During the last decade, the nature and the functions of the state throughout the world have changed. But will pro-market reforms allow governments to pursue development, and sustain their responsibilities in providing good, affordable services to their citizens? This study by the United Nations Research Institute for Social Development (UNRISD) looks at the implications of public sector reform.
During the 1990s, multilateral financial agencies and neo-liberal analysts began to point to the state’s nationalistic, hierarchical and redistributive character as being partly responsible for poor service delivery and economic performance. They sought to transform the state into a lean, managerial, decentralized and customer-oriented institution. However, the core elements of reforms are sometimes contradictory. There are tensions between market efficiency and deregulation, on the one hand, and accountability and equity, on the other.
The reforms have developed differently and at a differing pace in different parts of the world. However, several common elements can be noted. These include the following:
- All states are involved in fiscal reforms, which include: expenditure reduction; privatization; and tax reform.
- Public expenditure reforms focus on welfare and social services in industrialized countries, and on capital expenditures and government administration in developing countries.
- Privatisation, a central component of downsizing, is now a global phenomenon.
- The massive cuts in education and health provision suffered by low-income countries during the 1980s have not been sufficiently offset by the efforts to protect social sectors from state contraction during the 1990s.
- Managerial reforms focus on three main issues: decentralisation and the creation of executive agencies out of monolithic bureaucracies; performance contracts for employees; and contracting out of services to the private sector.
- Capacity-building reforms are restricted largely to developing countries. Despite their importance in promoting development and other reforms, they have not received the sustained attention they deserve.
There are several issues that need to be highlighted if the reforms are to be accountable to society and sensitive to the political realities of states, especially those with weak institutions. These include the following:
- Public sector reforms need sound political pacts or coalitions. The vast majority of countries that are implementing reforms are also grappling with complex programmes of democratisation, which seek to lay the ground rules for the way their societies are governed.
- There are governance issues that have not been satisfactorily resolved in a large number of low-income countries, which raise serious questions about their capacities to implement far-reaching state reforms.
- Market-oriented managerial reforms will be difficult to implement in countries that have not established a professional civil service.
- Multilateral agencies should understand and support the enduring missions of states, which are nation-building in multi-ethnic societies, rapid industrialization with an appropriate role for the state in facilitating the process, social equity and wealth distribution.
- For reforms to be institutionalised and serve the public good, public managers in service delivery must be made accountable. Among the instruments that have emerged for the attainment of these goals are Citizens’ Charters, Ombudsmen and service delivery surveys.
- Parliamentary plurality, press freedom, independent judiciaries, mass-based political parties and civic action are also central to public accountability.
