FISCAL FEDERALISM, PROFESSIONALISM AND THE TRANSFORMATION OF AMERICAN STATE GOVERNMENT

A combination of political and economic forces have helped to return the states to the centre of the political stage. Whether measured by objective indicators (employment, share of government expenditure, elasticity of state revenues) or political institutional changes (the rise of career governors, the increasing influence of the intergovernmental lobby and the spread of state responsibilities), the states have become increasingly important in the formulation and implementation of American domestic policies. However, these changes have by no means reduced the level of intergovernmental conflict. On the contrary, cuts in federal expenditure, the introduction of block grants and public opposition to increases in state and local taxation are likely to intensify debate on distributional questions at the state level.     

Changes in the Scandinavian Model. From Bureaucratic Command to Interorganizational Negotiation

Scandinavian local government is increasingly changing its organizational pattern away from the principles of local centralized bureaucratic control that were held sacred after the reforms of the 1960s and 1970s - reforms that made local government the building block for the welfare 'state'. Organizational fragmentation is taking place, making room for both new managerial styles similar to those of the New Public Management, featuring contracting out and similar market-like arrangements, and for democratic initiatives which place service users in command of service institutions. Such developments call for new approaches to the study of local government, approaches that take interorganizational relations more directly into account. Suggestions about such an approach are made, based on studies of intergovernmental relations. Distinctions are made between intergovernmental politics which is concerned with symbolic values linked to the status of an organization, and intergovernmental management where processes of making do are seen as most important. In spite of the managerial fashion for strategic goal-setting, it is expected that the new political actors are more interested in day-to-day results and thus challenge politicians, moving them away from the abstract goals in favour of advancing and monitoring actual accomplishments. This increases the need to understand network relations and, in turn, may yield better understanding on the part of citizens of how local politics and management works.     

THE GOVERNANCE OF FINANCIAL REGULATORY REFORM: THE AUSTRALIAN EXPERIENCE

The dominant perspective in the literature linking governance, globalization and public policy argues that globalization undercuts state capacity, weakening a government's ability to effectively regulate its domestic affairs. This paper shows otherwise with special reference to the Australian experience in financial regulation. It challenges the conventional wisdom that the Australian state is weak and cannot adopt anticipatory industrial policies. This paper argues that the adoption of the ‘twin peaks' model of financial regulatory arrangements is an example of the existence of government‐led steering in Australia which can adopt a proactive approach to financial regulation by steering and coordinating policy networks. ‘Governance through hierarchy’ in the financial services industry may be a function of the government's political entrepreneurship; its skill in setting and implementing an agenda; and an ability to create new policy communities and networks.     

Federal politics and market reform in the developing world

Prior research on the politics of market reform in developing nations has generally ignored the significant role of federal political and economic arrangements in shaping adjustment processes. In contrast, this research develops a model of macroeconomic reform that accounts for the significance of subnational economic policy in the developing world’s nine major federations. I examine five hypotheses which are expected to influence the capacity of developing federations to conduct polity consistent with the exigencies of market pressures. With the use of a cross-sectional time-series analysis of fiscal and monetary policies, I show that the policy divergence between levels of government shrinks when provincial governments have greater fiscal power and there are high degrees of party centralization across levels of government. These findings have important implications for the political economy of market reform, the widespread move toward fiscal decentralization, and the design of regional supranational institutions. This research is based on work supported by the National Science Foundation under Grant SBR-9809211. I would like to thank Karen Remmer, Ken Roberts, Wendy Hansen, Alok Bohara, and excellent reviewers for helpful comments.     

The Flypaper Effect Revisited: Intergovernmental Grants and Local Governance

Abstract

Local governance arrangements shape the incentives of local actors, which may in turn influence fiscal choices. By emphasizing the role of local government institutions in local fiscal choices, we seek to bridge between median voter and Leviathan models prevalent in the literature. We then offer some preliminary evidence to support this explanation by empirically testing several propositions regarding the flypaper effect in intergovernmental grants. One limitation of the median voter model is that the model does not consider political institutions and their influences on government expenditures. In this study, we attempt to capture the influence of political dynamics in determining public expenditures by considering institutional variables. Test results show that the political institutional variables could be one of the explanation variables for the flypaper effect.     

APPRAISING THE NEW INSTITUTIONAL ARRANGEMENTS FOR PRIVATIZATION OF KOREAN STATE-OWNED ENTERPRISES

Privatization is a long-term and complex process involving changes in attitudes, values, perceptions, and mentality. The president of the Republic of Korea and line ministries are pursuing an ambitious course of privatization. Based on common research questions concerning privatization policy, this paper has two objectives: first, to review the past performance of South Korea's privatization policy, and second, to evaluate the new institutional arrangements for the privatization of state-owned enterprises designed by the current government.     

