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The Politics of Constructing and Implementing New Public Management Reforms: A Comparison of the Netherlands and South Korea∗ (first version) Paper for the benefit of the 12th conference of the International Research Society for Public Management, Brisbane, 26-28 March 2008

Taco Brandsen Sunhyuk Kim

Contact details Taco Brandsen, Department of Political Science & Public Administration, Nijmegen School of Management, Radboud University Nijmegen, PO Box 9108, 6500 HK Nijmegen, The Netherlands, Tel. + 31 24 3611973, [email protected]. Sunhyuk Kim, Department of Public Administration, College of Political Science and Economics, Korea University, Anam-dong Seongbuk-ku, Seoul 136-701, Korea, Tel. +82 2 3290 2283, [email protected].

∗

This paper was conceived during our sabbatical stays at the Harvard Center for European Studies in

2006. We thank Harvard Law School for its excellent coffee, without which none of this would have been possible.

1. Introduction Over the past few decades, ‘globalization’ has occurred in several different dimensions. ‘Economic’ globalization has involved freer movement of goods, capital and labor across national borders. ‘Political’ globalization has been closely associated with what Huntington (1991) termed ‘the third wave of global democratization,’ that is, the global diffusion of liberal democratic regimes. In public administration, ‘globalization’ has been most prominently expressed in the rapid spread of public sector reform drives inspired by the ‘New Public Management (NPM)’ paradigm. Since its inception and proliferation in Anglo-Saxon countries, many non-AngloSaxon countries have also competitively adopted the NPM paradigm and implemented various types of state reform according to the paradigm. In rhetoric and practice, different countries imported NPM and used theoretical and practical tenets espoused by the paradigm. Despite the global expansion of the NPM paradigm over the past decades, the ways in which NPM was translated into specific policy decisions and programs have been far from being uniform. In some countries, NPM stopped merely at the level of political rhetoric. In others, it managed to be concretized into specific reform initiatives and policies, but failed to be carried out. In others, NPM was implemented to produce numerous notable changes in public administration structures, policymaking processes and administrative practices. The ways in which the NPM paradigm was interpreted and the degrees to which it was successfully put into practice has varied from country to country (Pollitt & Bouckaert, 2004; McLaughlin & Osborne, 2006). This paper purports to analyze why and how countries receive, interpret, and put into practice the NPM paradigm differently. We will compare two countries in different regions, The Netherlands and South Korea. This comparison is unusual, and that is the point. Nearly all cross-national comparisons of NPM focus on industrialized democracies with mature welfare states. This homogeneity leaves a potentially important element of the institutional context in the dark. With this paper, we hope to contribute to the effort to redress this deficiency. These two countries have emphasized different aspects of NPM and developed different public management reform strategies. We explain these national differences in terms of their distinct

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historical developmental trajectories, immediately antecedent social circumstances, and reform coalitions available at the time. The paper is organized as follows. In the next section, we explain and justify the comparative method we utilize in this paper and lay out our analytical framework, focusing on how it differs from existing works on comparative public management reform. In Section three, we conduct analyses of the two countries according to the analytical framework developed in the previous section, summarizing their similarities and differences. Section four puts the two cases in comparative perspective, explaining similarities and differences according to historical evolution of

state-society

relations,

immediately

antecedent

political

and

economic

circumstances, and political coalitions available in the polity at the time. In the last section, we conclude the paper with some reflections on the implications of our comparative analysis for future NPM research.

2. Comparative framework 2.1. Comparing NPM reforms ‘New Public Management’ is a broad term that encompasses several types of reforms that were adopted and implemented by many of the OECD countries since the early 1980s, aimed at improving the performance of organizations in the public sector. The most-cited description of NPM reforms is Hood’s, which includes the following elements: hands-on management, performance measurement, output control, disaggregation and decentralization, competition, private-sector management styles and financial discipline (Hood, 1991: 4-5). It has by now been widely acknowledged that such reforms are not converging towards a single model, as suggested in some early publications (e.g. in Osborne & Gaebler, 1992). Rather, different elements of NPM are selectively and differently introduced and implemented by different countries, to the point where it has even been questioned whether there really exists a coherent paradigm (Osborne & McLaughlin, 2006). One must in that sense clearly distinguish between different aspects of NPM (Pollitt & Bouckaert, 2004). The greatest extent of convergence can be witnessed in public management reform rhetoric, not least because it is espoused by major international funders such as the World Bank. However, the rhetoric only to 3

