Wednesday, April 9, 2014

Impact of Liberalization on Administration in Developing Countries

Liberalisation means relaxation of government controls in the spheres of economic and social policy. It has come to be equated with commitment to market orientation of the economy, deregulation, privatization, state withdrawal from many activities of the economy, integration with the global economy and reducing the public expenditure. The primary objective of liberalization is reorientation of the economies in the direction of market principles. It emphasizes dismantling the licensing system, reforming financial system, removing subsidies, user pay principle etc.

The impact of liberalization on administration has been viewed from different perspectives and hence the focus of the viewers has varied depending on their perceptions. But two central themes are found in these studies:

  1. An effective state with citizen friendly & transparent rules and institutions is vital for the provision of goods and services and for enabling people to lead healthier lives

  2. Within the state, public administration will continue to exist though in a different form


A consensus has emerged that state should not continue to play a role of universal provider of goods and services. Though it is still central in developing countries for ensuring social and economic development, it should assume a new role of partner, catalyst, facilitator and enabler. This view has emerged because the state in many developing countries has failed to provide basic amenities to the people so a new partnership between the government, citizens and the business is called for.

A two pronged strategy has been suggested to make administration in developing countries an effective partner in development. This comprises:

  1.        Matching the state’s role to its capacity

  2.        Raising the state’s capability by reinvigorating the public institutions


For meeting the challenges put forth by liberalization following have been the strategies of administration in developing countries:

1. Reform in the Public Services


The impact of free market economy on the structure and concept of government is on the agenda of discussion the world over. Terms like New Economic Policy, Structural Adjustment Programme, Privatization, Deregulation and Contracting out used in the context of liberalization in developing countries have all stressed on reforming the public services in these countries. The public services have been sought to be market and people friendly so that the individual and market enterprise could flourish in the economy.

2. New Public Management (NPM) Approach


This is also called “managerialism”. This approach has already much influenced the developed countries like USA, UK, Australia, New Zealand etc and is now spreading to the developing countries also. This approach is basically to remove the internal inefficiencies of bureaucracies. Though many influences have been there on administration by liberalization and globalization but the influence of new public management has the most phenomenal and visible. The major emphasis of new public management approach has been on the following concerns:

  • Much larger use of market like mechanisms for those public sector organizations which could not be directly transferred to the private owners

  • Decentralization of management and production of services by the public sector

  • Great emphasis on improving the service quality

  • Individual service users are to be treated as its “clients” are treated by the private sector


Though the various contents of new public management philosophy have already been discussed, here a more qualitative discussion would be presented. One of the significant influences of NPM has beerl that public administration has undergone significant transformation in structure and behavior in both developed and developing countries. Now the public sector is required to limit itself to facilitating and catalyzing changes with the help of limited financial and human resources.

A public administrator today is viewed as entrepreneurial manager whose job is to ascertain cost-effectiveness. So he has been given necessary flexibility and ‘autonomy’ which is not found in the traditional hierarchical systems. NPM advocates withdrawal of government from many activities and instead focus on the core tasks and to develop competencies in these. The cutting edge level administrator has been highlighted so that he could serve the clientele better. However the fact that NPM calls for not only adopting the techniques of business administration but also the values of business is disturbing for the developing countries as in developing mere efficiency is not the goal of government. Its goal is the realisation of progressive socio-economic goals of nation building.

3. Setting Bench Marks for Service Delivery


Impact of Liberalization on Administration in Developing CountriesBench marks for service delivery have been set not only in developed countries but also in developing countries like Malaysia, Philipines, India etc. These benchmarks are also called Service Quality Initiatives (SQIs). With onset of liberalization the public in developing countries is demanding better services but there is pressure on government to reduce the costs due to increasing public expenditure on welfare programmes. So service quality initiatives have been emphasized as a means of reducing costs and improving the quality of services provided. It has also been recognized that an efficient public sector will enhance the overall economic performance. In Malaysia, a number of measures like Total Quality Management (TQM), citizens’ charters etc. have been initiated. In Singapore, with the intention of providing high quality services concept of Public Service in 21st Century (PS 21) has been launched. In India the government has come up with the public service delivery excellence model “Sevottam” which encompasses Citizens’ Charters, Service Delivery and Grievance Redressal as its main constituents so that high quality services could be provided to the people.

