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Public Management and Administration

Phnom Penh, Cambodia,

015 666 678, [email protected]

6/22/2013 Syllabus 1

Course DescriptionThe course is designed specially for trainees of the Royal School of Administration

(generally known in French ERA). Thus, firstly, the course give overall picture what Public Administration/Management is all about. Secondly, the course will go deeper into substance of the effective management of public sector.

It, therefore, is designed to introduce and assess the principles and theories underlying changes in the management of the public sector. The class also discusses in detail newer public management models adopted internationally, and the basis, nature and dimensions of these models as well as their theoretical underpinning.

The course will begin with discussion on the nature of public management and move to organization theories and effects of government structure on executive branch behavior. The course will also examine human side of public organizations and leadership in organizations. The course is designed to go beyond conceptual framework of public management and also help students to develop their knowledge, insights and skills necessary to manage and lead public organization. Special reference will also be on non‐profit organization. In other words, management of not‐for‐profit organization will be in additional focus as well.


SyllabusThe following topics will be covered in this class:

• Introduction• Traditional Model of Public Administration • Public Management• Elements of Governance and the Role of Government • Strategies for Growth with Equity and a Glance on East Asia’s Experience• Overview of NPO• Effectiveness of ODA• Public Enterprise• Public Policy and Policy Analysis • Managing Internal Components• Managing External Constituencies • Public Management in Developing Countries


Textbook and Teaching Methods

• Teaching Method: – The Course is a combination of lecture and discussion. – English is instructional language.

• Teaching Time– The course is structured into seven 3‐hour sessions

• Assessment and Other regulations– See regulations set by RSA

• Textbook: – Main:

• Public Management and Administration, Owen E. Hughes, 3rd. Ed., 2003– Supplement:

• Public Management and Governance, Ed. Tony Bovaird and Elke Loffler, 2003

• The Thaksinization of Thailand, Duncan McCargo and UkristPathmanand, 2005

• Other articles and cases studies in several countries and others as required.


Public ManagementIntroduction, Definition, Concepts/Settings

6/22/2013 Week 1 1

Public Management Defined

• Public management is the use of managerial, political, and legal theories and processes to fulfill legislative, executive, and judicial mandates for the provision of governmental regulatory and service functions.

6/22/2013 Week 1 2

Introduction (I)

What traditional public administration regarded as fundamental principles have become challenges for new paradigm:

1‐ Bureaucracy: Government should organize itself according to the hierarchical, bureaucratic principles.

2‐ One‐best‐way: There is only one best way of doing thing.

3‐ Bureaucratic delivery: Government delivers goods and/or services.

6/22/2013 Week 1 3

Introduction (II)

4‐ Politics / administration dichotomy: There is a line to separate politics away from administration.

5‐ Public interest: Motivation of public servants is assumed to be that of public interest.

6‐ Professional bureaucracy: Public servants should be professional, neutral and life‐long employed

7‐ Administration: Tasks must follow instruction given by others. There is no or little personal responsibility.

6/22/2013 Week 1 4

A New Paradigm (the two models)

‐ The basic paradigm for public sector is built around the argument that there are two opposing forms of organization: 1‐bureaucracy and 2‐markets.

‐ The key difference between the two forms of organization is that between choice and compulsion; allowing the market to find an agreed result or having it imposed by a bureaucratic hierarchy.

‐ At this most fundamental level, bureaucracy and markets are very different; they are based on very different ways of looking at the world. In short, the traditional model of administration is based on bureaucracy; public management is based on markets.

6/22/2013 Week 1 5

Administration Paradigm

-People support the concept that the traditional model of administration as a paradigm believe that they have a “discipline”, complete with “theories, laws, and generalization” that focus their research. The discipline has been based on the works of such as Weber, Wilson and Taylor.

6/22/2013 Week 1 6

Management Paradigm

The public management paradigm has very different underlying theoretical bases of economics and private management. This new management paradigm emphasizes result in terms of “value of money”, to be achieved through management by objectives, the use of markets and market‐type mechanisms, competition and choice, and devolution to staff through a better matching of authority, responsibility and accountability.