a lesser extent translates into policy decisions and even less into administrative practices. Furthermore, our knowledge of the actual effects of such practices remains very much underdeveloped (Pollitt, 2006). Therefore, when mentioning the diffusion and expansion of the ‘New Public Management’ paradigm, it is crucial to articulate what aspect of the paradigm—e.g. rhetoric, programmatic decisions, administrative practices, or policy effects—is in fact being disseminated. For the sake of argument, we will here consider NPM as a single discourse that potentially translates into different national reform initiatives. We analyze how the adopted rhetoric of NPM was put into practice through specific policy initiatives and decisions. Although we have some evidence on implementation and outcomes, we must (like most of our colleagues) restrict the systematic part of our comparison to formal reform initiatives. By closely analyzing the ways in which different countries selectively emphasize and implement different elements of NPM, we can attain a better understanding of how the global policy ideas are transformed by national institutional ‘filters’. Cross-national comparison is useful for at least two reasons. The first is that it helps us to better understand national differences between manifestations of NPM around the world. Although our empirical knowledge in this area has grown considerably over the past decade, there remains the need for more systematic and more cross-national comparisons. This especially concerns NPM reforms in other than the usual countries (e.g. the European Union, the United States, Australia and New Zealand). A second reason, which is more theoretical in nature, is that it helps to refine our understanding of the institutional conditions that affect the ultimate shape of public management reforms. One of the central issues in the globalization debate since the early 1990s has been whether globalization—in economic, political, social, cultural, and administrative spheres—would lead to institutional and policy convergence of different countries or would not affect national differences. In the 1990s, as a matter of fact, countries in different regions maintained and even reinforced their unique institutional characteristics despite the tidal wave of globalization. A consensus is building on the thesis that globalization inevitably go through the national institutional filters to get translated into initiatives, programs, and policies. Yet, only a limited number of systematic studies have been conducted what those ‘institutional filters’ look like and how they actually work. Our paper hopes to 4

contribute to a deeper understanding of the domestic institutional matrices in which reform initiatives are realized. 2.2. Basic assumptions Our question is how NPM reforms have been received and actually realized into policy initiatives in The Netherlands and South Korea, respectively, and how we should interpret and explain their differences. The reason why we ask this particular question for these particular set of countries will be discussed in greater detail in the next section. First, let us state the basic assumptions of our comparative analysis. To avoid reinventing the wheel, we will retain the basic framework laid out by certain previous studies and particularly by Pollitt & Bouckaert (2004). For analytical purposes, we will treat national reforms as different interpretations and adaptations of a single NPM paradigm, with a set of common values and elements. When the NPM paradigm is imported or imposed from outside, national actors—both public and private—have the choice of emphasizing and amplifying different aspects of NPM, taking advantage of their locations in the polity, mobilizing support, and averting opposition. We will assume that the process of translating the ideas of NPM into decisions is filtered by national institutional arrangements. Our theoretical expectation is that this process of rendering the ‘global’ NPM paradigm into a ‘national’ administrative reform initiative will show a great deal about the ‘institutional filters’ through which many global ideas of public administration and policymaking are implemented in different countries. To describe actual reforms, we will adopt existing categorizations. Types of reform trajectories can be distinguished, along dimensions identified by Pollitt & Bouckaert as financial management (budgeting and accounting), personnel management (capacity, skills and coordination) and organization (relations between organizations or subunits). We will focus on the relative importance, basic goals, and concrete contents of public management reform on these three main dimensions. The scope of reforms can be measured in terms the breadth of the areas (policy fields) affected by the reforms and the depth of the impact (the level at which they affect the administrative system). The former is the horizontal scope of the reform, and the latter is the vertical scope of the reform. We will look at the number of policy fields (horizontal scope) and the number of organizational units (vertical scope) affected by reform initiatives. 5

In defining independent variables, many existing studies of public management reforms are informed by a variety of rational actor institutionalism. It is assumed that the reforms are ultimately the result of purposeful strategies by politicaladministrative elites. Relatively underemphasized question then is to what extent national institutional conditions shape and filter the interests and strategies of these rational actors in public and private sectors. The relevant institutions can be defined in various ways. Pollitt & Bouckaert name five institutional characteristics that affect the implementation of NPM reforms: state structure (e.g. federal/unitary), the nature of executive government at the central level (majoritarian or consensus-based), relationships between political executives and civil servants (e.g. politicized or not), administrative culture (e.g. Rechtsstaat or public interest oriented) and the sources of policy advice (civil servants, consultants, academics). Empirical research can clarify the effects of these institutional characteristics. For example, in their comparison of reforms in The Netherlands and New Zealand, Yesilkagit & De Vries (2004) critically examine the assumption that majoritarian systems are better at implementing NPM reforms than consensus systems and conclude that this is not the case. Although reforms in New Zealand were implemented at a quicker pace, they ultimately resulted in an electoral backlash, whereas almost equally far-reaching reforms in the Dutch context were spread out over a longer period, but aroused far less opposition. Although these studies are helpful in explaining national differences in adopting and implementing the NPM paradigm, they show limitations in defining their independent variables. Whereas Pollitt & Bouckaert lists too many variables, thus ending up with a laundry list of virtually all relevant variables. Yesilkagit & De Vries, by contrast, place excessive emphasis on one single variable, namely the constitutional structure. In addition, what is generally deficient in both studies is the clarification of the interaction between actors’ strategies and institutional variables. To shed light on the interactive dynamics between actors’ strategies and institutional arrangements, it is useful to maintain a manageable number of independent variables. Our study will re-examine the types of independent variables. While most of the rational choice explanations like Pollitt & Bouckaert (2004) and Yesilkagit & De Vries (2004) focus on present factors, whether they are socio-economic forces, political system, or elite perceptions about the desirability and feasibility of 6

