Understanding Public Management

Kjell A Eliassen, Nick Sitter

• Publisher: SAGE Publications Ltd
• Year: 2008
• ISBN:
  9781473902671
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Public Policy
• Index: Politics & International Relations

?A broad-ranging and highly intelligent account of key recent developments internationally which skillfully updates the public management and governance literatures? - Ewan Ferlie, Royal Holloway

?Public management has been radically changed and reformed... this book gives students a fine introduction to these changes and to the theories dealing with them? - Jørgen Grønnegaard Christensen, University of Aarhus

An introduction and guide to the dramatic changes that have occurred in the provision of public services over the last two decades, this book combines theoretical perspectives with a range of case studies from Europe, North America and further afield to explain why, how and with what success liberal democracies have reformed the service role of the state.

The book pays close attention to four major dimensions of this transition:

" External challenges and opportunties: globalisation and EU integration

" Reducing the role of the state: Liberalisation, privatisation, regulation and competition policy

" Improving the role of the state: New Public Management, e-Government and beyond

" Managing the New Public Sector: organisations, strategy and leadership

This text is designed for undergraduate courses in public governance, but it also addresses the core components of MPA programmes - the parameters, tools, principles and theories of public sector reform.

ONE

Internationalisation, Globalisation and Liberalisation – Strategic Challenges for Public Governance

Since the Second World War, the world has seen the gradual but continual development of free trade, to the extent that we may today speak of operating within something close to a global free trade regime. This chapter analyses the development of globalisation and liberalisation, and the consequences this has had for the public sector in the nation states. From a highly protectionist starting point just after the Second World War, the political and economic word changed substantially over the next half-century. By the turn of the twenty-first century, global free trade had become politically accepted as the norm for trade relations among most, if not all, states in the world.

The free trade regime exploits the effects of the distribution of labour principle in the economy: goods and services are produced where it is cheapest to do so, and sold where the highest price can be obtained. This politically and economically driven trade liberalisation process constitutes an important part of the globalisation process. In addition, a raft of bilateral, regional and interregional trade liberalisation arrangements have been developed, in the form of regional organisations, free trade areas and custom unions, and inter-regional organisations. Globalisation and regional (as well as inter-regional) integration are two very closely related processes. Whilst regional integration deepens trade liberalisation for the members of the regional organisation, the same regional cooperation also protects the member states from at least some of the effects of global trade liberalisation. Thus, although regional integration to some extent reduces state sovereignty at the national level, it also increases the combined (or ‘pooled’) sovereignty of the member states in the regional organisation.

This chapter will introduce the processes of trade liberalisation and globalisation and point out the more general dynamics of regional integration. More detailed analysis of the European Union as the prime example of a well-developed and comprehensive example of a regional organisation follows in Chapter 2. The present chapter first discusses the concept and dimensions of globalisation, as well as presenting globalisation’s main institutions. It then proceeds to analyse the impact of globalisation at the national level, and finally discusses the relationship between globalisation and regional integration in more detail.

Globalisation

Gradually – since the Second World War, but in particularly in the last decade or so – the scale and scope of global interrelations have grown enormously in almost every aspect of human life: politically, economically, culturally, socially and regarding everything from environmental hazards and cooperation to military intervention and global arms trade. World-wide economic integration has linked the fate of nations, communities and households across regions and on the global level in such a way that crises in one country usually takes a toll on jobs, production and investments in the rest of the world. A central factor in this process is the international, or transnational, firm. Transnational corporations account for between 25 and 33 percent of world output, 70 percent of world trade and 80 percent of international investment; overseas production by these firms considerably exceeds the level of world export; and every day more than 1.2 trillion US dollars is handled at the foreign exchange markets (Baylis and Smith 2005: 20–21). This makes such firms key players in global trade, investment and production, whilst effectively operating outside the control of their nation states and even regional or international organisations. At the same time, the external effects of their decisions on investment, production and trade has to be dealt with by the nation states through their welfare and regional development policies.

