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1.  FACULTY NAME:  KANHAIYA JHA  BATCH NAME:  PUB. AD. OPTIONAL  SUBJECT:  PUBLIC ADMINISTRATION  TOPIC NAME:  IMPACT OF LIBERALISATION ON ADMINISTRATION IN DEVELOPING COUNTRIES  DATE OF PRESENTATION:  26/ 03/ 2024

2. Unit Section Topic Concept of development Changing profile of development administration ‘Antidevelopment thesis’ Bureaucracy and development Strong state versus the market debate Impact of liberalisation on administration in developing countries Women and development- self-help group movement. Development Dynamics 8

3. IMPACT OF GLOBALISATION AND LIBERALIZATION

5. Concept of LPG  Liberalization involves reducing government regulations and restrictions in the economic sphere.  It aims to create a more open and competitive market by removing barriers to entry, encouraging free trade, and allowing market forces to play a more significant role.  Liberalization often includes reforms such as deregulation, trade liberalization, and financial market liberalization.

6.  Privatization is the process of transferring ownership, control, or management of state-owned enterprises to private entities.  This can include selling state-owned companies, outsourcing public services to private firms, or encouraging private sector participation in industries traditionally operated by the government.  The goal is to enhance efficiency, introduce competition, and reduce the burden on the public sector.

7.  Globalization refers to the increasing interconnectedness and interdependence of economies and societies on a global scale.  It involves the flow of goods, services, capital, information, and ideas across borders. Globalization is driven by advancements in technology, communication, and transportation, leading to a more integrated world where economic activities are not confined by national borders.

8. Characteristic Liberalization Privatization Globalization Reduction of government regulations and barriers to entry in the economy. Transfer of state-owned assets or enterprises to private ownership or control. Increasing interconnectedness and interdependence of economies globally. Definition Focus on improving efficiency, introducing competition, and reducing the role of the state in economic activities. Introduces competition in sectors traditionally operated by the government. Encourages the flow of goods, services, capital, and information across national borders. Emphasis on creating open and competitive markets. Economic Focus Allows market forces to play a more significant role in determining prices, production, and distribution. Enhances the role of market forces on a global scale. Market Forces Transfers ownership and control of state-owned enterprises to the private sector. Adapts policies to facilitate cross-border economic activities but may require regulatory frameworks. Reduces direct government intervention in economic activities. Government Role

9. Characteristic Liberalization Privatization Globalization Leads to increased international trade, breaking down barriers to the movement of goods and services. May involve opening up industries to foreign investment and competition. Aims to reduce trade barriers and promote free trade. Trade Barriers May impact employment as privatized entities seek efficiency through restructuring. Can lead to increased economic growth but may result in income inequality. Can lead to cultural exchange but may also result in social and economic disparities. Social Impact May result in increased government revenue through expanded economic activities. Potential reduction in revenue due to lower tariffs and taxes. Generates revenue through the sale of state-owned assets. Government Revenue Encourages the adoption of advanced technologies through increased competition. Private sector entities may bring in new technologies and management practices. Facilitates the global exchange of technology and knowledge. Technology Transfer Raises issues related to national sovereignty as global organizations and agreements influence domestic policies. Critics argue it may lead to loss of control over domestic economic policies. Concerns about loss of control over strategic assets and public services. Sovereignty Concerns

10. MAJOR CHANGES IN THE ERA OF GLOBALIZATION  Increasing Dependence of Developing Countries:  In the era of globalization, developing countries are increasingly oriented toward high-end technology, high-skilled manpower, and capital-intensive endeavors.  However, these countries often lack strength and proficiency in these areas, leading to heightened dependence on developed nations across financial and technological fronts. This dependency shifts the balance of power and influence in favor of developed countries.

11.  Global Elite and Erosion of State Responsibilities: The term "global elite" generally refers to a small, powerful, and influential group of individuals who have significant control and influence over global economic, political, and social affairs.  The emergence of a global elite, consisting of influential entities like multinational corporations, has led to the selection of subservient comprador elites within states. States are progressively favoring the interests of the global elite, eroding their responsibilities to their citizens. As a result, the state institution struggles to uphold its ideals and gradually diminishes its social responsibilities.