management reforms, we underscore the historical trajectory along which state-civil society relations have evolved. Differing degrees of state development, state-civil society collaboration, civil society’s involvement in state service provision greatly affect how the NPM paradigm is interpreted and what elements in the paradigm are selectively emphasized. It is critical, in this respect, to discern different needs and logics of public management reform in different countries. We also pay due attention to the events immediately preceding the emergence of reform initiatives and programs. By doing so, we try to highlight the environment in which the ‘reform discourse’ is being constructed. This is closely related to our last variable, social coalitions available in the polity. Different actors mobilize and utilize their available resources and coalitions to construct a reform discourse favorable to themselves. They compete to underscore and appropriate different aspects of NPM reform package. By unraveling the different processes of indigenous construction of ‘reform discourse,’ we try to overcome the static limits of the existing studies and shed light on the dynamic interactions between actors’ strategies on the one hand and institutional settings on the other, shaped by historical trajectories, antecedent events, and social coalitions. 2.3.The choice of cases Examining the effect of these independent variables requires a specific set of cases. Previous cross-national comparisons of NPM reforms have shown significant differences in the nature and speed of national reforms. Yet most tend to concern industrialized democracies with mature welfare states. As we will argue, the relative homogeneity of cases disregards the broader historical trajectories in which the reform processes are embedded and ultimately understates the significance of an important aspect of the institutional context. This paper is an effort to further clarify the nature and significance of the historically developed institutional context in which public management reforms occur. The bias in current comparative research ultimately translates into rather deceptive measures of success. Generally, success and failure are notoriously hard to pin down in policy research. Sometimes success is just a question of dates. A famous example is that in its early years the Sydney Opera House was by many denounced as a financial disaster. It is also very much in the eye of the beholder: achievement is a measure of ambition, and ambitions vary greatly. Pollitt (2006) has succinctly 7

described the specific difficulties in evaluating the success of NPM reforms, such as how to attribute changes to reforms and how to measure the realization of vaguely and subjectively defined policy objectives. Partly because of these difficulties, there is a tendency to define achievements in NPM reforms in terms of political success: the extent to which the interests of reformers can overcome the obstacles within the administrative system. Yet that kind of comparative analysis only works when the relationship between the interests of elites and the definition of success is held constant; in other words, when reforms are interpreted as serving roughly the same purpose. As it is, the relationship is often held implicit: the interests of NPM reformers are assumed to be broadly similar and therefore a single measure of success can be applied.1 Yet, as Cheung (2006) put it, NPM reforms may cover ‘similar policy and instrumental tools being adopted in different national political circumstances for vastly differences reasons and with different impacts’ (p. 245). If that is the case, what exactly are we measuring? How can the same activity in two countries be compared as a realization of elite interests, unless we take a closer look at the historical context in which those interests have been shaped? To do this, we need to broaden our range of enquiry beyond the comfort zone of Western nation-states and compare countries with differences of a more fundamental nature. This is behind our choice to compare South Korea and The Netherlands. For each country, we have collected data through an analysis of documentation and secondary analysis. Both can be characterized as highly industrialized and economically advanced. Also, in each country the state has historically been crucial in maintaining the social order. However, this has in each case taken a different form. The Netherlands has long been a decentralized unitary state based on a parliamentary democracy. What has been very typical of the Dutch state tradition is its integration (or, if one will, cooptation) of civil society to manage the welfare state. In South Korea, by contrast, the state structure has been largely centralized, originating from the strong colonial state built during Japan’s annexation of the Korean peninsula (1910-1945) and reinforced by the rapid and top-down

1

For instance, Yesulkagit & De Vries claim to be examining success “from the perspective of

reformers”, but the differences between the perspectives remain largely implicit, nor is there a significant difference in the actual indicators of success.

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industrialization by the developmental state in the 1960s-80s. The state co-opted or suppressed civil society during the authoritarian period (1961-87). In response, civil society was fiercely opposed to the state. It is only after 1987 that cooperation was introduced into state-civil society relations. So while the two countries are comparable in terms of economic development and a strongly developed state, they come from different traditions of state-civil relations. Without an appreciation of these traditions, it is not possible to assess the meaning of NPM reforms, even when on the face of it similar measures have been introduced.

3. Description of the Dutch and South Korean cases 3.1. The Netherlands Other authors have already collected most of the relevant empirical evidence on NPM reforms in The Netherlands (e.g. Pollitt & Bouckaert, 2001; Yesilkagit & De Vries, 2004), which we can do little more than summarize and update. However, developments in recent years do potentially cast a somewhat different light on the overall process of reform. Although successive governments started to effect serious budget cuts in the early 1980s, it was only by the middle of the decade that budgetary pressures started to translate into reform of the state’s financial system, led by the Christian-Democrat / Liberal governments under Prime Minister Ruud Lubbers (who later in his career became UN High Commissioner for Refugees). From 1986 through to the present, this has taken the form of increasingly output-focused budgeting. In the early years of the reforms, it started with the development of performance indicators. Over time, governments enacted reforms to embed output measurement more firmly into the policy process. This culminated in the adoption of a state-wide accounting system in 2001 that replaced input budgeting in favor of a system that stressed accountability. Administrative departments needed to predefine reasonably detailed goals, the efforts undertaken to achieve these goals and the estimated costs. These would all later be checked against reality in a standard annual procedure. This tighter coupling of stated aims and achievements was complemented by more transparency with regard to internal data.