6/22/2013 Week 1 7

The Emergence of New Approach

• By the beginning of 1990s, a new model of public sector management had emerged in most advanced countries and many developing countries. Names of new approaches include:–Managerialism, –New Public Management (NPM), –Market‐based public administration, –Post bureaucratic paradigm, – Eentrepreneurial government…Whatever name it takes the literature has more or less settled on NPM.

6/22/2013 Week 1 8

Some Cases

‐ UK: 3Es government emerged in 1980s during Thatcher government. Economics, Efficiency (doing thing right), and Effectiveness (doing the right thing).

‐ US: Reinventing Government toke place before and during Clinton era. The government changed culture of American federal government through 4 key principles: 1‐cutting red tape, 2‐putting customers first, 3‐empowering employees to get results, and 4‐cutting back to basics and “producing better government for less”. (See Gore report in 1993).

- The reforms of OECD, WB, and IMF in 1990s.

6/22/2013 Week 1 9

Differences of the two‐ Administration vs. Management

‐ Administration involves following instructions,‐ Management involves: 1‐ The achievement of result, 2‐ Personal responsibility of manager

‐ Public Administration vs. Public management‐ Public admin focuses on process, procedures,‐ Public mngt focuses on achieving result and taking responsibility for doing things,

‐ Public admin. is a discipline about public sector (Public Policy, Public Administration, Public Management)

6/22/2013 Week 1 10

Imperatives of Change

‐ The attack on the public sector–Scale of public sector: too much spending

–Scope of public sector: too many activities

–Method of public sector: too bureaucracy

6/22/2013 Week 1 11

Political Joke 1: What Are Politics?

A kid goes to his dad and asks, "Dad, what are politics?" His dad replies, "Put it this way; I am the breadwinner of the family so I am capitalist. Your mom is the owner of the money so she is government. The government is the provider for the people so you are the people. Your baby brother will be the future, and the nanny is the working class. Now think about that."

6/22/2013 Week 1 12

So he went to bed. He was woken by his brother. The baby had pooped in his diaper. He went to tell his parents, but he only found his mom asleep in the bed. He didn't want to wake her up, so he went to the nanny. The door was locked. He checked through a hole and saw the dad in bed with the nanny. He went back to bed.

6/22/2013 Week 1 13

The next morning, he went to his dad and said, "Dad I know what you mean now." "You do? Tell me." "OK, while capitalist is screwing the working class, the government is sound asleep, while the people are watching the future being pooped on!!!"

6/22/2013 Week 1 14

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

Strategic Management

6/22/2013 Week 10 1

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

What is Strategic Management?

6/22/2013 Week 10 2

The set of decisions and actions that result in the formulation and implementation ofplans designed to achieve a organization’s objectives.


Critical Tasks of Strategic Management

Formulate the organization’s missionConduct internal analysis Assess the organization’s external environmentAnalyze organization’s optionsIdentify most desirable optionsSelect long‐term objectives and grand strategiesDevelop annual objectives and short‐term strategiesImplement the strategic choicesEvaluate success of the strategic process

6/22/2013 Week 10 3


What is Strategy?

Large‐scale, future‐oriented plan for interacting with the competitive environment to achieve objectives

Company’s “game plan”Framework for managerial decisions

6/22/2013 Week 10 4


Dimensions of Strategic Decisions

• Strategic issues• Require top‐management decisions• Require large amounts of the organization’s resources• Often affect the firm’s long‐term prosperity• Are future oriented• Usually have multifunctional consequences• Require considering the organization’s external

environment

6/22/2013 Week 10 5


Three Levels of Strategy

National (or State) levelMinisterial levelFunctional level

6/22/2013 Week 10 6

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.6/22/2013 Week 10 7

Characteristics of Strategic Management Decisions

National (or State) level decisions

Greater risk,cost, and profit potential

Greater need forflexibility

Longer time horizons


Characteristics of Strategic ManagementDecisions (contd.)