The second central factor is the context and environment in which production and trade takes place. The collapse of communism in Europe in 1989 and the end of the Cold War brought about radical changes in the international political and economic system. As Thomas Friedman (2000) put it: the world went from playing chess to playing Monopoly. The end of the Cold War, the bi-polar world and the ideological struggle between capitalist liberal democracy and communism removed some of the biggest constraints on trade and interaction between states as well as non-state players.

The third important factor behind this wave of globalisation is the digital revolution. Digitalisation has created a completely new global communications infrastructure with enormous capacity and flexibility, and brought about the convergence of telecommunications, communication and IT into a strong and powerful ICT base for a new global information economy and information society. This influences everything from running businesses to the spread of new hits in the music industry. Without this digital revolution, the present wave of globalisation could not have been so forceful, let alone had such radical consequences.

Globalisation is not merely a post-Second World War phenomenon; we have witnessed periods of globalisation in earlier times. Most obviously, the period between 1880 and the First World War was also a period of globalisation, with perhaps a more extensive integration of the world economy than today (Dicken 2003). At that time the nation states were not as developed as today and there were far fewer restrictions on the free movement of individuals. Depending on the definition of globalisation, other periods in world history with a rapid expansion of political or economic regimes could also be characterised using the term globalisation: for example, the Roman Empire and some of the early phases of colonialisation. What is certainly different with this late twentieth century and early twenty-first century globalisation is the interrelation between the global reorganisation of production (both of goods and services) and the territorial opening of free trade among most of the countries in the world. It should also be noted that during the 1970s the cost of sea freight was dramatically reduced, which greatly contributed to a rapid increase in the free movement of goods in this wave of globalisation. This was due both to new technology and new logistic systems. More than 80 percent of world trade in goods is done via sea transport. Moreover, the digital revolution has played a big role in the (potentially) global integration of intangible commodities in the form of ideas, knowledge and services. The impact of these two developments is also felt in areas like culture, environment, military and migration etc.

Understanding globalisation

What, then, is globalisation? How can it be defined, and how has it developed? The focus here is on the concepts and processes of globalisation, how these developments are perceived by different actors and the effects of globalisation on national, regional and local public policy-making. Globalisation has been the new buzz word both in politics and in academic debate in this decade. There are, however, several definitions and understandings of what it is, how it comes about and what is new about it. The simplest definition of globalisation is that it is a process driven by technology and ideology in which geographical distance becomes irrelevant for cultural and economic relations. In the literature, globalisation has been defined in many different ways, for example as ‘the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa’ (Giddens 1990: 21) or simply as ‘the integration of world economy’ (Gilpin 2001: 364). Others have stressed changes in space and dismantling of borders like ‘de-territorialization or […] the growth of superterritorial relations between people’ (Scholte 2000: 46), and ‘time-space compression’ (Harvey 1999).

Globalisation is also closely linked to regional integration and the development of multilateral and bilateral free trade agreements. The aim of these more limited agreements – from a geographical point of view – is both to reap the economic benefits of distribution of labour among the participants, and to protect them against some of the negative effects of globalisation.

Since the turn of the century, globalisation has become perhaps the most important framework for national and local politics and policy-making. The globalisation process has dramatically reduced the freedom of governments and other publicly elected bodies to make unilateral decisions. The development of free-trade regime and reorganisation of global companies, and the prominent role played by global and regional regulatory regimes have had a direct impact on national and local companies. This also has political implications. One could argue that the globalisation process has created two types of democratic deficit. First, the political influence of the democratic institutions in the nation states may be reduced, and second, new global systems of governance are established outside direct democratic control. The end result is both increased pressure on the national welfare states and, at the same time, a desire for the development of better and stronger global regimes. However, the establishment of such regimes requires unanimous agreement among the states involved. This has proven very difficult in trade, environment and most other global issues.

Even if growing consensus on the newness and very comprehensive impact of the current wave of globalisation exists, there are still at least three distinctly different approaches to this phenomenon. These approaches differ on how they interpret both the characteristics and the potential impact of globalization. They also serve as a more theoretical introduction to analysis of the various dimensions of globalisation.