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Personnel reforms in The Netherlands have overall been relatively minor, with recent efforts having gone mainly into reducing the size of the civil service. Interestingly, even despite apparently drastic cutbacks, it is unclear whether staff number have actually fallen. A report by an influential thinktank in 2007 claimed that the government had no clear measure of the size of its own staff and that numbers of civil servants had actually been increasing for some time. The government disputed this. Where reforms are concerned, limited forms of performance-related pay were introduced in the 1980s and 1990s. The most extensive reform was the creation of a Civil Service corps that encouraged rotation among departments and the professionalisation of senior civil servants. However, this has affected less than 1% of the (estimated) numbers of personnel at the central government level. None of the changes have been legally embedded. In neither financial or personnel management have there been significant development in recent years. A more interesting story is unfolding in the area of organizational reforms, which have been more contentious and less unilinear. It is in any case a more complex process than most previous commentators have made it out to be. By the early 1980s, interest in privatization had grown, which translated into a number of measures. First, a number of departmental agencies was put at arm’s length, sometimes formally remaining within the department, sometimes separated entirely. Second, a number of organizations were fully privatized, legally and/or financially. Only by the late 1990s, this was followed by more systematic efforts to change the governance in the public services towards market-based systems, in fields such as social housing, energy, communications, taxis and, recently, health care. Finally, partly in response to the previously mentioned developments, accountability was strengthened by the creation of independent supervisory agencies. While many reforms were initiated by the previously mentioned Christian-Democrat / Liberal government, they have been extended by successive governments of different colors and have involved all major parties (Christian-Democrats, Social-Democrats and Liberals) and smaller parties. Previous analyses have perhaps understated the extent to which these developments affected third sector organizations operating in the service of the state, which control the bulk of service provision in social housing, education, health care and personal services. NPM-inspired reforms did not simply affect the state, but the wider public sector. This is especially relevant for an analysis of recent years, in which the pattern of reforms has come to seem less uniform. By the turn of the 10

millennium, several influential thinktanks had started to publish reports advocating a more trust-based variety of governance with less emphasis on accountability and output measurement. Their recommendations referred especially to organizations in core areas of the welfare state with a strong involvement of private providers. Whereas recently many of the agencies previously set at arm’s length are being reincorporated, the status of other service providers remains highly controversial and currently appears to be in a stalemate. Simultaneously, the market mechanism has made further inroads into the public sector, spurred on by the growing influence of the European Union’s single market regulation. The overall direction is difficult to assess and there are different developments cross-secting or moving in opposite directions. As we will argue, this must be understood as the result not only of reform coalitions, but also of broader historical trajectories in which NPM reforms are embedded. 3.2. South Korea It was during the Kim Dae Jung government (1998-2003) that the NPM paradigm was imported and implemented in earnest in South Korea. Trying to recover from a historically unprecedented economic crisis in 1997-98, South Korea launched a nationwide reform campaign. The campaign was quite comprehensive in its scope, affecting not only the business sector but also the public sector, because most South Koreans at the time believed that the primary causes for the crisis lay in South Korea’s ‘crony capitalism,’ characterized by, inter alia, collusive businessgovernment relations (Kim & Shin 2004; Kang 2002). Specifically, the Kim Dae Jung government designated four main sectors of reform: corporate, financial, labor, and public sectors. The main objective in public sector reform was to create a ‘small but efficient and better-serving government.’ Specific instruments of the reform included representative NPM elements: streamlining governmental organizations, privatizing SOEs, eliminating budget wastes, developing performance assessment measures, increasing administrative transparency, redefining citizens as customers utilizing devices as ‘citizens’ charters,’ and so forth. NPM reforms during the Kim Dae Jung government were initiated and driven in an outside-in and top-down manner. The idea and paradigm of NPM was imported from outside as a method of overcoming the economic crisis. At the same time, the manner in which NPM reforms were executed were largely top-down. Governmental ministries such as the Ministry of Government Administration and Home Affairs 11

