A New Public Management in Mexico

Towards a Government that Produces Results

Esteban Moctezuma Barragán, Andrés Roemer

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351808583
• Edition: 1
• Topic: Politik & Internationale Beziehungen
• Subtopic: Politik

This title was first published in 2001: This innovative text applies new institutional economics, public choice theory, and new public management concepts to the political arena of the Mexican administration. Including cutting-edge benchmarking analysis about best practices of human resources and the modernization of the public sector, the book also considers the history and situation of other countries from the Mexican perspective, especially those of Latin America and the OECD. An essential text for all those with an interest in public policy or Latin American politics.

1. Administrative Modernization

The object of this chapter is to introduce what is known today as administrative modernization. For this purpose, reference is made first to its origin, strategic objectives pursued, and institutional characteristics. The theoretical underpinnings are then analyzed, emphasizing their scope and implications. Finally, practical lessons are presented that were obtained from countries where this model has served as a basis for making governments more efficient.

It is important to point out that an exhaustive analysis of administrative modernization as a theoretical model is not claimed to be carried out, but rather the development of a general diagnosis of the practical virtues contained in this model is proposed, presenting guidelines that can be useful to those governments interested in modernizing their administrative structures and taking as a basis the fact that any modernization strategy should have as its starting point a continuous, permanent, contextual and historical analysis of the structural particularities of the countiy in question.

Origin, objectives and characteristics of administrative modernization

In the last few decades, the world has experienced a dizzying transformation. Today economies are more integrated into the context of the world market, and their internal processes depend inevitably on the complex dynamic of globalization. Unlike what used to happen a few years ago, it is now practically impossible for a society to set in motion successful strategies in economic development based on protectionist policies that isolate it from the world economic dynamic. The challenge lies in designing development strategies capable of giving national economies viability in a global market that is increasingly specialized and competitive.

In the framework of the previously valid model, encouraging development, the governments tended to confront upsets of an economic type by adopting survival strategies focused on attaining achievements over the short term. This myopic vision of economic problems generates enormous costs for the developing economies by encouraging governments to concentrate their efforts on attacking the superficial expressions of the crisis, ignoring structural causes. At present, the fundamental concern lies in undertaking institutional and legal reforms which actually make it possible to transform structures and undertake development strategies with possibilities of success over the long term. The project of this book is located precisely in the framework of this logic of radical modernization.

As was mentioned, the complexity of the problems that afflict contemporary societies and the increasingly generalized perception on the part of society that the government has ceased to “participate in the solution which favors development” and has become “part of the problem and an obstacle to development”, has generated a serious crisis of confidence. Far from being the result of a single line of causal determination, this crisis seems to be the synthesis of a complex set of processes. Foremost among these is the growing incapacity of the government to attend to society’s basic demands, a situation that arises out of the conjunction of two fundamental problems: the lack of clarity in the objectives and functions of government, and its lack of efficiency and efficacy in carrying them out. With respect to the first point, governments have obviously lost their sense of mission, so that at the present time there exists no consensus as to what they should and should not do nor, of course, as to how to do it efficiently. With respect to the second point, governments, in their keenness to eliminate corruption and wasting of resources, have introduced a profusion of controls and regulations that have ended up creating considerable costs in terms of effectiveness and efficiency as well as in terms of equity. This has meant that the government has had to spend more in order to accomplish the same, which leads to an increase in public expenditure above its fiscal capacity, and to a systematic decline in the quantity and quality of the goods and services it offers to society.

This situation has made the successful operation of the government, as based on traditional practices and structures, unsustainable, demonstrating the urgency for introducing substantial changes both in the way it administers social resources and in the way it implements and evaluates public policy. This idea is reinforced by a report by the OECD, the conclusion of which is that political leaders do not seriously deal with the roots of the problems of their nations until the situation nears critical proportions. And it is at this point, close to the disruption of the social and political order, that the need for a deep structural reform becomes evident and is finally accepted by a great number of relevant social actors.¹

In this context, many governments have undertaken to review their organizational basis thoroughly. In many countries, there has been a political will to create a new legal and institutional structure to make it possible to correct the rigidities and inadequacies of the prevailing administrative models. Rather than bringing about superficial modifications, they recognize the need to have a new model for public administration that would serve as a theoretical and methodological basis for undertaking radical reforms both in the way the government administers society’s resources and in the way it executes the decisions of public policy. The challenge lies in designing and applying formulas that, based on obtaining results, permit the effectiveness of the institutions to be increased in order to make the management of resources more efficient and make the decisions and actions of civil servants fundamentally more professional and accountable.

Based on the theoretical model that proposes administrative modernization, several countries² have set reforms in motion whose purpose is to replace the traditional rigid, centralist structures with a system of institutional organization and bureaucratic behavior, in which the public administration operates in a similar way to the best practices in environments of competitiveness and accountability.³ One of the important points of departure of this new model considers that the origin of the government’s problems lies in the prevailing organizational-administrative culture and not in the persons who make up the public sector. The basic idea is that it is not possible to attribute responsibility for the government’s failure to people who are constrained by obsolete regulations and excessive controls. On the contraiy, administrative modernization seeks to vindicate public servants, granting them greater confidence, stability and better work conditions, in order to increase their productivity so as to be in a position to attend to society’s demands more effectively, efficiently and equitably.⁴

In short, the point is to strive to turn the government into an organization that works better and costs less,⁵ with the understanding that present-day societies require public administrations that are changing, sensitive to their surroundings, provided with units which, in spite of their technical complexity, are effective in terms of producing results based on previously established indicators of performance, thereby achieving an optimal combination of quality and sustainable productivity.⁶

The model of public administration proposed encourages governments to establish clear, result-oriented missions and to endorse performance agreements committing the administrative units to responding to citizens, thus obtaining concrete, quantifiable results in terms of management and provision of public goods and services. Institutional commitments that form part of performance agreements involve granting civil servants greater levels of freedom in administering and organizing their funds as well as in operating their different programs. The point is to grant directors, or those in charge of administrative units, the elbow room necessary for producing the results expected of them, precisely defining their levels of responsibility and the volume of resources they can use in order to attain a certain goal.

