New Public Management Essays - Economic Systems, Economic Ideologies

New Public Management INTRODUCTION Public sector reforms adopted in a number of countries such as USA, UK and New Zealand in the last fifteen years and characterised by efficiency units, performance management, contracting out, market type mechanisms, and agency status have come to be known as the New Public Management or NPM. Appearance of the NPM as shifting the paradigm from the old traditional model of administration has been promoted by a remarkable degree of consensus among the political leadership of various countries and is presented today as the major tool for public sector management reforms. The elements of NPM have been implemented in diverse forms in different countries depending on their historical nature of bureaucracy and public sector management and reform objectives. For instance, more emphasis was given to performance management in Scandinavian countries, while a stronger accent was on market type mechanisms, contractualisation of the public service and systematic approaches to improving service quality in New Zealand, the UK and the USA. The long-term benefits from these reforms have not been empirically validated. Nevertheless, the major donors are agreed that what developing countries must do to improve public sector management is to sweep away the traditional public administration paradigm that underpins their bureaucracies and introduce the new public management (Turner and Hulme 1997: 230). Mongolia has not escaped from this trend. The Government of Mongolia is preparing to introduce public administration reforms based on the New Zealand experience of contract relationship between resources used and outputs purchased. However, there is a question mark about Mongolia's capacity to implement such reforms and wether they meet current needs. Therefore, assuming that the concepts of NPM are quite familiar, attempts have been made to asses the Mongolian situation against prescriptions of the New Zealand model of Public Sector Reform, particularly in relation with the country's transitional circumstances. THE NEW ZEALAND MODEL OF PUBLIC MANAGEMENT The proponents of the New Public Management have often identified New Zealand as a good example of this contemporary mode of administrative reform called NPM. New Zealand has implemented an enormous number and range of management reforms since 1988. These include accrual basis accounting and appropriations. Budgeting for outputs rather than inputs, separation of service delivery functions from advisory and regulatory functions, replacing permanent department heads with chief executives appointed for a fixed term, discretion for managers to spend their operating budgets as they deem fit, individual employment contracts for most senior managers, annual purchase agreements between ministers and their departments, annual reports, and audited financial and performance statements (Schick 1998:2). Every element of reform has been designed to establish or strengthen contract-like relationship between the government and ministers as purchasers of goods and services, and departments and other entities as suppliers. This ?new contractualism' replaced the relational contracts that characterise traditional public administration (Schick 1998:3). Managerial reform is based on a simple principle: managers cannot be held responsible for results unless they have freedom to act, that is, to spend and hire within agreed budgets as they see fit, to make their own choices concerning office accommodation and other purchases, and to run their organisation free from ex ante control by outsiders. The New Zealand experience shows how effective management practices in the private sector can be brought into a public sector environment and adapted. The change was driven by ideas that have only recently entered mainstream economics and they have been applied with full fidelity to their internal logic. Although one can justify that the country has vastly enlarged the stockpile of public management ideas and practices, however, there remain concerns related to contract-like arrangements in the public sector and there is much more to be accomplished before a final assessment can be made (Schick 1998:4). TRANSITIONAL FEATURES OF PUBLIC ADMINISTRATION IN MONGOLIA After the collapse of the socialist block, radical political and economic changes occurred in most former socialist countries. According to Hesse (1993) the former socialist countries have a number of common characteristics, such as: a transition from one party rule to a multi-party, pluralist system with democratic and accountable government; the deconcentration and decentralisation of political power; the creation of distinct spheres of economics and politics; and, economic liberalisation. No socialist country has yet completed the full process of economic liberalisation. This is mainly because the