The challenge of design of intergovernmental relations in economies in transition

The governments of Eastern Europe and the former Soviet Union are at a crucial juncture in their movement from highly centralized command economies to more decentralized market economies. While there is a belief in these countries that decentralization brings greater economic efficiency, the reality is that such a transition is a difficult process. This paper examines what types of administrative reforms are needed for the decentralization process, how far along the countries are with respect to these reforms, and what reforms are missing. As we discuss, many of the necessary administration reforms are missing and we argue that more attention must be paid to these elements for successful decentralization of these governments.

This paper examines the recent experience and reform needs of the key administrative aspects of the design of intergovernmental relations in countries in transition in Eastern Europe and in the former Soviet Union. There is a widespread realization in all of these countries that decentralizing government will help increase efficiency in the public sector just as privatization will improve efficiency in their economies. Decentralization of government operations is also attractive as a way to cement a democratic form of government. Despite the appearances of the existence of an already decentralized system, such as in the case of the Soviet Union, this experiment started in practically all cases with a lack of institutions and experience on how decentralized government operations should be organized.

As different as these countries are, there are many similarities in the reform process they are following in order to decentralize government structure. While the basic components of a decentralized system of government are emerging in many of these countries the structure of government has not fully evolved in a manner that can support such a decentralized system. Often, governments remain structured along a vertical hierarchy: information, budgetary authority, and revenue pass from the central government down to subnational levels of government while little communication or interaction exists at a horizontal level. In general, the assignment of revenue and expenditure has not been clearly defined among the two or three levels of government, central government transfers continue to occur in a relatively ad hoc manner, and the entire budgeting system still rests in many cases on more or less formal system of negotiations and bargaining among the different levels of government. There has been some change in this structure in certain countries. Over the last three years, both Poland and Hungary have legally increased the automony of subnational governments. In 1994 in Russia a new and more transparent system of intergovernmental grants has been established between the federal government and the regions. In 1994 also, Latvia introduced a more transparent formula-driven, transfer formula for the regional and municipal governments.

The focus of this paper is to develop a “blue print” for necessary changes in organization and administration of intergovernmental relations in countries in transition. While many experts have recently been discussing the public finance policy components of this new, evolving relationship among levels of government, less attention has been paid to the structural and administrative challenges and the information design issues that must be met in order to develop and support a system of intergovernmental relations.

The paper is organized as follows: First we review the major responsibilities and their allocation among levels of government, the assignment of revenue sources, and the system of transfers. We then turn to a discussion of the current experience of Eastern European and NIS countries in the context of the structural components of an intergovernmental fiscal system. Next, we analyze the organizational reforms that are necessary for the efficient functioning of a decentralized system of government in the economies in transition. Finally we “rate” the transition economies in relation to their current design of the system of intergovernmental relations and support mechanisms.     

REINVENTING THE AMERICAN FEDERAL GOVERNMENT: REFORM REDUX OR REAL CHANGE?

Reinventing government in the United States is the most recent of several efforts to reform public organizations and management. A cornerstone of the Clinton Administration's agenda for change, reinvention is proceeding on several levels. One is that of political symbolism and rhetoric: reduce waste, eliminate unnecessary programmes, and improve efficiency. Another level is found in the reinvention laboratories created throughout the federal government. Here the focus is on quality, customer service, streamlining processes and procedures, and eliminating unnecessary rules and regulations. A third level is found in policy and system changes; here the emphasis is on examining broad functions, decentralizing major activities, and providing legislative support for necessary changes.
Implementation of reinvention activities has been decentralized and loosely monitored. Many of the initiatives in the reinvention laboratories are difficult to track and analyse; changes at this level do appear, however, to be extensive and diverse. Broader legislative changes have not been so extensive and the Clinton Administration has been slow to introduce key legislative packages. The role of Congress is unclear.
Despite uneven progress and failure to ask key policy and implementation questions, reinvention is creating significant change in the federal government. The outcome of those changes and the long-term future of reinvention depend on the continued commitment of the members of the public service, as well as much clearer political support and will.     