First, hyperglobalists see globalisation as a development which fundamentally reorders the framework of human action and undermines the role and functions of the nation state and its democratic institutions. State governments will no longer be capable of controlling their own societies and economies (Ohmae 1995, Scholte 2000). According to this interpretation of the world, the dominant features of globalisation are the creation of global capitalism, global governance and a global civil society (Held et al. 1999). The driving forces behind this development are capitalism and technology. The result is denationalisation of economies through the establishment of transnational networks of production, trade and finance, and the erosion of old national and regional hierarchies.

Second, the skeptics view globalisation as just another instance of internationalisation and regionalisation, where states and regional organisations still play the dominant role. The dominant features of this development are trading blocs, regional blocs and somewhat weaker geographical control than in the earlier periods. The driving forces are states and markets. Thus, internationalisation depends on state acquiescence and support – and states and geopolitics still remain the forces creating world order (Krasner 1999, Gilpin 2001).

Third, the transformationalists view globalisation as the reordering of interregional relations. The central assertion is that there is no clear distinction between international and domestic, external and internal affairs. The state remains the central actor, but its role is changing. The supporters of this view argue that both the hyperglobalists and the skeptics exaggerate their main analyses and arguments. The world is going through complex changes that combine several forces including modernisation, global integration and fragmentation. Thus, the total picture becomes complex and multifaceted. Politics becomes global and politics is everywhere. There is no lack of government, but the logic of politics and the arena on which it is played out are changing. In fact, both the nature of the state and the international system has been changing, sometimes at a faster pace and sometimes at a slower pace, for the last five centuries (Bobbitt 2002, Cooper 2003).

In this volume globalisation is seen as a gradual transformation process – not new today, but different from any previous internationalisation and globalisation process. The rapid integration of the world economy and most aspects of socio-cultural activity may be desired by political parties, voters or governments – even if all the consequences have not been anticipated or are universally popular. The process is technologically driven, and extremely difficult to fundamentally reverse.

Characteristics of Globalisation

Globalisation has become a common name for a wide range of different aspects of economic and political developments that have a world-wide reach. The most important task here, however, is to try to identify and analyse the different aspects of this concept, and how and to what extent the different aspects of globalisation influence the functioning of national political systems. A simple definition of globalisation might be: a technologically and ideologically driven process in which geographical distance becomes irrelevant for socio-cultural, political and economic relations. This highlights both the dual roots of the present globalisation (driven by the deliberate acts of politicians and the effects of digitalisation) and the cross-border perspective of this venture. More or less along these lines, Held defines globalisation as ‘a stretching of social, political and economic activities across frontiers such that events, decisions and activities in one region of the world can come to have significance for individuals and communities in distant regions of the globe’ (Held et al. 1999: 3).

This definition implies boundary permeability or transcendence. The importance of borders has been reduced dramatically. Frontiers have been opened through international agreement on free trade in goods and services, as well as agreements on the (effective) free movements of persons – at least as tourists. At the same time the digital revolution has made it impossible for one country to prevent all news and information from reaching their citizens. Satellites and the internet have made information available for citizens everywhere at little or no cost. Companies can have customers and suppliers all over the world, and the number of participants in any social setting is almost limitless.

All these developments increase the need for robust and flexible governing systems at the national, regional and global level to cope with the rapidly changing political, economic and cultural environment. The growing number and increasing diversity of participants creates severe problems for governments, for example, how to control, how to stimulate and how to tax! Taken together, these developments have brought about rising complexity and uncertainty in all countries of the world, and this in turn has created problems of political instability and change.

Why does the current wave of globalisation contain all these forceful elements? What are the main characteristics of the process? Politically, the current globalisation process is characterised by a fairly continual and gradual development toward a free world market not only in goods, but (from the mid-1990s) also in services and capital. The rise of neo-liberal ideology resulted in widespread liberalisation, deregulation and privatisation. The basic assumption is that increased world trade generates faster economic development. Regional development is a complement to globalisation, as both take advantage of opportunities to produce goods and services where associated costs are lowest, and sell them where they fetch the highest price. There are more than 170 regional organisations in the world. Organisations such as the EU, EFTA, APEC, NAFTA and ASEAN promote freer trade among their members, and thus contribute to economic growth (even if they may protect their members from some of the effects of global free trade). There has also been a proliferation of international and transnational regulatory regimes, such as the WTO, but these tend to be somewhat weaker because of the need to reach agreement among a large number of states. The result has been a multilayered system of governance, and a diffusion of political authority that involves sub-national regions, nation states, regional organisations and global institutions. Chapter 2 explores the working of the most advanced of the regional organisations, the EU, in greater detail.

