The Changing Role of Government

Over the last two decades there has been emphasis, particularly in the English-speaking advanced countries, on reducing the role of government and on reforming public management by adopting aspects of private sector practice. The research programme on which this study is based was concerned with the fact that similar practices were being introduced in developing and transitional countries, often in association with economic adjustment. There has been considerable research on the difficult process of adjustment but little on the process and outcomes of public management reform for improved service delivery.

Chapter 1 traced the changing perspectives on the role of government in development. It was noted that crisis in the welfare and developmental states in the 1970s and 1980s called into question the post-war consensus on the active role of the state in the economy and led to the ascendancy of neo-liberal economic policies from the 1980s. It was not just the welfare state that was called into question, but also the traditional Weberian model of bureaucracy came under attack as being slow, inefficient, ineffective and unresponsive to service users. The crisis in the welfare state and the weaknesses of state bureaucracy led to the search for alternative ways of organizing and managing public services and redefining the role of the state to give more prominence to markets and competition. The shift was in response to a combination of stimuli for change driven by both theoretical arguments and pragmatic rationales. This chapter first reviews the theoretical arguments that have influenced the new trends in public service reforms, including neo-classical and new institutional economic theories. Second, it describes the more pragmatic rationales for change in the management of public services.

This chapter asks whether citizens and politicians (the ‘principals’) in developing countries have been instrumental in demanding, designing and directing reforms in service delivery.¹

The key assumption that underlined the study was that organizational and management reforms in the four sectors studied were pushed by the new public management-type reform agenda reviewed in Chapter 2. These reforms tend to ignore the specificities of sectors and the institutional contexts of poor countries often characterized by state dominance, weak market institutions, fiscal crisis, poor incentives and political sensitivities. This chapter will examine the nature and the extent of ‘the new management’ organizational reforms for service delivery across the four sectors, using evidence from the case study countries (Ghana, Zimbabwe, India and Sri Lanka) and reference countries where possible. The focus in this chapter is on internal management reforms rather than externally oriented market-type reforms, which are analyzed in Chapters 6–8. To put the reforms in context, the first section briefly reviews the pre-reform organizational arrangements for service delivery. The second section then outlines the types of organizational arrangements, and the third section examines the nature and extent of reforms in organizational arrangements. The fourth section reviews the available evidence on the performance of reformed organizational arrangements.

This chapter examines the experience of financing public service delivery by charging users directly through user fees and tariffs and/or withdrawing government subsidies to the provision of services. As was noted in Chapter 2, charging for public services is part of the new approach to public management. Like other reforms examined in this book, charging raises a number of issues relating to the appropriateness of reforms to poor countries, the ‘new’ roles of government in implementing a policy of user charges, and the capacity implications for government and public agencies in managing the new roles associated with charging.

This chapter explores evidence from the country cases studies about the experience of contracting across the service sectors.¹ Table 7.1 classifies the forms of contractual arrangement examined in the text. Down the left-hand column, contractual types proceed from shorterterm and simpler forms to longer and more complex forms, as described in Chapter 6. It can be seen that the business sector is almost absent from the table because here privatization has been most complete. The private sector operates independently rather than under contract, and governments have removed themselves to a support role — as will be described in Chapter 8.

Chapters 4 and 5 showed how internal management reforms within the public sector have been designed to release public managers from the hierarchical control of government, allowing them to make their own operational decisions about the raising and use of their resources. The ‘price’ that managers pay is that they are made more clearly accountable for their performance, according to policy frameworks and performance contracts. Their greater freedom is matched by a clearer statement about what they must achieve.

The previous chapters of this book have analyzed the application of a series of new public management reforms outside their countries of origin, in Africa, Asia and Latin America. The core issue is whether reforms based on a diagnosis of the weaknesses of the ‘over-interventionist’ state in advanced countries such as the United Kingdom, New Zealand and Australia, are appropriate responses in states where the levels of public management capacity, market development, resources, political inclusiveness, legal effectiveness, political and economic stability are quite different. Our core argument, as outlined in Chapter 1 has been that governments may be illequipped to adopt unfamiliar approaches to public service provision, where the institutional conditions on which the new management practices are premised may not be present.