12.  Emergence of Unilateral and Multilateral Supra-National Institutions: In the era of globalization, unilateral supra-national institutions such as the World Bank, IMF, and OECD gain increasing prominence.  Simultaneously, multilateral supra-territorial institutions, notably the UN (excluding the General Assembly), become more dominant. The influence of these organizations is largely tied to financial resources, and their presence is strongly felt in global affairs.

13.  Globalization of Issues: Global issues, including human rights, child rights, environmental concerns, drug trafficking, organized crime, and terrorism, have gained prominence. The world's focus on the rights of people in general reflects a shift toward addressing global challenges collectively.

14.  Age of Information and Technology: The 21st century is characterized as the age of Information, Communication, and Technology (ICT). Satellite information, communication revolutions, and the widespread use of the internet have become integral aspects of people's lives. Information, crucial for a country's administration and policies, plays a significant role in shaping global events. Countries with advanced information and technology have a strategic advantage, occupying a central position in global dynamics.

15.  Shift to Governance from Government: The world is experiencing a shift towards governance – both institutional and networked – as opposed to a traditional focus on government, which is purely institutional.  This transition signifies a move from a single-actor paradigm to a multi-actor paradigm, acknowledging the complexity and interconnectivity of global affairs.

16.  Administrative State to Competitive, Entrepreneurial, and Hollow State: States are evolving into competitive, entrepreneurial, and hollow entities rather than adhering to a traditional administrative model. The encroachment of markets into state functions is notable, reflecting a changing dynamic between governmental and market forces.

17. Hollow State  The term "hollow state" refers to a concept used in public administration and political science to describe a situation where the traditional functions and capacities of the state are weakened or compromised, often due to various factors. The idea is that, despite the external appearance of a functioning state, its core functions, such as policy formulation, implementation, and service delivery, are hollow or significantly diminished.  This can result from factors such as extensive outsourcing, privatization, bureaucratic inefficiency, corruption, underfunding, political instability, and a lack of public confidence. When authority is fragmented, essential tasks are outsourced, and budgets are constrained, the state may struggle to effectively fulfill its responsibilities and provide essential services. The hollow state concept highlights challenges in governance and administration, emphasizing the importance of addressing issues such as accountability, transparency, and effective policy implementation to ensure the state's functionality and public trust.

18. IMPACT OF LPG ON PUBLIC ADMINISTRATION  Globalization has significantly influenced public administration by subjecting it to various pressures stemming from global institutions, advancements in information technology, and a growing emphasis on efficiency and productivity.  Globalisation is resulting in a transition from centrally planned to market structures, and their integration with the global economy the world over. This has repercussions for the administrative framework and, the functioning of State machinery. The emphasis is on acquiring new skills and capabilities; and changing the mindset of personnel to adjust to the new environment.

19. Impact of LPG on Public Administration Shift from direct involvement to creating an enabling environment for private enterprise. Redefined State Role Market-Oriented ReformsEmphasis on efficiency, competition, and responsiveness in public administration. Transfer of state-owned enterprises to the private sector, requiring effective management. E-Government and Technological Integration efficiency, transparency, and citizen services. Privatization and Outsourcing Adoption of technology for administrative

20. Policy Shifts and DeregulationNavigating policy changes, including deregulation and reduced government intervention. Global Cooperation and Integration Engagement in international collaborations and adherence to global standards. Public-Private Partnerships (PPPs) Structuring and managing partnerships to deliver public services and infrastructure.

21. Focus on Efficiency and Performance Capacity Building and Training Increased Accountability and Transparency Challenges of Social Disparities Emphasis on outcome-based management and achieving tangible results. Development of skills such as negotiation and contract management. Heightened scrutiny to ensure transparent decision-making and efficient resource use. Addressing social disparities and ensuring equitable distribution of benefits.

22. Evolving State Functions  Historically, the State has played a central role in societal governance, often adopting the Welfare State model with a high degree of responsibility for public welfare. However, the advent of globalization has brought about significant shifts in the traditional role of the State.  The rise of a market-oriented approach to public administration is giving rise to what is termed as a 'Competition State.' This new paradigm encourages public choice initiatives, deregulation, and privatization, regardless of local political and administrative cultures.  This ‘roll back’ of the State propagated during the 1980s and 1990s, especially in the USA and UK, due to the influence of Neo-liberalism has resulted in deregulation, privatisation and the introduction of market-oriented reforms in public services.  This has led to a pro-market and anti-state philosophy of ‘private good’ and ‘public bad’.