4. Changing Role of Bureaucracy


The process of economic liberalization seeks a reduced governmental intervention in the economic sphere thus implying a reduced role of bureaucracy in the process of development. The bureaucracy has a role of helper, catalyst and facilitator. As already mentioned in the article on Market versus State debate, the state today is not expected to do everything on its own but it has to just give direction to the process of development so that no one is left out from reaping the benefits of economic development. In developing countries the role of bureaucracies has been emphasized in social sectors like health, education, rural development etc. and the market regulation.

5. Emergence of Concept of Good Governance


The era of 1990s has been an era in which lot of emphasis has been given on reforming public administration. The issues of governance have kept the policy making echelons occupied during this period. “Governance” has been defined as the capacity of the governments to design and implement the public policies. The developing countries have sought to increase their policy making and implementing capacities after the onset of liberalization. The international bodies like the World Bank, the International Monetary Fund, the United Nations Development Programme etc. emphasized on “capacity building” in the developing countries so that they could compete with the comity of nations once the countries of world have come closer consequent to liberalisation and globalization.

6. Enhancing the use of Information Technology in Government


The use of information technology had first been suggested in developed countries and it has been doing wonders even in developing countries. The developing countries have realized the importance of e-governance and they have realized its importance. The Singapore government now has its own website. Two way communication between the citizens and the government through the use of internet is doing revolution in the basic way how the government is functioning in developing countries. In developing countries due to the problem of corruption in government offices the less is the direct interaction between the government officials and the citizens less is the bureaucratic red tape. Towards this end e-governance is being seen as a great asset.

7. Clear perception of the role of government


Liberalisation is essentially a process of freeing the economy from the state control. In other words the market forces are given a greater say in the process of governance. Under this scenario it is now widely accepted among the policy makers at national and international levels that the state should focus on only the core areas like defence, foreign affairs, social and physical infrastructure etc and the other areas should be left open to the private players. Further as the sate is withdrawing from the non-core areas this space is getting filled by voluntary organizations, non-governmental organizations, self-help groups and community based organizations. In developing countries, concepts such as signing of Memorandum of Understanding (MoU) for improving the performance of public sector enterprises, corporatization of the loss making public sector enterprises, acceptance of the role of civil society in framing policies e. g. while designing Right to Information Act 2005 in India, allowing some private participation even in areas such as defence etc. point out to the fact that the perceived role of government is going through a change.

However the development countries like developed countries can not approach a blatant approach of state minimalism and market friendly development approach. The state has to continue playing an equally equally important role to play in providing basic education, health, malnutrition, eliminating poverty etc. Developing countries are diverting their limited resources to these sectors instead of indulging itself in production of consumer goods etc.

8. Empowerment of the citizens


Globalisation and liberalization have helped to reduce the communication gap between the different nations and societies. They have sensitized people about the events happening not only in their immediate surroundings but also in other parts of the world. Developments in part of world affect the mindset of people residing in other part. This has created an awareness of their rights in people. Citizens of developing countries are also demanding for empowerment and raising their voice in governance. This has been one of the most important paradigm shifts in public administration.

From the above discussion we can say that due to the impact of liberalization public administration is moving towards a rights’ based approach, a culture of accountability & transparency instead of traditional hierarchies is being sought to be imbibed in public bureaucracies. Innovative concepts such as e-governance, corporate governance, decentralization etc. are being offered as solutions to the “governance deficit” which has plagued developing countries for decades. The role of government is undergoing a qualitative shift from “doer” to “enaebler” in the provision of goods & services and in imbibing a citizen friendly culture.

However apart from the above positive impacts of liberalization, the developing countries are facing some serious challenges also. Some of these are “perceived” loss of sovereignty over taking their own economic & social policy decisions, indifference of western countries over distorted trade structure at international level favouring the developed countries, lack of commitment of developed countries towards environmental conservation and to take necessary steps so that developing countries do not face an environmental catastrophe in future, threat of rising powers of some of the multinational companies, lack of movement of labour across the borders at the same pace as does the capital & investment etc. The developing countries are increasingly becoming dependent on the policy advice of the international fora. These fora are dominated by the representatives from developed countries and are influenced greatly by their development experiences. The indigenous development experiences and potentialities of developing countries are not being due importance.


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