(MOGAHA) and state-controlled thinktanks such as the Korea Research Institute for Local Administration adopted, adapted, and promoted the NPM paradigm as the main instrument of restructuring the public sector in South Korea. This is why some analysts deplore that the way in which the ‘New’ Public Management paradigm was carried out was, ironically, an excellent example of ‘Old’ Public Management, centralized and top-down (Im 2003b). There was no serious bottom-up discussion on the relevance and applicability of NPM, either in civil society or in the academia. The Kim government primarily relied on private consultants in and outside of South Korea with economics and business management backgrounds to design a South Korean version of NPM reform initiative2 and used state machines to implement it. In terms of the specific contents of the reforms, the ‘market’ served as a prominent, sacred guiding principle. The Kim government emphasized that the public sector needed to import and incorporate as many market principles, mechanisms, devices, and practices as possible. A small government and market-friendly public administration were underscored as important goals. Privatization, deregulation, public-private partnership, agencification were the main components of marketoriented restructuring of South Korea’s public sector. In financial management, the Kim government repeatedly emphasized that a ‘business mind’ must be incorporated into the government budgeting and accounting system and process. The ‘Budget Incentive System,’ which went into effect in August 1999, provided bonuses to those public officials who proposed policy innovations to save budget or generate new revenues. Emulating the UK and New Zealand, the Kim government also announced that it would discontinue the cash accounting system and instead introduce accrual basis accounting system to increase efficiency and transparency of the budgeting process (D. G. Kim 2000).3 In personnel management, the Kim government in February 2000 enforced the ‘Open Position System’ to increase competitiveness and expertise among public officials (Ahn & Han 2006, 772). The purpose of the system was to render highly 2

A scholar reports that in 1998 about 4 billion won ($3.8 million) was paid to private consulting

companies to provide a detailed functional analysis of governmental ministries and suggest solutions (Im 2003a). 3

As of March 2008, however, the accrual basis accounting system is still not fully introduced in South

Korea mainly due to bureaucratic resistance and the overall decrease of interest in NPM reform after the economic crisis.

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specialized positions open to competition, seeking applicants both inside and outside of government ministries. A total of 139 posts at the deputy minister and director general levels in 40 ministries were designated ‘open.’ However, at the end of the Kim Dae Jung administration, say as of December 2002, only 15% of these ‘open’ positions had been filled by genuine ‘outsiders,’ i.e., candidates from the private sector. Most of the ‘open’ positions were filled by officials from either the same ministry or other ministries. Ministries often ‘opened’ only trivial positions and retained more important positions within the conventional personnel system (Im 2003a). In organizational management, the most notable change brought about by NPM reforms was the reduction of the size of the bureaucracy. The Kim government declared that it would slash 10% of central and local government offices. Between 1997 and 2002, central government personnel decreased by 12.7%, while local personnel decreased by 14.1% (Ahn & Han 2007, 158). During the last four years of Kim’s government, the number of public officials decreased by 20.2% or 4,800 persons (Im 2003a, 93). Not only the size of the government, but also the quality of public employment were heavily affected by the reforms, because a sizable number of public offices became ‘irregular,’ i.e., subject to more ‘flexible’ recruitment and dismissal. Privatization of state-owned enterprises (SOEs) also took place. As of late October 2002, eight public corporations were privatized, and the SOEs’ workforce was reduced by 25%. Several SOEs’ functions that could not be privatized were contracted out (Im 2003a, 93). Meanwhile, executive agencies, based on the British model, were used more extensively as well. The Kim government established agencies to promote autonomous and responsible management. The number of agencies increased from 10 in 2000 to 13 in 2001. However, agencies were still in large measure controlled by central ministries in terms of personnel, budget, and management. About 80% of the budget of agencies depended on the budget of the central government (Ahn & Han 2007). Lastly, the Kim Dae Jung government popularized and strongly encouraged the diffusion of Citizens’ Charters in local governments. MOGAHA compelled local governments to have one or two charters. In 2000, MOGAHA’s directive recommended that every local government should create at least 10 charters, after which time the total number of charters reached 2,552 (Im 2003a ). The number of 13

charters continually increased to 5,411 in 2001 (Im 2003a). As was the case with the way in which NPM reforms in general were carried out, citizens’ charters were also imposed in a top-down manner on local governments by central authorities. The Roh Moo Hyun government (2003-08) was inaugurated after the economic crisis was over and was comparatively free from the dominant influence of the NPM paradigm. Instead of efficiency, customer-orientation, deregulation, and other NPM values, the Roh government put an emphasis on crafting and nurturing a ‘capable government’ rather than a ‘small government.’ The Presidential Commission on Governmental Innovation and Decentralization, which was in charge of public sector reforms at large, pledged to carry out ‘integrative’ reforms, combining restructuring with appropriate changes in decision-making processes and styles. The Roh government placed greater emphasis on participation and decentralization and downplayed efficiency and productivity. Thus, civil society-centered paradigm such as the New Governance paradigm became more popular and influential than NPM. The New Governance paradigm, in comparison with NPM, focused more on the participation of rank-and-file public officers, ordinary citizens, NGOs, and other relevant third sector organizations. Unlike its predecessor that used American and New Zealand models to pursue efficiency and economy, the Roh government emulated Scandinavian countries such as Sweden and introduced the Top-Down Budgeting System in which the central budget authorities focus on the macro-level, multi-year overall strategic budgetary planning and allow subunits to flexibly spend the allotted budget to achieve the required performance goals prescribed by the central government. The Roh administration also introduced in January 2007 the Total Payroll Budgeting System at all central government ministries. According to the system, the central budget authorities only determine and manage the total amount and soundness of the payroll and allow sub-ministerial organizations to determine the size and kind of their personnel and to allot and use their budget more independently and flexibly. In terms of personnel management, the Roh government continued and expanded the previous government’s ‘Open Position System.’ As of 2005, 156 positions at various ranks were open. About 54.1% of those positions were filled by candidates from inside of the ministry, while 45.9% were filled by those from other departments or civil society (Ahn & Han 2007, 773). As compared with the preceding

