New public management (NPM) is the managerial process in which administrative activities are led to improve the administrative ability to make the function of the government or the state as successful and significant as in the management of the private sector. In this, efforts have been made to increase administrative efficiency, effectiveness and efficiency by introducing good managerial aspects invented and developed in the private sector in public administration and to make managerial transformation. In this sense, NPM is the practice of using management principles, models and tools to make the role of the state effective and meaningful. The NPM focuses more on outcomes than on processes, on accountability rather than on irresponsibility, and on management rather than administration. At the same time, the NPM believes that the traditional shortcomings in the administration should be removed and transformed into a competitive, efficient, effective and result-oriented management.
In fact, NPM has been conceptually developed to meet and manage the challenges posed by globalization, economic liberalization, privatization, increasing international competition and rapid changes in technology in the late 1980's and early 1990's. It encourages the adoption of the good aspects developed by the private sector in the public sector as well as helps to make public administration / management efficient, productive, effective and accountable. It is also able to achieve qualitative improvement in the flow of public services. NPM also adopts flexible, effective and useful and market-oriented policies.
NPM concept has led to a wide-ranging change in the role of government as well as following the good aspects of private sector management, emphasizing the relationship between government and civil society. Apart from NPM, it is also known as New Managerialism or Managerialism or New Taylorism, Entrepreneurial government, Market-based Public Administration etc.
1. Aggression and Criticism in the Public Sector
There are too much criticism and aggression on the size, scope and methods of government and bureaucracy in the 1980s and 1990s. At the same time, many hopes and demands were made from this system. In addition, the world's most prominent critics of the government or the public sector were the head of government. For example, Margaret Thatcher ruled the United Kingdom in 1979 and Ronald Reagan ruled the United States in 1980. They were the ones who were the most criticized for their administrative actions. The most frequently criticized topics are:
- The impact on the state along with the large size of the government
- Expansion of scope of government and its impact
- The traditional procedures of the government and the bureaucracy.
2. Emerging Economic Theories
Some principles were established financially. The government becomes the ultimate obstacle to national economic growth, prosperity, progress and independence. Only a limited government can work for the welfare of the people and the market system was much better than the bureaucracy. With this belief, the new public management has been directed for governance based on the famous principles related to the economic sector like Public Choice Theory and Principle Agent Theory.
3. Globalization and Competitiveness
The rapid development in the private sector through globalization and economic liberalization have made compulsion to transform public administration into a New Public Management in terms of capacity building, making it competitive and people-oriented in the administrative sector. The public sector must be as efficient, competitive and effective as the private sector for the good economy. The efficient operation of the government sector can also make the private sector more effective. These two are interdependent with each other. Similarly, due to expansion of the functional role of the government, the development of new public management concept had taken place.
Features of New Public Management (NPM)
- Fast and Quick Government: NPM replaces the large and multi-purpose bureaucracy with a fast and quick government.
- Achievement and Results Oriented: NPM is a management system that emphasizes achievement and results rather than process.
- Under NPM, a mechanism based on market economy is promoted for the flow of services or availability of goods by the public sector.
- Cooperation between public sector and private sector is an important feature of NPM. Emphasis is placed on the government to play a coordinating and facilitating role by making the private sector more active.
- There is maximum use of information technology to make the public sector management effective.
- The development of NPM has changed the values of public sector. It emphasizes institutional economy, efficiency and effectiveness.
- NPM guarantees the right of consumers to make their own choice while using goods and services.
- NPM ensures personal and institutional accountability.
- NPM provides flexibility as per the needs of public sector management.
Limitations of New Public Management (NPM)
- Repetition of traditional principles
- Limitations of public choice theory
- Problems of ethics and accountability
- The problem of politicization
- Difficulty in applying market principles
Uses and Practices of New Public Management (NPM)
- Its use varies from country to country.
- The use of NPM is very low in Japan.
- Partial use in China.
- Relations between Japan and China have a hierarchy-based strong culture, whether official or personal.
- Due to differ from policy execution, it is partially used in Australia.
- However, the use of NPM is increasing with the modern global change.
What should be done to align the administration of Nepal with the concept of NPM?
- Clarify the areas of work to be done by the government.
- Arrangements will be made to receive public services from the lower unit.
- Make the administration small, efficient and empowered.
- Make development programs based on program budget.
- Control unnecessary and distribution oriented expenditure.
- Provide ICT based online services.
- Provide business related training to the service providers.
- Increase the physical, technical and economic capacity institutionally.
- Make employees to study and research new topics.
- Effectiveness in administrative work will be increased by involving the private sector as a partner in good and achievable work.
- Follow the best practices around the world.
- Implement performance based incentive system.
- Increase the participation of citizens in service delivery and development work.
- Commercialize the bureaucracy instead of politicizing it.
- NPM is a powerful means of connecting the government, the private sector and the general public. It is effective in providing services through it.
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