The text discusses the concept, formation background, characteristics, and limitations of New Public Management theory. New Public Management emerged as a response to government failures, aiming to implement smaller, more efficient governments. It introduces market principles into public administration, emphasizing accountability, responsiveness, and efficiency. However, it faces criticisms for its neoliberal approach, potentially undermining public values and social equity.
I. Introduction
II. Main Body
1. Concept of New Public Management Theory
2. Formation Background of New Public Management Theory
3. Characteristics of New Public Management Theory
4. Limitations of New Public Management Theory
III. Conclusion</32>
I. Introduction
The expanded role of government following the Great Depression led to excessive welfare spending, coupled with the oil shocks of the late 1970s, resulting in fiscal deficits in the public sector. To address this, governments around the world introduced and implemented the theory of New Public Management (NPM) as a reform measure. Over the past three decades, a new trend in public administration, which has led administrative reforms, can be summarized as New Public Management. Disappointment with inefficient government led to a growing demand for smaller, more efficient, and more responsive government that caters to the needs of citizens. As a result, the need for fundamental reforms in the public sector became apparent. Subsequently, the introduction of managerial logic and techniques into the public sector aimed at eliminating inefficiencies and drastically improving services gave rise to NPM, which has significantly contributed to the reform efforts of many countries worldwide. Particularly characterized by the reduction of government agencies and personnel, enhanced accountability through performance management, increased value-added efficiency, expansion of privatization, and deregulation, the NPM-driven government reform is evaluated as a comprehensive movement to depart from traditional bureaucratic administration (bureaucracy, big government) previously led by governments. This is a global trend and has exerted significant influence on South Korea without exception.
Therefore, in the main body, we aim to explore the concept, formation background, characteristics, and limitations of New Public Management theory, which is presented as the direction of government innovation under the auspices of neoliberalism.
II. Main Body
1. Concept of New Public Management Theory
New Public Management (NPM) is a theory that seeks to implement a smaller government and achieve performance-oriented improvements in the administrative operations of traditional bureaucracy. To understand NPM, it is necessary to first examine the characteristics of traditional administration.
In the past, the state needed to maintain neutrality as a political actor. Politics and administration were strictly separated, maintaining the dichotomy of politics and administration. However, administration becomes involved in policy execution, regulation, and policy formulation processes. It is evident that a balance between administrative responsibility and the administrative policy role is necessary. The characteristics of traditional public administration can be seen in the strict distinction between private administration and public administration in terms of management methods, organizational principles, personnel, and so on. NPM has not been precisely formulated as a single theory, so its application varies from country to country. For example, in the United Kingdom, emphasis was placed on excluding frequent political judgments by the administration to emphasize the realm of management, while in the United States, measures were taken to introduce competition and performance indicators to enhance the administrative capacity and accountability of the administration.
This difference arises from whether there is distrust of the existing bureaucratic system or whether improvements are sought in the systemic aspects of the bureaucratic system. As NPM is a theory that is currently being applied in reality, it is premature to make hasty evaluations. However, it is undoubtedly a theory that has made significant contributions by efficiently transforming bloated government organizations and improving administrative responsiveness by recognizing citizens as customers or consumers.
2. Formation Background of New Public Management Theory
New Public Management (NPM) emerged as a response to government failures in the era of administrative states, aiming to implement a 'small but efficient government'. It originated from market-oriented government reforms initiated in Anglo-Saxon countries since the 1980s, represented by the Thatcher and Reagan administrations. NPM combines market-oriented principles with neo-managerialism, where 'market-oriented' encompasses principles of competition and customer orientation. It advocates applying competition and customer choice to traditional monopolistic government services as much as possible to provide administrative services.
The recognition of the problem was the monopoly held by the bureaucratic regime. As government monopolized, government failures became apparent, leading to the belief that decentralization of power and emphasis on competition should result in new synergies and connections. Thus, decentralization of decision-making processes and introduction of market principles into the economic system were deemed necessary. It was argued that competition among government organizations and between government and private organizations would increase efficiency, and privatization was advocated. Decentralization also included transferring authority to local governments, termed as 'voting with one's feet', implying that elections involve actual movement and enabling mobility.