At the economic level, the last half-century has witnessed a continuous development of economic and trade liberalisation, which has led to a practically free global market for goods (excluding agricultural products) and a truly global financial system. The financial system is the most liberalised today. This has been a step-by-step process, governed by the results of the different trade rounds in GATT, and later the WTO, and of a large number of bilateral and multilateral trade agreements. Recent WTO negotiations and many bilateral agreements have come to include services from telecommunications to shipping. However, the degree of liberalisation varies from agreement to agreement and between different countries. In any case, the result at the global level is increased economic interaction among all countries, rapidly growing world trade, and greater economic interdependence.

Globalisation is also reflected in defence and military matters. There has been a shift in the nature and impact of global and regional conflicts. Attempts have been made to establish, or develop, or change the focus of, regional regimes for cooperative security and collective defence such as NATO, the OSSE and the EU’s security and defence capacity. The end of the Cold War brought about new rivalries and security concerns, and a totally new pattern of global and regional threats. At the same time, armaments production and procurement has become more internationalised, and the US industry has emerged as hegemonic in this sector.

As in all previous periods of globalisation, there have been large waves of migration between countries, and even regions. In the current wave, the movement has primarily been away from war-zones, failed states and poor living conditions and poverty. Economic migrants in search of a more prosperous life may be highly skilled individuals such as doctors, nurses and engineers, but there are also a growing number of unskilled persons fleeing to the Western world from unbearable living conditions at home. This comes in addition to increasing numbers of international asylum seekers, refugees and displaced persons.

Cultural globalisation is an effect of globalisation, particularly in the Information and Communication Technology (ICT) field, but is also an important cause of further globalisation. The means of cultural transmission and reception are diffusing around the globe in the shape of TV, radio, satellite communications, mobile telephony and the internet. Many national media markets feature a degree of foreign ownership and control. This runs in parallel with a globalisation of content, from football and music to films and news, which has, if anything, developed even faster than the mediums themselves. Like so many other aspects of globalisation this is a double-edged sword: it helps create cultural trends which become truly global, whilst presenting new channels for the spread of alternative cultural messages (including anti-globalisation platforms). So far, the threat has been primarily to closed societies of the totalitarian or authoritarian kind (whether communist, fundamentalist or military regimes). The extent to which globalisation can be perceived as a threat to national cultures is hotly debated in many liberal democracies.

In the same way as culture, environmental problems can be seen both as a driver behind and a consequence of globalisation. Free trade has exacerbated some environmental problems, but others can arguably only be addressed at the international or global level. For example, increased global warming and ozone depletion is partly as a result of the increased transportation required for free movement of goods and persons. On the other hand there has also been a large increase in international environmental laws, treaties and regimes.

Compared to the previous waves of globalisation, the current pattern includes five features which are new or have not been fully developed before. The first is the somewhat unique international situation brought about by the end of the Cold War, whic...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• List of Figures and Tables
• Preface
• Introduction: Liberalising and Modernising Public Services
• 1 Internationalisation, Globalisation and Liberalisation – Strategic Challenges for Public Governance
• 2 European Integration – Recapturing Sovereignty and Institutionalising Liberalisation
• 3 Liberalisation and Privatisation
• 4 Regulation and Competition Policy
• 5 Modernising Public Administration: To the New Public Management and Beyond
• 6 Modernising Government – eGovernment
• 7 Organisational Design and Institutional Governance
• 8 Tools of Management and Leadership
• Conclusion: Public Service Delivery in the ‘Knowledge Society’
• Bibliography
• Index