PUBLIC VALUE AND POLITICAL ASTUTENESS IN THE WORK OF PUBLIC MANAGERS: THE ART OF THE POSSIBLE

The public value framework, with its call for more entrepreneurial activities by public managers, has attracted concern and criticism about its implicit breaching of the politics/administration dichotomy. This article explores the role of political astuteness not only in discerning and creating public value, but also in enabling public managers to be sensitive to the dichotomy. We employ a conceptual framework to identify the skills of political astuteness, and then articulate these in relation to identifying and generating public value. Drawing on a survey of 1,012 public managers in Australia, New Zealand, and the UK, and in‐depth interviews with 42 of them, we examine the perceptions and capabilities of public managers in producing value for the public while traversing the line (or zone) between politics and administration. We conclude that political astuteness is essential to both creating value and maintaining allegiance to democratic principles.     

Current challenges of the mexican state and of mexican public administration

This article deals with the problems that the Mexican government will need to face in order to go on with the reform of the state. The cycle of such a reform (privatization, liberalization and democratization) is already closing down. While ending this process, however, Mexico also started to see an increasing number of demands calling for administrative reform and, above all, the federalization of government and public administration. This is what the author calls the strategic agenda of the Mexican government.

In order to implement the administrative reform, the author favors enhancing the accountability of the Mexican government, by increasing public participation in the policy and decision making processes. With regard to the federalization of government and public administration, Aguilar proposes the implementation of policy tools never used in Mexico, such as fiscal federalism (categorical and block grants, for instance), together with new constitutional, political and administrative arrangements.     

Optimal approaches to structural reform in regional and rural local governance: The Australian experience

Abstract

Australian local government finds itself at the vortex of various mounting pressures, including acute funding shortages, complex intergovernmental relationships, and forced structural reform programmes, that have made the status quo unsustainable. State government policy makers have placed heavy emphasis on council amalgamations as their chief means of resolving the problems facing municipal governance. This paper argues that such reliance on the blunt instrument of municipal consolidation has been misplaced, not only because it is based on the mistaken premise that ‘bigger is better’ in local governance, but also because it ignores many other promising alternatives to amalgamation involving various combinations of structural change and process change better suited to the extremely diverse character of regional and rural local government in Australia.     

THE ENTERPRISE FORMULA,NEW PUBLIC MANAGEMENT AND THE ITALIAN HEALTH CARE SYSTEM: REMEDY OR CONTAGION?

Health care services represent an extraordinary experimental ground for introducing wider political and institutional transformations of the state. The adoption of entrepreneurialism into European health care systems has strengthened technocratic decision making over traditional mechanisms of political control. In Italy, in the midst of a severe legitimacy crisis affecting the administrative and political systems at the beginning of the 1990s, New Public Management ideas seemed ‘the’ remedy against the pathological politicization of distributive politics. Much hope has been placed since in a new and ascending group of general managers, entrusted with the ambitious mission of running health care services more efficiently and with the unenviable expectation of resuscitating public trust in welfare institutions. By analysing the 1992 Amato government’s landmark health care reform in its substantive changes, this paper explores the last decade’s main reform trajectories of Italian health care reforms that irreversibly transformed its institutional arrangements and organizational structure, namely the enterprise formula and the regionalization of the health care sector. The paper suggests that the political turmoil of 1992–94 served as catalyst for radical policy change and argues that the single most important explanation for the enactment of New Public Management‐type reforms rests in a new executive reinterpretation of its legislative prerogatives and function.     

A MAYOR FOR PARIS – AN EARLY EXAMPLE OF DECENTRALIZATION

This paper analyses the 1975 municipal reform which gave Paris its first elected Mayor since the days of the revolutionary Commune. Local government reform has proved notoriously difficult in France and the policy-making process in this case was complicated by the political situation, following the death of President Pompidou, in April 1974. His successor, Giscard d'Estaing, attempted to marginalize the Gaullist Party and to govern from the centre. Paris was the testing ground for this political strategy. The capture of the mayorship by the Gaullist Jacques Chirac was a personal humiliation for the President.
The reform demonstrates the reluctance of French governments, compared with their British counterparts, to radically mould their local government institutions. In particular, the constant reference during the debate to the words 'Mayor' and 'Commune', which have great symbolic power in France, arguably prevented the elaboration of an institutional structure adapted to the peculiar needs of the Paris urban area.     

EMERGING FROM POST-COMMUNIST CHAOS: THE CASE OF BULGARIA

This essay provides a historical analysis of how the post-Communist constitutional process has shaped the current governmental system in Bulgaria. History and recent events marking Bulgaria's struggle toward democracy and a free-market economy are examined in the context of possible consequences for the nation's welfare, freedom, and prosperity. The extremely powerful political influence of the central government has led to unprecedented obstacles to reform in both the emerging Bulgarian democracy and its social policies and systems.     