Functionallevel

decisions

Implement overall strategy

Involve action-orientedoperational issues

Are relatively short rangeand low risk

Incur only modest costs


Characteristics of Strategic Management Decisions (contd.)

Ministerial leveldecisions

Bridge decisions atNational and functional

levels

Are less costly, risky, and potentially profitable thannational-level decisions

Are more costly, risky, andpotentially profitable than functional-level decisions


Formality in Strategic Management

• Definition• Degree to which participants,

responsibilities, authority, and discretion in decision making are specified

• Forces affecting degree of formality• Size of organization• Predominant management styles• Complexity of environment

6/22/2013 Week 10 10


The Strategy Makers

• The ideal strategic management team includes• Head and deputies of the government• Cabinet members • Heads of functional areas

• The strategic management team obtains input from• Planning staff• Lower‐level management and supervisors

• Role of Head and deputies of the gov’t• Provides long‐term direction• Assumes ultimate responsibility for country’s success• Solicits guidance from other branches (representatives,

legislative)

6/22/2013 Week 10 11


Benefits of Strategic Management

Enhances the country’s ability to prevent problems

Emphasizes group-based strategic decisions likely to be based on best available alternativesImproves gov’t employees’ understanding of the productivity-rewardrelationshipReduces gaps/overlaps in activities among gov’t employees as theirparticipation clarifies differences in roles

Resistance to change is reduced


Risks of Strategic Management

• Time involved may negatively impact operational responsibilities of officials involved,

• Lack of involvement of strategy makers in strategy implementation may result in shirking of responsibility for strategic decisions

• Potential disappointment of employees over unattained expectations requires managerial time and training

6/22/2013 Week 10 13


Country missionand social

responsibility

Externalenvironment Internal analysis

Strategic analysis and choice

Long-termobjectives Generic and grand strategies

Short-term objectives;reward systems

Functional tactics Policies thatempower action

Restructuring, reengineeringand refocusing the organization

Strategic control andcontinuous improvement

Possible?

Desired?

LegendMajor impactMinor impact

Ex 1-6:StrategicManagementProcess

6/22/2013 Week 11 1

Personnel Management

6/22/2013 Week 11 2

HR Defined

Human Resource (HR) Management consists of the activities managers perform to plan for, attract, and retain an effective workforce.

6/22/2013 Week 11 3

HR Planning

Strategic Human Resource Planning consists of developing a systematic, comprehensive strategy for (a) understanding current employee needs (b) predicting future employee needs

6/22/2013 Week 11 4

Understanding Current Employee Needs

Job Analysis is to determine, by observation and analysis, the basic elements of a job.

Job Description summarizes what the holder of the job does and how and why he or she does it

Job Specification describes the minimum qualifications a person must have to perform the job successfully

6/22/2013 Week 11 5

Forecasting Future Demand

• The staffing the organization might need

• The likely sources for staffing

6/22/2013 Week 11 6

Categories of HR Law

Labor RelationsCompensation and BenefitsHealth & SafetyEqual Employment Opportunity

6/22/2013 Week 11 7

3.843.81

3.713.083.05

2.862.78

1.921.64

Employee referrals

Executive search firms

Want ads

Private employment agencies

Unions

College recruiting

Professional associations

Direct applications

Public employment agencies

Effectiveness Of Recruitment Sources

Scale: 1 = not good, 3 = average, 5 = extremely good

6/22/2013 Week 11 8

How to Attract Qualified Applicants

Internal Recruiting making people already employed in the organization aware of job openings

External Recruiting attracting job applicants from outside the organization

6/22/2013 Week 11 9

Performance Appraisal Defined

Performance Appraisal consists of 1- assessing an employee's performance 2- providing him or her with feedback

6/22/2013 Week 11 10

Compensation Defined

- Compensation has three parts: - 1- wages or salaries

2- incentives3- benefits

6/22/2013 Week 11 11

Concerns with Promotion

FairnessNondiscriminationOthers’ resentments

6/22/2013 Week 11 12

Types of Dismissal

LayoffsDownsizingsFirings

6/22/2013 Week 12 1

Public Management

Managing External Constituencies

6/22/2013 Week 12 2

The Needs for an External Focus

- Dealing with external units of the same organization (different parts of the same org),

