Managerial reforms and developmental state capacity

Obviously the distinction between the two positions is more nuanced than the blunt picture presented above. However, in one major area of public expenditure - education - this sharp difference between the `static' NPM approach and the `dynamic' approach of the developmental state comes sharply into focus. Here, a notable feature of the developmental state has been the priority that it attaches to `qualitative' change in the direction of promoting technical and scientific education, which seeks to transfer and root technological advances from the global economy to the domestic arena. By contrast, the more `quantitative' approach underlying the NPM-type managerial reforms in the education sector has prioritised the use of blunt and general indicators, such as classroom size, teacher qualification levels, school autonomy and examination results.

The promotion of high quality university education is a major feature of the developmental state and this has had a positive impact on strengthening the professionalism and esprit de corps of the core civil service. For this reason, efforts to upgrade the teaching quality of universities in LMICs, by raising the standards of competitive entry to the `fast stream' - could play a major role in helping to endow the civil service of those countries with the genuine attributes of a Weberian bureaucracy.

The new concern for aid harmonization and country ownership emanating from the 2002 Paris Declaration embodies two features that a priori suggest support for promoting the kind of strategic vision associated with the developmental state in aid- recipient countries. First, the new focus on country PRSPs, following the neo-liberal era when `development planning' almost came into disrepute, suggests a welcome move in the direction of the sort of strategic vision characteristic of the developmental state. However, a cursory examination of such documents suggests that the overriding approach remains `static' and `welfarist' in nature, with very little concern for strategic issues of coordination between the public and private sector in investment planning. Most telling in this respect is the minimal role usually played by the private sector in the elaboration of most PRSPs. Second, by pooling and channelling aid funds through the finance ministry, GBS potentially enables greater opportunity for resource allocation by the state on the basis of strategic development priorities. However, as mentioned above, the continuing `linkage' of GBS to approval by the IMF/World Bank places severe restrictions on the use of these funds in a manner characteristic of the developmental state.

Finally, it is should be noted that even in the UK, the birthplace of the executive agency concept, there has been concern at the negative effect that agencification is having on the capacity of the state for strategic planning. “So many experts have moved into management in the agencies that there are two few civil servants involved in policy-making. Core Whitehall departments are in danger of becoming departments of administrators rather than policymakers” [8]. This poses an even greater danger in LMICs where the strategic capacity of the state is much weaker.

Trust-based relations with the private sector

Contrary to conventional wisdom, the managerialist and the `development state' perspectives both assign a strategic role to central government in promoting economic growth as well as a predominant role to the private sector in the economic development process. Managerialism does not necessarily subscribe to the `minimal state' view nor does the developmental state perspective necessarily imply a `statist' view. However, where they differ fundamentally is on the nature of the relationship between central government and other major actors, both public and private, that are engaged in the development process.

On the one hand the NPM paradigm insists that the strategic role of the state is facilitated by distanced `principal-agent' relationships of a contractual nature with other major actors. Contracting-out has become a key component of NPM-type managerial reforms. It involves an `arm's length' relationship between the state as purchaser (principal) and the private company as provider (agent). This institutional re- arrangement for service delivery is essentially adversarial in nature. It often introduces a semi- autonomous regulatory body to arbitrate over contractual disputes with the regulator acting as a sort of `boxing referee'. On the other hand, the `developmental state' paradigm advocates a much closer, discretionary and flexible relationship with the private sector, one that is essentially based on a complex web of trust and coercion.

In the urban water sector, where NPM-type contractual arrangements have been introduced in many LMICs, there is a growing recognition of the failure of this adversarial relationship, focused exclusively on the contract, to deal with the multiplicity of conflicts that can arise during the long time period (up to 25 years) of such contracts. In France there has long been recognition that a legal contract can never incorporate all possible conflicts that may arise in the future so that `relational' or trust- based contracting has become the norm. Even in the UK, the heartland of `contracting- out- there is a new awareness of the limitations of the adversarial approach and the virtues of trust-based contracting [21].

