Public policy implementation in the 21st Century often involves a complex web or delivery network that minimizes traditional direct service methods employed by governmental entities. These new delivery systems helped create New Public Management (NPM), a managerial approach significantly different from conventional public administration. The intellectual debate on NPM often lacks a systematic examination of its specific tools and techniques. This paper examines the roots of New Public Management instruments, demonstrating that shifts in intergovernmental relations (IGR) altered the mechanisms and processes of public service delivery, creating new approaches and tools for administrators to implement public policy. Citing programmatic changes in the delivery of economic development policy in one state as evidence of this shift, this paper shows the links between new implementation approaches and many New Public Management tools.
The process of implementing public policy has changed, especially in domestic areas like economic development. Beginning in mid 1970s the delivery of large portions of domestic public policy gradually ceased being the exclusive and direct responsibility of employees on the government payroll. Instead, by the 21st Century, public service delivery often occurs in an indirect manner. Implementation in many cases, then, involves a collaborative effort linking public, private and non-profit organizations in a complex web that minimizes the use of direct service delivery methods by public or governmental entities (Anton, 1989; Kettl, 1993; Salamon, 1989). These collaborations and partnerships not only altered the basic structure of and approaches to implementation, they created new and complicated delivery mechanisms consisting of intersectoral networks often managed by public administrators.
This paper reviews the emergence of these new public service delivery mechanisms and systems and examines their links to the rise of New Public Management (NPM), a loosely connected set of methods with an over arching general philosophy that significantly departs from conventional public administration. Using evidence from the changing implementation of economic development (ED) policy, citing examples from one state's experience in this transformation, and employing concepts from the policy tools literature, this paper shows that shifts in the dynamics of intergovernmental relations (IGR) helped alter the formulation and subsequent delivery of many domestic policy areas, therefore contributing to the use of many of the delivery mechanisms associated with New Public Management. This paper argues, then, that NPM emerged and grew in part because of changes in the role of government in the implementation of domestic public policies like economic development.
New Public Management and Policy Tools
New Public Management generally emphasizes competition in the public sector, using corporate-like management methods and administrative structures that focus on quantitative performance measures (especially outputs) to improve the efficiency of public services and reduce budgets. Called by some a global reform movement in public administration, NPM strives to increase management autonomy by replacing bureaucratic rigidity with market-like competition (Kettl, 1997: p. 447; Lynn, 1998: p. 231).
While the specific mechanisms of the NPM approach often seems to be only briefly discussed by researchers and commentators, a review of the literature reveals that practitioners of NPM appear to employ a wide-range of administrative processes that blend public and private resources and processes in the implementation of public policy, including public-private cooperative arrangements and networks, strategic planning and management techniques, outsourcing and privatization of public services, and nonprofit service delivery organizations (Nagel, 1997: p. 350; Peters & Pierre, 1998: p. 231). Portions of public choice, principal-agent, and transaction cost theories combine to frame the foundation of this new approach to public management (Kaboolian, 1998: p. 190; Terry, 1998), relying heavily on market place factors and business oriented competitive strategies. Of the primary evaluative criteria for public service delivery: efficiency, effectiveness, equity, and responsiveness; the NPM approach, then, appears to focus on improving efficiency.
New Public Management, like most fundamental shifts in thinking and practice, understandably sparked lively discussions among practitioners and theorists, often resulting in controversy and the trading of accusations, warnings, and rebuttals; eventually developing proponent and opponent camps (Nagel, 1997: p. 349). Entrepreneurial management strategies and behavior, where public administrators take calculated risks using public resources and employing business-like strategies (e.g. strategic planning, privatization, public-private partnerships, etc.) within a competitive environment, probably generated the most controversy. Some see this aspect of NPM as essential to improving management capacity (see Frant 1999; Peters & Pierre 1998); others see entrepreneurial tendencies and the entrance of free market practices to public administration as a threat to the delicate balance of democratic governance, accountability and efficient service delivery (see Adams, 2000: p. 498; Kelly, 1998: p. 207; Terry, 1998: p. 197).
However, with few exceptions, most discussions of New Public Management focus on its implications to theory and practice, failing to systematically examine the roots or the characteristics of the specific mechanisms used by practitioners of the NPM. Policy tools theory, an alternative approach to implementation, however, offers a way to link New Public Management to issues relating to public service delivery practice. The policy tools theoretical approach examines public policy delivery in terms of sets of government action, characterizing policy actions by government as specific objects, much like formal legal tools, rather than a broad collection of management activities and processes (de Bruijn and Hufen, 1998). Nearly all policy initiatives, programs, and policy interventions, then, can be identified according to the structural characteristics of their basic public service delivery system. A limited number of policy structures can be classified according to these various characteristics (Salamon, 1989). Policy tools, or instruments, constitute the categories of the different classifications. According to tools theory, then, tools affect implementation patterns and policy outcomes in predictable and regular ways (Bobrow & Dryzek, 1987), constituting a "blueprint or template that shapes policy" (Linder & Peters, 1990: p. 51).
Critics of New Public Management, therefore, should also look at the tools and ask if specific public policies or programs initially encouraged the use of NPM? What factors encouraged administrators to employ these tools? What is the source of these tools? While increased use of New Public Management undoubtedly affects the practice of public administration, showing the potential for altering the delicate forces balancing administrators, political leaders and the populace, an examination of the nature of these new tools and their roots may be a fruitful and enlightening exercise. Maybe some insight into the threats and advantages of the NPM approach to public administration may be gained? B. Guy Peters (2000: p. 36), for instance, proposed that a policy instrument approach could "bridge the gap" to appreciating the advantages and limits of New Public Management, and help us better "understand the policy performance of government in contemporary political systems." This paper takes Peters' challenge and attempts to make that link.
Taking a basic political economy approach, much like Felts and Jos (2000) and Scott, Ball and Tony (1997) who postulated that environmental forces influenced the shape of administrative organizations, increasing the tendency to use NPM techniques, this paper argues that transformations in the policy environment, especially shifts in fiscal and policy relations between the national and state governments, changed the formulation and implementation of public policy. Looking at the delivery of a critical domestic policy area like economic development, this paper confirms these shifts and discusses its role in the rise of New Public Management.
A few scholars already empirically researched the impact of intergovernmental relations on the implementation of state and local economic development policy. Elkins, Bingham, and Bowen (1996), for example, verified that when the national government assumes a passive role states often …