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Kim government, this represents a considerable increase in the number of ‘civilian experts’ employed by the government. In organizational management, the Roh government preferred to use various forms of ad hoc committees to drive reforms and changes in regular ministries and departments. Committees—some presidential, some prime ministerial, some ministerial—were composed of both public officials and civilian experts so as to maximize the input from civil society and the business sector. They performed diverse deliberative,

consultative,

and

monitoring

functions

throughout

the

Roh

administration. The Roh government also introduced the ‘Team System’ in which lower-level organizations were allowed to flexibly experiment with a variety of organizational forms and structures, avoiding the traditional uniform hierarchical structure. Furthermore, the number of agencies also increased. As of December 2005, 44 agencies were active in 17 ministries. Expansion of agencies was particularly prominent in the areas of medicine, research and experiment, culture and arts, quarantine, manufacturing and maintenance, etc. The number of workers in agencies accordingly increased from 4,973 in January 2001 to 5,141 in December 2005 (Ahn & Han 2007, 776).

4. Analysis 4.1. The interpretation of reforms Both countries to some extent display similar patterns of reforms. Both have changed budgetary systems towards more emphasis on measurable output; both have introduced performance measurement among government personnel and have enacted staff cuts (or tried to do so); both have decentralized and privatized parts of the government apparatus. In that sense, one could argue in favor of interpreting New Public Management reforms as a global development. There are of course also differences. Given the evidence as we have described it, one could conclude that NPM reforms in South Korea have in the early stages of the reforms placed most emphasis on financial and personnel reforms. Only more recently have organizational reforms become more important, with a shift towards a governance approach and more emphasis on participation. In The Netherlands, 15

personnel reforms have been relatively minor, but financial reforms have been more extensive. Organizational reforms were more far-reaching, affecting not only the agencies that were set at more distance from central departments, but also the broad range of service providers affiliated to the state. How can we explain these different realizations of NPM reforms? Theoretically, we have assumed that the reforms can be regarded as realizations of elements of a single paradigm. They are then ‘filtered’ through national institutions. From the perspective of rational actor institutionalism, the institutions determine the ability of reformers to push through reforms (which some have used as a measure of the success of reforms). Given differing characteristics of political-administrative systems, one can estimate the opportunities for reformers to proceed. But, even if NPM is considered to be a single, global paradigm, one must be careful not to simplify what it means if such a paradigm is transformed by national institutions. The metaphor of institutional filters conceptualizes of NPM as a single substance that mixes with local elements to produce hybrid structures. But that may understate the extent to which such isomorphic trends are (at least partially) legitimizing labels for specifically local developments, with apparent homogeneity covering actual diversity (cf. Brandsen, 2004). Similar reforms may have quite different meanings in different contexts. For instance, in a traditionally hierarchical culture, the introduction of even a minor form of performance measurement may be of great symbolic significance in overall social developments. In a more egalitarian culture, it may simply be regarded as an HRM instrument, but nothing other than technical. Regardless of the effort it has taken reform coalitions to enact the reform, it means that the significance of the reform cannot be properly assessed without reference to the broader historical context in which it is embedded. Although one must necessarily isolate NPM reforms to some extent to examine them comparatively, there is a risk that the narrow focus on public management in the dependent variable translates into an overly narrow interpretation of where such reforms come from and what they mean beyond the politicaladministrative system; more specifically, what they mean in relation to nationally specific roles of the state and to state-civil society relations. There have been too few efforts to take full account of this broader context in cross-national comparison (see e.g. Christensen & Laegreid, 2003) even though they may lead to a reinterpretation of reform. 16