- Dealing with independent organizations such as other parts of government, business and interest groups (different org in and out gov’t),

- Dealing with the press and publics

6/22/2013 Week 12 3

External relations in the Traditional Model and NPM

Traditional Model:

Same org: Handled bureaucratically, based on organizational charts,

- Different org: Managed by political leadership. Interest groups were barely tolerated by the public services,

- Press and publics: Regarded negatively by the bureaucracy,

6/22/2013 Week 12 4

Interest Groups Terminology: Pressure group Definition: Not part of the government

but being the institutionalized linkage with government, providing systematic functions.

Relationship with bureaucracy: Began in 1950s

6/22/2013 Week 12 5

The Policy Community

The Emergence:The decline of prestige and influence of the bureaucracy,

More open political system (bureaucracy does not have any more information monopoly)

6/22/2013 Week 12 6

Theoretical Problems in relying on interest groups

Is group competition beneficial / harmful?

The Importance for the Theory:

6/22/2013 Week 141

Public ManagementA New Paradigm

for Public Management

6/22/2013 Week 142

External relations in the Traditional Model

Paradigm defined– A philosophical and theoretical framework of

scientific school of discipline within which theory, laws, and generalizations and experiments

performed in support of them are formulated. A Paradigm shift or not?

– Is there a new paradigm or just a reform?– Whether or not the two models can be regarded

as paradigms?

6/22/2013 Week 143

Traditional Administration Paradigm

Weber’s theory of bureaucracy Wilson’s theory of political control Taylor’s theory of management

6/22/2013 Week 144

Public Management Paradigm

A focus on results in terms of efficiency, effectiveness, quality of service...,

A decentralized management environment, A greater client focus and provision of client

choices through the creation of competitive environments within and between public sector orgs. and non-government competitors,

6/22/2013 Week 145

Public Management Paradigm (II)

Flexibility to explore more cost effective alternatives to direct public provision or regulation, including the use of market type instruments, such as user charging...,

Accountability for results and for establishing due process rather than compliance with a particular set of rules, and a change from risk avoidance to risk management.

6/22/2013 Week 146

AN International Movement

The match toward – a more flexibility in organization– market based

6/22/2013 Week 2 1

Traditional Model of Public Administration

6/22/2013 Week 2 2

Introduction

- Traditional model of admin. is characterized as:- Being under formal control of the political

leadership,- Based on strictly hierarchical model of

bureaucracy, - Staffed by permanent, neutral and

autonomous officials, - Motivated only by public interest…- Not contributing to policies but administering

the policies decided by politicians. - It remains the longest standing and most

successful theory of management in public sector but it is now being replaced.

6/22/2013 Week 2 3

Early Administration (pre- and early 19th century)

- Earlier systems of administration shared important characteristics:- Being personal based on loyalty to a particular individual such as king or minister, instead of being “Impersonal” based on legality and loyalty to the organization and the state,- Recruitment based on patronage / nepotism. - Practices resulted in corruption or misuse of

office for personal gain.

6/22/2013 Week 2 4

The Reforms of the 19th. Century

1- The beginning of traditional model of admin. is best seen in mid-19th. century in Britain and the reform in UK system also influenced opinion in the US.

2- Civil Service Act in 1883 contained four key points:- Holding of competitive examination for all applicants - Making of appointment based on grades gained in

the examination,- Effective probationary period led to absolute

appointment,- Proportion of appointment at Washington

according to the population of other States.

3- The model was influenced by Woodrow Wilson in the US, Max Weber in Europe. Both of them believed the notion that admin could be instrumental and technical and had to be removed from political sphere.

6/22/2013 Week 2 5

Weber’s theory of bureaucracy

1- Fixed and official jurisdictional areas2- Office hierarchy and of levels of graded

authority (there shall be super- and sub-ordination),

3- The management of modern office is based upon written document (the File). It makes the office “bureau…”

4- Office management shall be specialized. Thus there shall be expert training,

5- Full of working capability. 6- General rules.

