Public Management and Administration - Owen E.hughes

228 Public Management and Administration
Developing countries found themselves undergoing various kinds of structural
adjustment through international agencies, notably the World Bank and the
IMF. Financial assistance to governments ‘comes with a panoply of conditions;
it is in no way a gift’ (Haynes, 1996, p. 84). The Fund requires debtor governments
to take action in five broad areas: first, trade barriers are to be lowered;
secondly, subsidies and price controls are to be cut or withdrawn altogether;
thirdly, financial systems are to be restructured by withdrawing controls on capital
movements; fourthly, state-owned enterprises should be privatized and foreign
investment controls cut; and fifthly, ‘state intervention in both the
management of the economy generally as well as in the provision of social
services is to be minimised’ (Haynes, 1996, p. 84).
The various structural adjustment programmes, at least in their initial stages,
were not particularly successful. As Haynes argues:
Despite the doubtless good intentions of the Bank [World Bank] and the Fund [IMF], the
result of sometimes insensitively applied conditionality was to force many Third World
countries to adjust to full orthodox liberalism without allowing the pace or thrust of liberalisation
to be tempered by the peculiarities of local state-society relations. Results
were often disappointing, with serious social and political repercussions. (1996, p. 86)
There seemed to be an assumption that, merely because neo-classical economic
theory prescribed a minimal role for the state, all that was needed for economic
development was to cut the public sector. It seemed that another orthodoxy –
simple reduction of state activity – was to replace the previous orthodoxy of
development administration. It also seemed that the result would be no better.
The shift to state minimization did not work as intended. Even the World
Bank, one of the institutions whose prescriptions had led to this impasse, for
which it must share some blame, could argue later (1997, p. 24):
As often happens with such radical shifts in perspective, countries sometimes tended to
overshoot the mark. Efforts to rebalance government spending and borrowing were uncoordinated,
and the good was as often cut as the bad. To meet their interest obligations,
countries mired in debt squeezed critically important programmes in education, health,
and infrastructure as often as – or more than – they cut low-priority programmes, bloated
civil-service rolls, and money-losing enterprises.
It was simple, but simplistic, to say that government just needed to be cut. What
was more important was that government should be efficient, facilitative and
appropriate to its circumstances rather than merely small. This change in attitude
led the funding agencies to change their perspective on the role of government.
In the 1990s, development specialists ‘were concerned about building
institutions for democratic accountability as well as for economic regulation
and management’ (Grindle, 2000, p. 189). And, following a period in which
policy seemed to be based on the assumption that all developing countries
needed was to reduce the role of government to the bare minimum, the World
Bank began to emphasize public sector reform.