Conclusion

This paper has sought to address the relationship between managerial reforms of the public sector associated with the NPM and the developmental capacity of the state. After describing the theoretical underpinning plus major strands of the NPM package and the salient features of the developmental state, the paper reviewed the uneven global spread of the managerial reforms and examined the extent to which aid dependence provided a more conducive environment for such policy transfer. The paper then highlighted the main features of the so-called developmental states, which sets them apart from that of other LMICs, with particular emphasis on the Weberian bureaucracy. It then examined the extent to which NPM-type managerial reforms contribute or not to strengthening the public management systems of those countries aspiring to become development states. It did this by contrasting the NPM reforms with three distinguishing features of public management systems in those countries - centralisation, high- level strategic planning, and trust-based relations with the private sector.

The thrust of the argument in this paper is in support of the general criticism of the limitations and dangers of `policy transfer' of NPM-type managerial reforms to LMICs, precisely because of the weakness of the bureaucracy in terms of Weberian values of meritocracy and professionalism. The NPM reforms in the Anglo-American countries were built on the foundation of Weberian bureaucracies. Therein lies the paradox that in countries where the need for improvement in bureaucratic performance is greatest, such reforms are least appropriate precisely because of the absence of the strong `Weberian' state structures. The very `weakness' of the state has made problematic the implementation of the complex new contracting, regulatory and monitoring roles that are central features of the managerial reforms. It is for this fundamental reason that, instead of improving public management performance, NPM type reforms risk increasing the core problems of administrative coordination and corruption.

For example, a researcher commissioned by the Government of New Zealand, where the most extensive application of the NPM paradigm was applied, concluded that the reforms had “greatly improved the efficiency and quality of public services in that country” [70 P. 86]. Nevertheless, soon after the very same writer wrote a paper entitled, “Why most developing countries should not try to New Zealand's reform” [71]. This called for priority attention to creating a genuinely Weberian bureaucracy before proceeding to introduce NPM-type reforms. The argument was succinctly put: “Politicians and officials must concentrate on the basic process of public management. They must control inputs before they are called upon to control outputs; they must be able to account for cash before they are asked to account for cost; they must abide by uniform rules before they are authorized to make their own rules; they must operate in integrated, centralized departments before being authorized to go it alone in autonomous agencies” [71. P. 130].This highlights the importance of the sequenced approach to public management reform, defined as i) creating an Old Public Management (OPM) before ii) introducing the New Public Management.

The experience of Singapore provides support for the argument that a functioning ODA provides the best basis for introducing the NPM. Although a a classic `developmental state', it has carried out a wide-ranging package of managerial reforms, known as PS21 (Public Service for the 21^st century) since 1989. These reforms were introduced on the basis of an existing public administration system that was already characterised by meritocracy, high status and professional ethic among the senior cadre of the civil service, and an uncompromising attitude towards corruption [41]. Executive agencies now cover the bulk of the civil service, personnel functions such as recruitment and promotion have been delegated to individual ministries, and a culture of service excellence in meeting the needs of the public with high standards of quality and courtesy has been nurtured [65]. Nevertheless, Singapore remains wedded to a state-directed system of governance via a wide range of recently corporatized utilities and other publicly-owned bodies. The selective introduction of NPM reforms has not sought “to reduce the role and importance of the state as such, but has rather been aimed at maintaining the same strong administrative state by means refining its role to keep it in step with the latest developments and future challenges [20. P.155]. Clearly, Singapore is experimenting with the NPM in a manner akin to the neo-weberian state (NWS) approach found in Germany (see Section 2).

Finally, it should be stressed that the existence of a Weberian bureaucracy is no `magic bullet' that will ensure the creation of a developmental state. Ultimately the will, drive and commitment of the leadership to go down that path or not depends on deeper political forces at play in the wider society in which elite attitudes play a major part [30]. Nevertheless, the centrality of the core features of a Weberian bureaucracy - probity and concern for rule-based due process - to the workings of the developmental state is so self-evident that strengthening such attributes within the bureaucracies of LMICs should continue to be the core activity of public management capacity-building efforts. Unlike the `projectised' and hence time-limited nature of donor-driven NPM reforms, the (re)construction of the `Old Public Administration' is a long-term investment commitment but one that has a much higher rate of return in assisting LMICs to build what Chan[13] calls `statecraft',. This key attribute of the developmental state is the ability to design and implement strategies and policies conducive to development.

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