6/22/2013 Week 2 6

Wilson and Political Control

- There is a clear relationship of accountability and responsibility of department or agency - Advice politician- Manage resources

- There is a strict separation between matters of policy (politician) and matter of administration (public servants)

- The administration is presumed to be anonymous and neutral

6/22/2013 Week 2 7

Taylor and management

- Scientific Management- Human relation- A continuing debate

6/22/2013 Week 2 8

Problems with the Traditional Model

- The problem of political control- The problem of one best way- The problem of bureaucracy

6/22/2013 Week 2 9

Political Joke 2: Government Tactics

The Central Intelligence Agency (CIA), the Federal Bureau for Investigation (FBI) and the Los Angeles Police Department (LAPD) are all trying to prove that they are the best at apprehending criminals.

The President decides to give them a test. He releases a rabbit into a forest and each of them has to catch it.

6/22/2013 Week 2 10

The CIA goes in. They place animal informants throughout the forest. They question all plants and mineral witnesses. After three months of extensive investigations they conclude that rabbits do not exist.

6/22/2013 Week 2 11

The FBI goes in. After two weeks with no leads they burn the forest, killing everything in it, including the rabbit, and they make no apologies. The rabbit was killed in the battle field.

6/22/2013 Week 2 12

The LAPD goes in. They come out two hours later with a badly beaten bear. The bear is yelling: "Okay! Okay! I'm a rabbit! I'm a rabbit!"

Public Management

6/22/2013 Week 3 1

The Meaning and Functions of General management‐ The Meaning of Management‐ Functions of General Management

‐ Strategy‐ Establishing objectives and priorities‐ Devising operational plans

‐ Managing Internal Components‐ Organizing and staffing‐ Directing personnel and personnel management

‐ Controlling performance‐ Managing External Constituencies

‐ Dealing with external units‐ Dealing with independent org‐ Dealing with the press and public

6/22/2013 Week 3 2

The Beginnings of a Management Approach

‐ 1950s‐60s problems of bureaucratic rigidity became evident in private sector,

‐ 1980s governments were unconvinced that the traditional system of admin provided an effective form of mngt in their public services

‐ Management approach began sometime between these years (1960s‐70s)

6/22/2013 Week 3 3

The Public Management Reforms

Four possibilities behind the reform:• Whim (sudden wish) of fashion,• Cargo cult (the endless rebirth),• Attraction of opposite, and • Response to the set of social conditions.

6/22/2013 Week 3 4

Theoretical Bases

• Theoretical bases for traditional public management– Theory of bureaucracy– Theory of separation between politicians and administrators

• Theoretical bases for new public management• Economic theories

– Market‐based – Moving away from bureaucracy as an organizing

principles• Private management

‐ Result‐based‐ Profit centers‐ Decentralization‐ Staff flexibility

6/22/2013 Week 3 5

Criticism of Managerialism

‐ The economic basis of managerialism‐ The basis in private management ‐ Politicization ‐ Ethical issues in implementation and morale problems

6/22/2013 Week 3 6

Political Joke 3IF

If a barber makes a mistake, it is a new style.If a driver makes a mistake, it is an accident.If a doctor makes a mistake, it is an operation.If a parent makes a mistake, it is a new generation.If a politician makes a mistake, it is a new law.If a scientist makes a mistake, it is a new invention. If a tailor makes a mistake, it is a new fashion.If a teacher makes a mistake, it is a new theory.If your boss makes a mistake, IT IS YOUR MISTAKE

6/22/2013 Week 3 7

The Roles of Government and Elements of Governance

6/22/2013 Week 4 1

Introduction

‐What government should or should not do?‐ The dividing line varies between different nations in different times,‐ It is observable that during the last two decades of the 20th century resources and functions move away from public sector toward private sector,

6/22/2013 Week 4 2

The Need for a Public Sector

- Private and Public Management

- Management Characteristics:

- Public sector is coercive (using force)

-Private sector is arbitrary (not seeming to be based on a reason, system or plan and sometime seeming unfair)

- Accountability:

- Public sector is accountable to the nation

- Private sector is accountable to shareholders

6/22/2013 Week 4 3

Market Failure as the Basis for Public policy

‐ Public goods‐ Externalities‐ Monopoly‐ Imperfect information

6/22/2013 Week 4 4

Instruments of Government

‐ Government provision‐ Subsidy‐ Production‐ Regulation

6/22/2013 Week 4 5

Basic Functions of Government

Providing economic infrastructure Provision of various collective goods and services

The resolutions and adjustment of group conflicts

The maintenance of competitionProtection of natural resourcesMinimum access by individuals to the goods and services of the economy

Stabilization of the economy6/22/2013 Week 4 6

The Size of Government Debate

• Is it too big? Too small? • What government has done with that money?

6/22/2013 Week 4 7

Governance

• ADB clarifies its concept of governance by identifying four elements. These are:

• Accountability• Participation• Predictability• Transparency

6/22/2013 Week 4 8

Accountability• Public officials must be answerable for government behavior, and responsive to the entity from which their authority is derived.

• ADB's efforts towards promoting accountability in governments build the capacity to undertake economic reforms, implement them successfully, and provide citizens with an acceptable level of public services. Criteria are established to measure the performance of public officials, and oversight mechanisms set up to make sure the standards are met.

6/22/2013 Week 4 9

Participation• Participation refers to the involvement of citizens in the

development process. Beneficiaries and groups affected by the project need to participate so that the government can make informed choices with respect to their needs, and social groups can protect their rights.

• ADB promotes participation in governments by:• Encouraging the participation of project beneficiaries and

affected groups • Improving the interface between the public and private

sectors • Empowering local government by letting them take ownership

of the project • Using NGOs as vehicles for mobilizing and reaching project

beneficiaries 6/22/2013 Week 4 10

Predictability

• A country's legal environment must be conducive to development. A government must be able to regulate itself via laws, regulations and policies, which encompass well‐defined rights and duties, mechanisms for their enforcement, and impartial settlement of disputes. Predictability is about the fair and consistent application of these laws and implementation of government policies.

6/22/2013 Week 4 11

Transparency

• Transparency refers to the availability of information to the general public and clarity about government rules, regulations, and decisions. It can be strengthened through the citizens´ right to information with a degree of legal enforceability. Transparency in government decision‐making and public policy implementation reduces uncertainty and can help inhibit corruption among public officials.

6/22/2013 Week 4 12

6/22/2013 Week 5 1

Strategies for Growth with Equity

6/22/2013 Week 5 2

0%

100%

100%

50%

25%

75%

50%25% 75%People

Money

6/22/2013 Week 5 3

Redistribution first, then growth

The case was evidenced in China during 50s and 60s. Development started with confiscation from capitalists’ and landlords’ property. The property was placed under collective ownership.

6/22/2013 Week 5 4

Redistribution with growth

The strategies built around the question if there is a way in which the gains from economic growth can be redistributed so that over time the income distribution gradually improved.

The World Bank has been one of the leading development agencies introduce policy instruments that become popular and employed by many developing economies.

6/22/2013 Week 5 5

7 policy instruments1- Encourage employment of unskilled workforces,2- Encourage the poor to earn assets they can afford

such as improve agricultural land,3- Greater educational level,4- More progressive taxation,5- Public provision of basic needs to the poor,6- Policies (on taxes and subsidies) to aid poor

producers and poor consumers,7- Development of new technology that helps to make

low-income workers more productive

6/22/2013 Week 5 6

Basic Human Needs (BHN)

For BHN programs to redistribute income, basic services must be subsidized. Two basic actions for poverty reduction should be employed: Policy to increase the productivity of the main

resources own by the poor (means their labor), The provision of basic social services to the

poor.

