paper presented at the Critical Perspectives on Accounting
Conference, April 22-24, City University of New York, New
York.
- Harding, A.
and A. Preker, eds. 1999. Innovations in Health Service
Delivery: Corporatization in the Hospital Sector. New York:
Oxford University Press.
- Hood, C.
1991. “A Public Management for All Seasons?” Public
Administration, 69(Spring): 3-19.
- Ives, D.
1998. “Issues Concerning the Use of ‘Agencies’ in the Public
Sector.” Presentation at the seminar "Reform of Public
Administration,” February 4, Riga, Latvia.
- James, O. and
N. Manning. 1996. “Public Management Reform: A Global
Perspective.” Politics 16(3): 143-149.
- Kelly, J. and
J. Wanna. 2000. “Are Wildavsky's Guardians and Spenders Still
Relevant? NPM and Budgetary Politics.” In L. Jones, J. Guthrie and
P.Steane, eds., Learning from International Public Management
Reform. London: Elsevier-Oxford Press.
- Kernaghan, K.
2000. “The Post-Bureaucratic Organization and Public Service
Values.” International Review of Administrative Sciences
66(1): 91-104.
- Manning, N.,
R. Mukherjee, et al. 2000. “Public Officials and Their
Institutional Environment: An Analytical Model for Assessing the
Impact of Institutional Change on Public Sector Performance.”
Policy Research Working Paper No. 2427. World Bank, Washington,
D.C.
- Miller, P.
1996. “Dilemmas of Accountability: The Limits of Accounting”. In
P.Hirst and S.Khilnani, eds., Reinventing Democracy.
Oxford: Blackwell.
- Minogue, M.
1998. “Changing the State: Concepts and Practice in the Reform of
the Public Sector.” In C. Polidano, M. Minogue and D. Hulme, eds.,
Beyond the New Public Management: Changing Ideas and Practices
in Governance. Cheltenham, UK: Edward Elgar.
- Mukherjee, R.
and J. K. Wilkins. 1999. “Unbundling Bureaucracy through Agency
Creation.” Adjudicated paper presented at the IPAC National
Conference, August 30, New Brunswick, Canada.
- Nickel, J. L.
1998. “Institutional Reform of Public Research Organizations:
Autonomy, Legal Status and Governance.” Working paper prepared for
Rural Week, March, World Bank, Washington, D.C.
- Osborne, D.
and T. Gaebler. 1992. Reinventing Government. Reading, MA:
Addison-Wesley.
- Peters, B. G.
1998. “Governance without Government: Rethinking Public
Administration.” Journal of Public Administration Research and
Theory, 8(2): 223-243.
- Peters, B. G.
1996. The Future of Governing: Four Emerging Models.
Lawrence, KS: University of Kansas Press.
- Peters, B. G.
and D. Savoie. 1994. “Civil Service Reform: Misdiagnosing the
Patient.” Public Administration Review, 54(5).
- Polidano, C.
1999. “The New Public Management in Developing Countries.”
Institute for Development Policy and Management, University of
Manchester, Manchester
- Pollitt, C.
1993. Managerialism and the Public Services. Oxford:
Blackwell.
- Pollitt, C.,
J. Birchall, et al. 1998. Decentralising Public Service
Management. Hampshire, UK: MacMillan.
- Romzek, B. S.
2000. “Dynamics of Public Sector Accountability in an Era of
Reform.” International Review of Administrative Sciences,
66(1): 21-44.
- Savoie, D.
1995. “What Is Wrong with the New Public Management?” Canadian
Public Administration, 38(1): 112-121.
- Schick, A.
1996. The Spirit of Reform: Managing the New Zealand State
Sector in a Time of Change. Wellington, New Zealand: State
Services Commission.
- Schick, A.
(1998), 'Why Most Developing Countries Should Not Try New
Zealand's Reforms', World Bank Research Observer
(International), 13, pp. 23-31.
- Scott, Graham
and Taylor, Irene. 2000. "Autonomous Public Organisations In
Thailand". Victoria Link mimeo. Wellington, New Zealand.
This page was authored by Nick Manning of the World
Bank. It was submitted on 10/3/00.
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