This aspect of comparative analysis on NPM has been further obscured by the prevailing emphasis on advanced industrialized democracies with mature welfare states. That is why we have chosen South Korea and The Netherlands, not countries normally brought together in a one-on-one comparison, but excellently suited for making our point. In the remainder of this section, we will describe the distinct historical developmental trajectories in which NPM reforms have been realized in the two countries. While social circumstances and political-administrative coalitions were decisive in shaping their ultimate form, their role within broader developments must also be assessed. 4.2. The background of NPM reforms in The Netherlands An analysis of state reforms in The Netherlands must take account of its historically crucial role in building consensus in a society characterized by strong religious and political diversity (Noordegraaf et.al., 2006). The specific shape of the Dutch welfare state in the 20th century was to a large extent conditioned by this socio-political need. Since its inception, The Netherlands have been the home to several religious groups, notably dominant Protestant communities and a large Catholic minority. In the late industrialization of the country, they were joined by a strong socialist movement. Consensus-building has been crucial in keeping the country together and has strongly conditioned the state’s role and policies. In the first half of the 20th century, Dutch society developed a system in which different social groups were integrated in so-called ‘pillars’: integrated configurations of organizations with a common identity (Catholic, Protestant, and Socialist). For example, a Catholic family would read a Catholic newspaper, send their children to a Catholic school, join the Catholic football club, and so forth. Organizations within the pillars were usually connected through personal networks rather than formal ties. Strong social segmentation was combined with pragmatic and consensus-based decision-making by the political elites (Lijphart, 1968). They encouraged their ‘flock’ to be loyal to their own pillar (in the literature, this process is usually labeled as ‘vertical integration’) while simultaneously engaging in consensus-based decisionmaking at the top (referred to as ‘horizontal integration’). This was brought to a head in the field of education, where the issue was whether private (esp. religious) schools should receive the same funding as public schools. In 1917, the liberals and the religious parties came to a compromise: in exchange for universal suffrage, religious 17

schools received the same funding and rights as their public counterparts. The principle developed for schools spread to other vertical fields of service delivery. There was to be no differential treatment between public organizations and third sector organizations. This style of policymaking was aimed at depoliticisation turning ideological clashes into ‘technical’ issues. Organized civil society therefore not only provided a means for political emancipation, but also helped to take difficult issues of distribution out of the political arena. When the welfare state expanded after the Second World War, pillarisation became the organizational principle through which its growth was channeled. In most policy fields, the third sector represented an acceptable compromise between state growth (opposed by liberals) and market solutions (opposed by the social democrats). The effects of this policy on the third sector were twofold. Organizations involved in service delivery could grow at an exponential rate, assured of increasing public funding. According to the Johns Hopkins survey, The Netherlands proportionally have the largest third sector in the world in terms of non-agricultural employment (Dekker, 2001). This is to a large extent due to the sector’s role in offering statefunded public services. However, this meant that the money brought regulation that not only diminished their autonomy, but also gradually blurred the distinction between public and nonprofit—private—agencies. For instance, it was difficult to maintain bonds with specific client groups when the regulatory framework promoted equal access and uniform standards. It is against this background that NPM reforms must be judged. Although the third sector’s roots in society had shriveled by the time of the NPM reforms, the bulk of services in this mature welfare state was still provided by private non-profit organizations that could at least theoretically lay a claim to a measure of autonomy. Given the complexity of these relations, it is only logical that the public debate should focus primarily on organizational reforms, where not only a major share of public expenditure, but also the major source of controversy was concentrated. Personnel and financial reforms within the central state were of much less interest and even large-scale cutbacks in the civil service have aroused relatively little controversy, since they have not affected core welfare state services. This is not to say that these types of reforms were insignificant or failed, but it does indicate that one must be careful of discussing them as equal parts of a single reform movement. The

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organizational issue touches upon wider social changes, whereas the personnel and financial reforms can be more rightly regarded as technical shifts. That, in turn, has implications for how the efforts of reformers must be assessed. NPM-inspired interventions in finance and personnel have been implemented incrementally over a long period of time, without any fundamental shifts along party political lines. The picture changes when organizational reforms are examined. The Christian-Democrats have long been considered loyal supporters of the third sector and have recently actively sought for ways to re-affirm the privileged partnership of the state with the third sector (e.g. through the invention of a new legal status). By contrast, the reform coalition that most vigorously pursued market reforms, in which there was no fundamental distinction between historically public or private origin, consisted only of non-religious parties (a unique occasion in Dutch parliamentary history). It is therefore not simply a question of reform coalitions trying to push reforms past institutional barriers. There are fundamental political differences over the direction of reforms, which can be described in terms of varying interpretations of NPM. While some have emphasized the disciplining elements, such as output control and competition, others have stressed the elements of managerial autonomy and decentralization. Implicitly, it tweaks at our starting assumption, which is that NPM is a coherent paradigm. More precisely, it points to the fact that such an assumption is acceptable for streamlining a comparative framework, but that its effect can be to overstate the ‘global’ nature of the NPM paradigm and to disregard their specific meaning in national contexts. 4.3. The background of NPM reforms in South Korea Governmental reforms have a long history in South Korea. Since South Korea’s inauguration in 1948, different governments have designed and carried out various reform programs. Democratic governments after the democratic transition in 1987 are no exception in this regard. During the Kim Young Sam government (1993-98), the government established the Public Administration Renovation Committee and emphasized NPM-related values such as efficiency, productivity, and transparency. It also highlighted deregulation and streamlining of government organizations. Yet, as the first civilian president (i.e., not a military general-turned-president) in South Korea in more than 30 years, Kim Young Sam was much more interested in uprooting authoritarian practices and augmenting democratic legitimacy in the first half of his 19

