Download - A Primer on Public Management
A Primer on Public Management
Center for Democracy, Development, amd the Rule of Law
Summer Fellows Program
--attributed to Goldman Sachs
“It’s not the business plan but the execution”
The Scope of State FunctionsM
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Two Dimensions of Stateness
Scope of State Functions
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Stateness and Efficiency
Scope of State Functions
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Quadrant I Quadrant II
Quadrant III Quadrant IV
The Stateness Matrix
Scope of State Functions
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USSR
Japan
BrazilSierra Leone
United States
France
Turkey
Afghanistan
USSR/Russia
Scope of State Functions
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USSR 1980
Russia 2000
Russia 2010
China
Scope of State Functions
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China 1978
China 2005
China 2011
New Zealand
Scope of State Functions
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1981
2000
1990
Why is Public Administration So Difficult?
• Central issue of all organizational theory is delegated discretion
• All organizations need to delegate authority– To take advantage of local knowledge– To respond quickly
• But delegation means loss of control
Two Approaches to Organizational Theory
• Economists’ approach– Man is homo economicus– Incentives matter– Principal-agent framework
• Social capital approach– Man as social animal– Norms and bonding over incentives
Principal-Agent Theory: Private Sector
Shareholders
Board of Directors
CEO
Senior Management
Workers
Principal-Agent Theory: Public Sector
The People
Legislature President
Bureaucracy
Implementing organizations
How is the Public Sector different from the Private Sector?
• Public agencies not allowed to retain earnings
• Public agencies can’t reallocate factors of production
• Public agencies must follow goals not of their own choosing
• Public agencies not subject to market discipline
Making the public sector more like the private sector
• New Public Management (NPM)
• Adding an exit option and competition– Vouchers, school choice
• Wage decompression
• Separating the policymaker from the implementer
• Public expenditure tracking surveys
What these innovations have in common
• All can be subsumed under principal-agent framework– Use a monitoring-and-accountability
framework
• All try to affect agents’ incentives
• All try to mimic market mechanisms
• But: Do they work?
Limitations of Principal-Agent
• If you can’t measure, you can’t hold accountable
• Multiple principals
• Principals want contradictory things
• Public agencies are monopoly suppliers that can’t go out of business
Public Sector Outputs
Low Transaction volume High
Low
Sp
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Hig
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Quadrant I Quadrant II
Quadrant III Quadrant IV
Monitorability of Public Sector Outputs
Low Transaction volume High
Low
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Hig
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Central banking
Aircraft maintenance
Primary school teaching
Highway maintenance
Preventative medicine
Telecoms
Guidance counseling
Foreign affairs
Railroads
University education
Court systems
Finally,
• Human beings are not simply homo economicus
• Are social animals as well
• Motivated by pride, self-respect, group solidarity, other norms
• Importance of social capital
04/20/23 21
A Third Type of Capital
Physical Capital
Human Capital
Social Capital
04/20/23 22
Networks of Trust
04/20/23 23
A Corporate Culture
04/20/23 24
Trust networks critical to flat organization...
04/20/23 25
And to Outsourcing
Final ProductFinal Product
DesignDesign
ManufacturingManufacturing
CEOCEO
ManufacturingManufacturingPersonnelPersonnel
MarketingMarketing
DesignDesign
Where does social capital come from?
• In traditional societies:– Kinship, shared culture, repeated interaction
• In modern societies– Education, particularly professional education– Shared goals and standards– Leadership!
Education Reform
• Economic approaches– Vouchers, school choice– Testing and individual accountability
• Social capital approaches– Raise salaries; improve professional standards
• Fundamentally a political issue– Teachers’ unions, low incentives to solve issue
Community-Driven Development
• Program design– Designed to foster social capital– Bypasses traditional institutions– Relies on participation and bottom-up input
• Problems– Expensive and highly labor intensive– Encompasses ambitious social engineering
goals
Conditional Cash Transfers
• Transfers to poor require school attendance
• Programs designed for sustainability– Goal is increased human capital– Often built-in evaluations
(Progresa/Oportunidades)
• Problems– Programs develop their own constituencies– Can be used in clientelistic ways