This allows for an increase in productivity and the level of accountability of public servants, who must then find a balance between greater margins for operational capacity and greater levels of responsibility. This logic of government functioning involves a powerful decentralizing inertia that guides the redesigning of the functions and powers of the central departments and agencies. This redesigning implies leaving the task of strategic planning based on the formulation and evaluation of middle-and long-term public policy in the hands of the central government, in order to concentrate the execution of the short-term actions contemplated in the program goals, in the local administrative units.⁷

In conclusion, and in order to increase the government’s efficiency in the production and provision of public goods and services, the new model recognizes the need to promote the use of marketing techniques.⁸ In these it is considered particularly important to create an environment of competitiveness between public agencies and companies in the private sector. It is necessary to get over the idea that a public sector company is, by definition, unable to compete successfully with private units. The challenge lies in generating sufficient incentives and precisely defining the rules of the game. In order to achieve this, it is essential for public institutions to adopt ideal systems for the administration of human and administrative resources, which ought to be complemented by the development of areas of planning, evaluation and marketing that would let them study the demands and preferences of the users of their products and services thoroughly.

To summarize, the government reforms undertaken by various countries on the basis of the model of administrative modernization have had three characteristic elements: the introduction of greater levels of flexibility and autonomy in the management of public servants and administrative units based on clear, specific missions; the endorsement of agreements that would enable the performance of bureaucrats to be evaluated, based on the obtaining of results and not only in terms of carrying out formal procedures; and finally, the use of marketing strategies aimed at improving the productivity of government agencies and companies in order to enhance the quality of the goods produced and services provided.

The fundamental objective of these efforts is to restore citizens’ belief in their governments by making their administrative structures more efficient and, above all, more involved in the true demands, expectations and needs of society.

Theoretical underpinnings of administrative modernization

The central aim of. administrative modernization is to improve efficiency and effectiveness in order to strengthen the processes of equity in the institutions that comprise the government, as well as increasing the professional quality, accountability and sense of commitment toward the community on the part of public servants. This means a project aimed at raising society’s confidence in its leaders through structural changes in the administrative machineiy that would provide an effective solution to problems, an economical use of political resources and the growing provision of high-quality goods and services.

As a theoretical point of view, administrative modernization is situated in the field of economic analysis of the law, of the theory of the new economic institutionalism and of the theory of public choice.⁹

New economic institutionalism and the economic analysis of the law

One of the main characteristics of administrative modernization is the use of a neo-institutional focus on the analysis of the impact of public policy on the behavior of individuals.¹⁰

The economics of property rights and transaction costs, also known as the new institutional or neo-institutional economics, had its modest origins in the late 1950s in the work of Armen A. Alchian.¹¹ With the support of seminal articles about transaction and information costs, written by Ronald H. Coase and George J. Stigler,¹² this area of research attracted other authors and, by the mid 1970s, had generated a considerably increasing body of theoretical and empirical research.¹³

The work of this school is sensitive to organizational subject matter and analyzes how the structure of property laws and transaction costs affect incentives and economic behavior.

The new institutional perspective tries to show that institutions count. Every different organizational structure affects incentives and behavior; however, institutions themselves are considered legitimate objects for economic analysis. Coase indicates that it is possible to use theory to analyze institutions in such a way that their operation is explained and forms an integral part of the economic model. Most authors have accepted this point of view and, consequently, recent efforts to broaden the applicability of traditional institutionalism have led to new methods on how to interpret economic doctrine as applied to public administration.¹⁴

The new institutionalism considers how the distribution of property rights and transaction costs affect incentives for public servants and consequently their behavior.

This perspective underlies three elements inherent in the model of public administration: methodological individualism, which considers bureaucracy as maximizing its utility function; and which implies that the rationality of individuals is limited; and that there are individuals who behave opportunistically. These postulates translate into four axioms in administrative modernization:

First: administrative modernization reinterprets the role of the public servants’ interests within the government, starting from the assumption that an analysis of the functioning of the government should be based on a methodological individualism; that is, in an evaluation of the situation and of the incentives that affect the persons that make up the government.

Second, instead of considering that civil servants have the priority of maximizing the objective function of the government, it considers that bureaucrats are rational actors who seek to maximize their personal benefits.¹⁵

This situation often leads civil servants to make decisions that turn out to be inadequate and inefficient for the general interests of society. The logic of personal benefit is imposed, from this theoretical point of view, on the logic of the public service, causing the policy implemented by the governments to tend to deviate from the objectives that originally shaped it.

We can find one clear example of this in the public servants in charge of deregulating administrative procedure in order to give the citizen faster, more efficient service. Even though the objective of the public policy is clear, it often happens that the bureaucrats in charge of applying it see the opportunity for improving their income precisely by not carrying out this deregulation, or by not carrying it out completely. The logic of personal benefit indicates to them that the slower and more complicated the procedure, the greater the possibility of demanding more money from those citizens interested in having fast service. In other words, the bureaucrat finds greater incentive in terms of personal benefit in the act of corruption than in that...