In South Korea, until the Park Chung-hee regime, the government's role was predominantly large, essentially maintaining a state-led planned economy. However, from the Chun Doo-hwan regime onwards, the government began to reduce its size, with the motto of becoming a small and efficient government established during the Kim Dae-jung administration.
This trend was prompted by the 1997 IMF financial crisis. Structural adjustments based on the principle of a small government, efficient systems, and improvement of services to the people were pursued. Subsequently, under the Lee Myung-bak administration, there was a resurgence of efforts towards privatization, reverting to NPM principles. However, the economic policies of the Lee Myung-bak administration itself resembled those of the Park Chung-hee administration, focusing on planned economy and regulation.
In South Korea, the predominant approach of NPM was to introduce market principles into the public sector and focus on reducing bureaucratic size. Exceptionally, during the Roh Moo-hyun administration, the emphasis was on achieving 'a better government' rather than a small government, aiming to improve the quality of public services, leading to an increase in the number of public officials, including police officers and teachers. However, the market-oriented atmosphere was generally maintained during this period. The performance-based salary system implemented during the Park Geun-hye administration can be seen as a policy based on NPM principles.
3. Characteristics of New Public Management Theory
New Public Management (NPM) is an effort to introduce and integrate the logic and techniques of business management into government administration. It aims to relax existing regulations and induce competition through the introduction of internal markets. Additionally, it emphasizes active involvement of the private sector in providing public services and highlights the managerial aspects of administration.
NPM emphasizes accountability and responsiveness to individual interests of customers rather than the collective interest of citizens as a whole. Governments are expected to enhance the quality of government services for citizens and increase transparency in resource allocation while minimizing transaction costs.
It stresses operating government functions according to market principles and restraining expenditure expansion. Introducing market mechanisms is essential for optimizing public management and enhancing the efficiency of public service provision to citizens. Management of government service delivery should be performance-oriented.
4. Limitations of New Public Management Theory
New Public Management (NPM) inherently pursues neoliberalism, leading to problems such as excessive emphasis on marketization and disregard for the specificity of public administration. There is a problem of equating government with businesses based on market omnipotence and attempting to transplant business management principles and techniques directly onto the fundamentally different government. Additionally, NPM may undermine the value ideology of public administration. Grounded in efficiency based on price systems and principles of competition, NPM can compromise public interest, social justice, and equity, potentially undermining democracy by failing to ensure representation for all layers of society.
Moreover, its theoretical framework is inadequate. There is a lack of theoretical coherence and rigor, making it challenging to view it as a single paradigm. Furthermore, for the reform strategy of NPM to succeed, the existence of a 'rule-based government' and a 'sound market' is a prerequisite, which may not be suitable for developing countries where such conditions are not met.
Furthermore, the customer-centric thinking of NPM may breed a population seeking benefits without fulfilling civic duties, exacerbating regionalism and causing them to be swayed by the demands of majority interest groups and specific social strata.
From the perspective of government and civil servants, there are also limitations. NPM advocates for large-scale personnel reductions and a flexible labor market, leading to weakened job security for career civil servants, undermining morale, and weakening the loyalty and accountability of civil servants. Additionally, the expansion of bureaucratic discretion poses problems, as arbitrary administration may prevail, making it difficult to preemptively control corruption issues.
Thus, NPM has been criticized for its excessive emphasis on marketization, erosion of state functions, neglect of equity leading to welfare decline, increased unemployment, and depletion of international speculative funds.
III. Conclusion
Looking back at the history of state administration, the past theories of governing functions and development functions have been marred by government failures. The administrative intervention by the government, which has been governing the nation as a whole until now, suffered from events like the oil shocks and the British disease, leading to a loss of legitimacy in government intervention. The extensive intervention of the government did not guarantee the perfect development of the nation; instead, it led to incidents that hindered the development of the nation. Consequently, there is a movement to restrict the authority of the government once again.
Thus, born out of this context is the New Public Management theory, represented by neoconservatism and neoliberalism as discussed in the main body. In New Public Management, the government pursues a 'small but strong' and beautiful government. In New Public Management, the government no longer intervenes extensively in the nation, but rather operates administration through regulation and incentives. Additionally, it supplies public services and goods through partnerships with the market, introducing market mechanisms into government sectors or areas to promote government efficiency. However, it is assessed to have vulnerabilities in terms of social equity.