Problem,Process and Product: Implementing Key Reforms in Local Government in Northern Ireland Since the Belfast Agreement

This article maps the key findings from empirical research on how local government mainstreamed new statutory duties to promote equality and good relations in a change implementation process emerging from reform introduced in 1998 to embed the Northern Ireland peace process. It departs from the elite political focus of much of the international literature on peace building and addresses organisational change developments in a context that was intensely politicised, highly contentious and required radical organisational change. Newry and Mourne District Council addressed their problem of perceived inequality in employment, by engaging in a lengthy process of change and development to achieve ‘product’ in the form of a more balanced workforce, power sharing in the Chamber and more participative democratic arrangements for decision-making, both inside the organisation and in external relations. The key factors that facilitated this change process included the availability of political will, change champions, appropriate resources and structural adaptation.     

THE EDUCATION OF THE TREASURY: THE MEDIUMTERM FINANCIAL STRATEGY 1980–84

The first Thatcher government introduced an innovatory macro-economic plan – the medium-term financial strategy (MTFs) – in March 1980. It was the most notable example of how the Government sought to change the direction of post-war policy. This article traces the origins and formulation of the strategy, noting that it was Treasury-imposed, and monetarist in orientation. During its implementation however it was substantially modified. The phrase 'pragmatism and continuity' best describes this process. Aspects of macro-economic policy are introduced to develop this theme. There is clear evidence that the Treasury was 'educated' by the problems encountered: the objectives of the MTFS were not uniquely achievable simply because they were deliberately limited in scope. Nevertheless, the strategy has survived as a policy framework and freed from its monetarist dogma remains a useful means of co-ordinating objectives.     

Westminster No More? Governance,Devolution and Delegation in Scotland

Abstract

Politicians have returned frequently to the need to reform schools to achieve wider objectives of social reform and economic prosperity. Within the UK education systems, however, there have been differing experiences and approaches at both national (Scottish, English, Welsh and Northern Irish) and local levels towards school governance reform. School governance in Scotland remains distinct compared to the rest of the UK, both in terms of the pace of reform and the content. The pace of reform in Scotland has been slower and the content has been shaped to a greater extent by political and professional modes of accountability. This article argues that a new phase in school governance reform is likely to follow the election of the Scottish National Party (SNP) majority government in May 2011. A number of factors both external (international comparison of the school performance; the post 2008 politics of austerity) and internal (changes led by the SNP government to the policy-making process, namely outcomes-based policy-making) have placed debates about school autonomy and school governance on the political agenda.     

Public official associations and public administration: A shared history

This essay focuses on the development of public official associations—those organizations that represent the interests of incumbent public officials in public affairs and their sense of the public interest—as a way to illustrate major issues of professionalism and intergovernmental management. Associations are seen as vehicles for linking an otherwise fragmented federal system and profession. Concentrating on the groups representing general government officials, efforts to make public official associations financially secure, intellectually stimulating, and influential in policy formulation will be reviewed from 1891 to 1940. An understanding of the history of Public Administration is incomplete without recognizing that the early development of the field was based on the logic of reform, a central feature of which was an alliance of nongovernmental associations dedicated to the public good.     

THE POLITICAL AND ADMINISTRATIVE CONSEQUENCES OF JUDICIAL REVIEW

Academic analysis of judicial review is confined largely to juridical commentaries in legal journals. This article, written from an administrator's viewpoint, examines its consequences for the power of government, for administrative behaviour, for constitutional dynamics, and for the scientific study of policy-making. It distinguishes a four-fold effect on administrators, including a substantial element of inhibition, and highlights the uncertainty created by the incremental and inconsistent development of the principles of judicial review. In constitutional terms, while the courts eschew national security and economic policy, they have in other fields explicitly created a process of accountability parallel to that of Parliament, and have resisted statutory attempts to limit their jurisdiction. Analysed in terms of political science, judicial review imposes unrealistic standards of administrative conduct, entrenches the role of pressure groups, and places on public bodies legalistic requirements that they may not be equipped to fulfil. The combination of these pressures, exacerbated by further expansion of the scope of the judicial review, are likely to increase friction between judiciary and government, possibly precipitating a crisis.     

THE NEW SYSTEM OF LOCAL TAXATION IN SCOTLAND: PRINCIPLES AND PRACTICE

This article examines the new system of Scottish local government finance in theory and practice. It argues that reform is based on an economic theory of local fiscal behaviour, and examines the empirical evidence regarding the application of marginal cost pricing principles through the linking of marginal spending to taxation. The research reveals that the application of such principles in practice will be difficult, as only a few services offer direct benefits to all individuals, and as yet the technical precision needed in assessing needs for grant distribution has not materialized. There is little evidence of any impact of financial reform on local expenditure, as a number of intervening variables and assumptions can skew the accountability process.