23.  These beliefs in ‘Government by the Market’, opined by Peter Self (1993), rest upon the proposition that the market system is inherently a better method of satisfying human wants and aspirations than recourse to government.  The first objective of this thinking has been to slim the State and liberate the market forces in a variety of ways such as deregulation as well as through suitable monetary and fiscal policies.  The second objective has been to import market concepts and incentives into the operations of the government itself.  The third objective is to take measures to reduce the relative size and expanse of public expenditure and also to cut down the range of functions that the government performs.

24.  Undoubtedly, globalization profoundly influences the State, shaping its policies, institutions, and personnel. The once-expansive 'public sphere' for citizen involvement is contracting, making room for the emergence of the Corporate State.  For administration, the paramount challenge lies in redefining the State's role. There is a compelling need to establish a new regulatory State with an expanded agenda. This regulatory State should focus on ensuring efficiency, setting service standards, rectifying market distortions, providing a suitable regulatory and legal framework for market participants, and safeguarding the interests of consumers, employers, employees, and other stakeholders.

25.  Osborne and Gaebler (1992) advocate in their work, "Reinventing Government," for the government to play a pivotal role in market restructuring by: oSetting rules in the marketplace. oFacilitating the provision of information. oBoosting demand. oCatalyzing private sector supplies and fostering new market sectors. oCreating market institutions. oEngaging in risk sharing. o Regulating through the application of market-oriented incentives.

26.  The World Bank (1993) points toward several policy measures that have facilitated in providing the benefits of growth to a wide section of the population. These are: o Provision of universal primary education with increased access to secondary and higher education o Land reform measures in Japan, Korea and Taiwan have provided for a more egalitarian ownership of land, assistance to agricultural production both for domestic and export promotion, and provision of increased incomes to a broad group of land holders o Promotion of small and medium sized enterprises (most exclusively in Taiwan, to a lesser extent in Japan) o In addition, specific welfare measures such as investments in providing housing to low income households (in Hong Kong, Singapore and Indonesia) have also contributed to a lessening of poverty

27. Responsiveness of State Institutions  The globalising State that is said to threaten the lives of common people, through promotion of elitist policies, can be counteracted by reasserting the role of the State institutions in becoming responsive to the needs of people.  The World Development Report – 2000/2001 ‘Attacking Poverty’ asserts that public administration should implement policies efficiently, be responsive to the needs of the people and redistribute resources for activities that benefit the needy.  The World Development Report 2002 “Building Institutions for Market” has observed that “Weak institutions – tangled laws, corrupt laws, corrupt courts, deeply biased credit systems and elaborate business registration requirement – hurt poor people and hinder development”.

28.  The key challenge, to counteract the negative consequences of globalisation, is to strengthen and revitalise the public institutions in a manner to ensure their legitimacy and effectiveness in protection of public interests.  The developing countries need to take concrete measures in this direction. According to James Wolfensohn, the then President of the World Bank (1999), development requires Good Governance meaning open, transparent, accountable public institutions.  In a market economy, if growth is to be lasting, then it must be regulated - not over-regulated, but guided by public institutions and private professional conduct, which establish a foundation of transparency and fairness in economic life. Effective, accessible public institutions are not just conducive to, but a necessary condition for stable growth.

29. Management Orientation in Public Administration  Public administration, traditionally speaking, had the major obligation of promoting public interest. It had to assure representativeness and responsiveness to citizens. The managerial orientation in it is not a recent development, as it was prevalent earlier too but in varied form and content.  The new reform model in public administration, which emerged in the 1980s as New Public Management (NPM) approach has once again condemned the traditional public administration as a failure. It starts with the premise that the traditional, bureaucratically organised public administration (in the words of Al Gore) is, ‘broke’ and ‘broken’ and consequently, the public has lost faith in the government.