term (i.e., 1993-95). The Kim government’s emphasis shifted from democracy to ‘global competitiveness’ in the second half of tenure (i.e., 1995-98), underlining efficiency and productivity. However, NPM was not seriously adopted or pursued as a coherent reform program. It was only during the Kim Dae Jung and successive governments that NPM reforms took shape, as described in the previous section. Comparing the Kim Dae Jung government and the Roh Moo Hyun government, it is obviously the Kim government that introduced and vigorously promoted the NPM reform model. The Roh government, in contrast, intended and appeared to reverse the NPM orientation of its predecessor by underlining participation and decentralization. Ironically, however, what transpired during the Roh government was not dramatically different from what had begun during the Kim government. Roh’s accomplishments in participation and decentralization were not particularly impressive. Rather, the NPM reforms that had been introduced earlier in the Kim government became institutionalized, strengthened, expanded, and deepened during the Roh administration. The previous emphasis on competition, efficiency, ‘small government,’ productivity, deregulation, citizens’ charters were to some degree toned down. However, the Roh government similarly accentuated performance, output,

customer

satisfaction,

transparency,

and

‘flexible’

personnel

and

organizational management. In this regard, the two South Korean governments were not as different as a cursory look might suggest. Despite their apparent differences in slogans and emphases, governmental reforms in South Korea have all shared a crucial commonality: a strong focus on the internal structures of the state, rather than the relationship between the state and civil society. Most of the reform campaigns so far have concentrated on improving and increasing

the

efficiency,

transparency,

responsiveness,

accountability,

and

‘democraticness’ of the state system. Not much attention has been paid to state-civil society relations. Most of the reforms, including the recent NPM-inspired ones, have been limited to the state sector. During the developmental and authoritarian era (1961-87), the state had no interest in building a welfare state. The state was in charge of accomplishing the overall economic growth, and welfare was put aside as individual responsibility. Civil society groups were utilized and mobilized to justify the government’s ‘growth first, welfare later’ slogan and facilitate the implementation of economic development plans of the developmental state. Those civil society groups that dissented and 20

protested against the state’s developmental philosophy were violently suppressed. Since South Korea’s democratic transition in 1987 and particularly after the unprecedented economic crisis in 1997-98, South Korean governments have belatedly made sincere efforts at creating and nurturing a welfare state and strengthen welfare policies. State-civil society relations have considerably improved as a result. However, the size and scope of the South Korean welfare state is still negligible and incomparable to those of Europe and North America. Involvement of third sector organizations in welfare provision and delivery is gradually increasing but fails to obtain the priority of governmental reform campaigns. Administrative reforms and governmental innovations still focus on the state’s internal dimension, rather than its external relations with nonprofits. The current South Korean government of Lee Myung Bak (2008-13) is very likely to revive, reinvigorate, and reinforce the NPM paradigm of the Kim Dae Jung government. As a former CEO of a business conglomerate, Lee is a firm believer in market principles and initiatives. He has frequently and unabashedly shown profound distrust and distaste toward bureaucracy and public officials. Efficiency, transparency, and customer-orientation will be emphasized rather than participation or accountability as was during the previous Roh government. Yet, the Lee government is not likely to make an aberration in the general pattern of governmental reform in South Korea, i.e., focusing on internal reform of the state sector rather than the state’s external relations with civil society. 5. Conclusion: the significance of historical legacies As we have described, in both countries the state was crucial in maintaining the social order. In The Netherlands, strong religious and ideological differences were depoliticized by a state that incorporated such differences within its welfare state. In South Korea, the combination of a developmental state and an authoritarian regime enjoyed an extremely tight control of the whole society for several decades. The political democratization and the emergence of an infant welfare state in the latest two decades have not made an appreciable dent in the power and influence of the centralized state. In both cases, the state derived its strength from its symbiotic relationship with political elites; in both cases, the reform of the state was a sign that the social order was changing. In The Netherlands, attempts at changes in the 21

governance of service providers was an indication that these were no longer regarded as intermediaries between state and civil society, and were rather an extension of the state. The controversy over this aspect of the reforms, as well as the significance of party political positions—which for other types of reforms mattered far less—can be seen as reflecting a wider debate over the nature of state-civil society relations and uncertainty over the position of the state, when it has clearly lost its former pivotal role. In South Korea, NPM reforms were considered instrumental in overcoming the economic crisis in the late 1990s and in promoting the transition from a developmental state to a welfare state, from an authoritarian regime to a democratic regime. In either case, NPM reforms were significant not just as administrative changes, but also as expressions of social change. Strip the reforms of current terminology and we are simply looking at a particular phase in a longer history of shifting state-society relations. Cross-national comparative studies of NPM reforms have contributed greatly to our understanding of these reforms by creating a framework of categories and variables that have inspired many (though still too few) follow-up studies. It is to be hoped that such frameworks will encourage the development of a large and consistent set of empirical data, as did Titmuss’ and Esping-Andersen’s typologies of welfare states (Titmuss, 1974; Esping-Andersen, 1990). Although fundamental and justified criticism has been directed against these categorizations, they have proved invaluable in facilitating cross-national comparison. Yet the interpretation of cross-national variation can be too narrow and needs to draw upon a broader range of cases. With this paper, we have tried to contribute to theoretical development in this direction.

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