East Asia’s Success Story

6/22/2013 Week 6 1

Highly‐Performing Asian Economies (HPAEs) I

• Japan • Four Tigers

– Hong Kong– Korea– Singapore – Taiwan

• Three ASEAN– Indonesia– Malaysia– Thailand

6/22/2013 Week 6 2

Since 1960, the HPAEs have grown:

- More than twice as fast as the rest of East Asia and industrialized countries,

- About three times faster than Latin America and South Asia,

- About five times faster than Sub-Sahara countries

Highly‐Performing Asian Economies (HPAEs) II

• The proportion of people living in absolute poverty has dropped substantially during 1960‐90– from 58% to 17% in Indonesia– From 37% to 5% in Malaysia

• Among developing countries, the degree of inequality of income distribution is among the lowest in Taiwan and Korea. Reasons can be:– Comprehensive land reforms– High income earned in off‐farm jobs by the lower income groups,

– Rapid increase in crops yields

6/22/2013 Week 6 3

Principles of Shared Growth in HPAEs

• As the economy grows, all groups benefit. Some of the mechanisms are used to achieve shared growth:– Korea and Taiwan : Land Reforms,– Hong Kong and Singapore: Massive public housing programs,

– Malaysia**: Introduced explicit wealth‐sharing program to improve living standards of ethnic Malay to better off ethnic Chinese,

– Indonesia: Used rice and fertilizers price policy to raise rural income.

6/22/2013 Week 6 4

Malaysia’s Case (I)

At the time of independence in 1957, the population distribution was:

‐ 51% Malay ‐mostly farming,‐ 38% Chinese ‐mostly mining, financial, service and manufacturing,

‐ 11% Indian – mostly rubber cultivation

6/22/2013 Week 6 5

Malaysia’s Case (II)

• To reduce unequal distribution of income, Malaysia set distributional policy and New Economic Policy (NEP) was put in place in 1971. The goal of the NEP: to eliminate poverty and to redistribute the nation’s wealth along ethnic lines favoring the BUMI BUTRA (Malay + indigenous people)

6/22/2013 Week 6 6

Debt Crisis andAid Effectiveness

6/22/2013 Week 7 1

What is Development Studies?

–A process of making current world situation for “better” quality,

– A process of moving down the line between middle income group and low income group by using integrated or multi‐disciplinary approaches (Socio‐cultural, political, and economic approaches).

6/22/2013 Week 7 2

Development for whom?• For low income group

– Improving quality of life in low income group but avoiding 3C style,– Improving degree of participation by all concerned in decision making

process.• For high income group

– Conserving environmental and non‐renewable natural resources– Reconsideration of life style of middle income group (3Cs and 3Ds)

• For all– Economic development vs. conservation of environmental and non‐

renewable natural resources

6/22/2013 Week 7 3

Foreign Aid / ODA

• The UN target: Industrialized countries contribute 0.7% of GNP in foreign aid. Japan (0.3%) and US (0.2%) fail to reach the target. Only 4 countries have their ODA more than 0.7%. They are:– Denmark,– Netherlands– Norway– Sweden

6/22/2013 Week 7 4

Foreign Aid Effects

• Negative Effects– Donors offer aid to reward political friends and military allies, withhold it from those perceived as enemies,

– The recipient countries are required to spend the funds received and goods produced in the donor countries (tied aid).

• Positive Effects– Donor use aid to reduce burden of recipient government to change their development policies in what donors believe to be the recipient’s own best interest.

6/22/2013 Week 7 5

Does a majority of aid work?• If a majority of aid works, why is Africa’s development record

so poor?– Smaller % of literate and educated people– Less stable political structures,– Less settled administrative institutions,– Dependency on primary commodity exports,– High population growth.