30.  The new reforms model that is the NPM model is based on certain postulates, which include: o Focusing on achieving results rather than primarily conforming with processes o Introducing market principles such as competition, and contracting out in the provision of goods and services o Making public administration customer-driven to enhance service ethic and efficiency o Assigning the role of steering activities to the government rather than rowing o Relying on third parties such as non-profit organisations, and other levels of government in implementation of policies o Deregulating the government activities to make them result-oriented o Empowering the employees to serve the customers as it promotes teamwork; and Changing the overall public administrative culture towards flexibility, innovation, entrepreneurialism, as ‘opposed to’ rule-bound, process orientation

31. • As highlighted by Huque, the marketization process in the public sector of developing countries gives rise to several associated challenges. • Firstly, the often-touted improvements in efficiency and reductions in public expenditure may be overshadowed by significant indirect costs and an artificial boost in productivity. While there may be marginal savings in terms of both money and manpower, these gains often come at the expense of fundamental principles of public service, leading to a loss of public confidence in the government and its agencies. • Secondly, there is a erosion in the power, credibility, and legitimacy of governments. Weak governments in developing countries find themselves at a disadvantage when negotiating with resourceful, organized, and highly competent service providers from the private sector, as well as influential international agencies and multinational corporations. • Thirdly, consumers of public services, already in a vulnerable position in developing countries due to inadequate government protection and regulations favoring service providers, become even more marginalized following the introduction of marketization in public administration.

32.  State-Market Cooperation  A consensus is gradually building up to create cooperation between the State and the market. Three kinds of interventions have been identified which are functional, institutional and strategic. o Functional interventions seek to remedy market failures in so far as prices give the wrong signals. o Institutional interventions seek to govern the market by setting the rules of the game for players in the market. o Strategic interventions seek to guide the market, as these are interlinked across activities or sectors in an attempt to attain broader, long-term objectives of development.  The State in order to facilitate market functioning needs to develop the physical infrastructure as well as create indispensable social infrastructure.

33.  In 1994, some economists in India recommended evolving a paradigm of ‘Socially Responsible Market Economy’ (SRME), which seeks to: reorient the role of the State and planning through public sector and joint sector, strengthen economic and social service activities through building of human resources, skill development, employment generation; and develop infrastructure where private sector and foreign investment are not forthcoming.  The SRME paradigm emphasises on self-discipline, peer pressure and adherence to codes of conduct by all economic players. These codes are intended to be followed by all concerned sections of the society reflecting their socially responsible economic behaviour in a free market economy. The State is expected to play a balancing role in overseeing the achievement of people’s welfare in a market driven economy.  In the national context, the State must endeavour to create the pre-conditions for a more equitable development, bargain with transnational corporations to improve the distribution of gains from cross-border economic transactions, practice prudence in the macro-management of the economy so as to reduce vulnerability and intervene to minimise the social costs associated with globalisation.

34. Other challenges for public administration • Public administrations may face challenges in maintaining control over essential services and strategic sectors as privatization transfers ownership and management to private entities. Loss of Control: Social Inequities: • The market-driven approach of LPG can exacerbate social inequalities. Certain segments of the population may face disadvantages in accessing essential services, leading to disparities in education, healthcare, and other vital areas. Accountability Concerns: • As services are privatized or deregulated, ensuring accountability becomes more complex. Private entities may not be as transparent or accountable to the public as government agencies, leading to concerns about service quality and adherence to standards. Job • The restructuring and privatization of state-owned enterprises can result in job losses for public sector employees. This can lead to social and economic challenges, including unemployment and labor market imbalances. Displacement:

35. Limited Government Revenue: • The sale of state-owned assets during privatization may provide immediate financial gains, but it can lead to a reduction in long-term revenue streams for the government, impacting its ability to fund public services and infrastructure. • Public administration faces challenges in designing and implementing effective regulatory frameworks. Striking a balance between ensuring fair competition and preventing monopolies or unfair practices requires sophisticated regulatory mechanisms. Regulatory Challenges: Erosion of Public Services: • There is a risk that the focus on efficiency and cost-effectiveness may lead to a reduction in the quality and accessibility of public services, especially for marginalized or remote communities. Dependency on Global Economic Trends: • Globalization exposes public administrations to external economic shocks and uncertainties. Dependency on international markets may make it challenging to insulate domestic economies from global economic downturns.

36. • Public sector employees and stakeholders may resist the changes associated with LPG, leading to organizational resistance and potential disruptions in the implementation of new policies and practices. Resistance to Change: Environmental Sustainability Concerns: • The pursuit of economic growth and globalization may raise concerns about environmental sustainability. Unregulated market forces may contribute to environmental degradation and resource exploitation. Complex International Relations: • Engaging in global trade and cooperation requires navigating complex international relations. Public administrations may face challenges in negotiating favorable terms and protecting national interests in a globalized context.