a primer on public management
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A Primer on Public Management. Center for Democracy, Development, amd the Rule of Law Summer Fellows Program. “It’s not the business plan but the execution”. --attributed to Goldman Sachs. The Scope of State Functions. - PowerPoint PPT PresentationTRANSCRIPT
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A Primer on Public Management
Center for Democracy, Development, amd the Rule of Law
Summer Fellows Program
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--attributed to Goldman Sachs
“It’s not the business plan but the execution”
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The Scope of State FunctionsM
inim
al F
un
ctio
ns
Inte
rmed
iate
Fu
nct
ion
s
Act
ivis
t F
un
ctio
ns
Pro
vidi
ng p
ure
publ
ic g
oods
D
efen
se, L
aw a
nd o
rder
P
rope
rty
righ
ts
Mac
roec
onom
ic m
anag
emen
t
Pub
lic h
ealth
Impr
ovin
g eq
uity
P
rote
ctin
g th
e po
or
X-axis
Add
ress
ing
exte
rnal
ities
E
duca
tion,
env
iron
men
tR
egul
atin
g M
onop
oly
Ove
rcom
ing
impe
rfec
t inf
orm
atio
n
Insu
ranc
e, f
inan
cial
reg
ulat
ion
Soc
ial I
nsur
ance
Indu
stri
al p
olic
yW
ealth
red
istr
ibut
ion
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Two Dimensions of Stateness
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
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Stateness and Efficiency
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
Quadrant I Quadrant II
Quadrant III Quadrant IV
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The Stateness Matrix
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
USSR
Japan
BrazilSierra Leone
United States
France
Turkey
Afghanistan
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USSR/Russia
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
USSR 1980
Russia 2000
Russia 2010
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China
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
China 1978
China 2005
China 2011
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New Zealand
Scope of State Functions
Str
engt
h of
Sta
te I
nsti
tuti
ons
1981
2000
1990
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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
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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
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Principal-Agent Theory: Private Sector
Shareholders
Board of Directors
CEO
Senior Management
Workers
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Principal-Agent Theory: Public Sector
The People
Legislature President
Bureaucracy
Implementing organizations
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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
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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
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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?
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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
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Public Sector Outputs
Low Transaction volume High
Low
Sp
ecif
icit
y
Hig
h
Quadrant I Quadrant II
Quadrant III Quadrant IV
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Monitorability of Public Sector Outputs
Low Transaction volume High
Low
Sp
ecif
icit
y
Hig
h
Central banking
Aircraft maintenance
Primary school teaching
Highway maintenance
Preventative medicine
Telecoms
Guidance counseling
Foreign affairs
Railroads
University education
Court systems
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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
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A Third Type of Capital
Physical Capital
Human Capital
Social Capital
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Networks of Trust
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A Corporate Culture
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Trust networks critical to flat organization...
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And to Outsourcing
Final ProductFinal Product
DesignDesign
ManufacturingManufacturing
CEOCEO
ManufacturingManufacturingPersonnelPersonnel
MarketingMarketing
DesignDesign
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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!
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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
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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
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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