• Reasons for the failure– Excessive imposition of commercial or political motives (small % of

ODA goes for human welfare purpose such as education & health),– Many projects are technically poorly designed for their intended

purposes,– Failure to learn from mistakes

6/22/2013 Week 7 6

Debt crisis and adjustment in the Philippines I

Vicious circleMarcos (corrupt) Akino (politics>economy) Ramos (economy>politics)

6/22/2013 Week 7 7

Poor

Low quality school

Poorly-paid employment

Low-income

Debt crisis and adjustment in the Philippines II

• 1970s the Philippines launched public development investment programs investment rapidly

• Major problems in the late 1970s and early 1980s– The Philippines failed to develop self‐sustaining growth that would have eased the burden of servicing its debts,

– The maintenance of trade regime that did not sufficiently encourage exports,

– Political economic environment create by Marcos’s gov’t

6/22/2013 Week 7 8

Failure to develop self‐sustaining growth

‐ Poor returns from investment, low output response and low employment generation of investment,

‐ Continued dependence on foreign borrowing to fund domestic investment and difficulties mobilizing domestic resources to fund investment.

6/22/2013 Week 7 9

Trade regime that did not sufficiently encourage exports

• The Philippines increased taxation on traditional export commodities, particularly on agri‐commodities,

• The import substituting manufacturing continued to have heavy tariff protection until the early 1980s manufacturing had higher import component (i.e. it had to import parts & other intermediate goods) compared with traditional export goods lowered the net foreign exchange earnings.

6/22/2013 Week 7 10

Marcos’s Political economic environment

• Entrepreneur became less willing to invest and expand in the Philippines,

• Sharply accelerates capital flight in the early 1980s, averaging 4.8% of GNP in 1981‐82.

6/22/2013 Week 7 11

How the Philippines correct errata • Increase productivity in agriculture,• Remove the state from activities that could be more efficiently performed by private firms,

• Reduce government borrowing, lower interest rate & increase investment:– Improve efficiency of tax collection,– Suspend subsidies to state‐own enterprises,

• Place greater emphasis in the edu. system,• Create more favorable environment to attract FDI, • Improve the structure of incentive & export promotion.

6/22/2013 Week 7 12

Public Enterprise

6/22/2013 Week 8 2

Reasons for Establishing Public Enterprises

To correct market failure, To alter the structure of pay-off in an

economy (to assist some groups with disadvantages),

To facilitate centralized long-term economic planning,

To change the nature of the economy, from capitalist to socialist

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Kinds of Public Enterprises

Public utilities (water, sewerage, electricity…), Transport and postal services, Trading enterprises, Regulatory authorities (government’s regulation

and ownership, ex. Automobile checking),

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The privatization Debate

Economic arguments for privatization: Exposing activities to market forces and competition; and reducing government spending,

Managerial Efficiency and privatization: ,

Ideological Arguments,

Public Policy and Policy Analysis

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Public Policy, Administration and Management

• Ways of studying and characterizing interactions between government and its clients.

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Public Traditional Administration Public Management

Public PolicyStudy of Government sector

Policy Analysis Political Public Policy

Policy Analysis and Its Limitations

• Methods used• Policy Process Models

• Limitations of Policy Analysis Approach• Response to the Criticism

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Methods Applied (I)• Empirical Methods

– Scientific Skills:Information structuring skills: Sharpen the analyst’s ability to clarify policy related ideas and to examine their correspondence to real world events,

Information collection skills: Provide the analyst with approaches and tools for making accurate observations of persons, objects, or events,

Information analysis skills: Guide the analyst with drawing conclusions from empirical evidences

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Methods Applied (II)

• Facilitative Skills:–Planning Skills,–Management Skills:

• Technical skills,•Conceptual skills,• Inter‐personal skills

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Policy Process Models– Step 1: verify, define and detail the problems,– Step 2: Establish evaluation criteria,– Step 3: Identify alternative policies,– Step 4: Evaluate alternative policies,– Step 5: Select alternative policies,– Step 6: Monitor policy outcomes

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Limitations of the Approach and the Response

• Quantitative methods,• Separate public policy discipline,• Overemphasis on decision,• Not used, less used,• The rational model,• A faulty model of science,• Undemocratic.

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Political Public Policy

• It is a political process rather than narrowly technical one. There should be the output of individuals in organizations.

• There should be participation in:– Formulation,– Implementation, and – Evaluation.

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