Statistics, Knowledge and Policy
OECD World Forum on Key Indicators
Palermo, 10-13 November 2004
NEW PUBLIC MANAGEMENT REFORM AND THE LEGACY
OF DEVELOPMENTAL STATE IN KOREA
HAN, CHONGHEE
(THE KOREA INSTITUTE OF PUBLIC ADMINISTRATION, SOUTH
KOREA)
As a genre of administrative reforms, New Public Management (NPM) has spread around the world,
covered a variety of concepts as well as ideas, and been called by names. It has been called results-driven
government or performance-based management. Whatever it has been called, the main ideas of NPM
include businesslike transformation of state policies through privatization, deregulation, and
liberalization, especially under the influence of neo-liberalism with emphasis on market forces in order to
enhance the performance of governments (Osborne and Gaebler, 1992; Peters, 2001).
However, the enthusiasm of the NPM bandwagon since the late 1990s has given way to skepticism about
applying its main ideas and strategies to developing countries (Sutch, 1999). Can governments in
developing countries use really the concepts of the NPM to actually lead to successful administrative
reforms
to render the public sector produce more and better results? There are questions about how the
NPM ought to be applied in developing countries and how such applications reconcile its promises with
both old public management principles and operational realities of bureaucratic agents. These substantial
questions should be addressed to assess the usefulness of NPM reforms in developing countries.
With doubt of generalized applicability of the NPM, the critics argue that the usefulness of NPM reforms
in developing countries is slight at best. (Farazmand et al., 2001). In a bid to support this argument a case
of NPM reform efforts in Korea, especially for the central government during the Kim, Dae Jung
administration (1997-2001), is employed to critically assess the suitability of international benchmarking
originated in developed countries. In explaining the limited applicability of NPM reforms in the Korean
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government an emphasis is on the legacy of the developmental state within the bureaucratic elite, where
active state intervention guided the economy or society according to the state goal. The legacy is distinct
from that of developed countries where liberal democracies, based on market economy featuring free
competition, have been consolidated.
There is an underlying logic to the trajectory of administrative reforms towards the principles of market
and business management, and there are strong pressures giving voice to this logic from such supranational organizations as the IMF and WTO. At the same time, the reformers in the Korean government
have pursued their aims within a framework of the government officials’ embedded beliefs and
institutional arrangements. Their battles are with a set of oppositional forces within the Korean
administrative reform state and the way in which the government carries out the reform initiatives. Such
battles are the primary explanation of the limited applicability of the NPM reforms in Korea. Put it
generally, this suggests that administrative reform in a country should take account of his own distinct
factors domestically in shaping his program of reform.
From this perspective, this article first outlines the character of the different settings where the NPM
reform efforts have been made by contrasting them with those of developed countries. Second, it turns to
the major reform measures: administrative reorganization, executive agency system, open personnel
system. The conclusions draw on this survey of the reform issues to critically assess the current
achievements and their consequent problems, with a final word on strategies for successful NPM reforms
in Korea.
1.
Why the Impact of NPM Reforms Has Been
The Legacy of the Developmental State is Still Prevalent
Modest
There seem to be plausible explanations for why NPM reforms in Korea have delivered less than initially
claimed. The legacy of the developmental state, however, is one the most crucial factors for limiting the
applicability of NPM reforms because it can determine the trajectory of reform process and have an effect
on the way public servants and citizens or society in general interact.
The legacy of the developmental state can be derived from export-oriented industrialization or EOI
through effective state intervention between the 1970s and the 1980s in Korea. Such industrialization
strategy was possible by the state’s corporatist function associated with a political monism that does not
allow interest group democracy and represses independent representation of organized interests in the
society (Schmitter, 1975). Under the developmental state, the state is no longer seen as an agent of
competing and interacting groups, nor simply as a reflection of broader societal conditions under which
competing societal groups operate denying the pluralist view of the liberal state. To put it differently, the
state is no longer conceived as a dependent actor in relation to competing societal forces as the pluralist
perspective assumes. Rather, it is viewed as one of the primary actors in shaping the formation of societal
interests and civil society to produce public policy. The causality is inverted from the liberal state in
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which societal associations and class actors are producers, not products of public policy, which in turn
determine the representation and mode of action of societal associations.
In general, such state-centered analysis as the developmental state pays primary attention to state
autonomy, such as the ability of state managers to exercise power even in the face of strong opposition
from societal forces. According to Nordlinger (1981, pp. 91-140) the growth of state intervention helps to
enhance state autonomy because it provides more chances to disguise policies, insulting the policymaking process from opposition. Seen from this perspective, the state, conceived as an organization that
can claim control over territories and people, may propose his own goals without considering the
demands of the society, making it clear that state autonomy has an independent effect in social dynamics
(Evans, 1995; Skocpol, 1992).
Given that a country’s development path is greatly conditioned by the inherently domestic characteristics
of each country, in the context of the embedded state autonomy even after the demise of the
developmental state since the 1990s, it is reasonable to say that the limited usefulness of the NPR reforms
in Korea can be explained better if the relationships between the state and society distinct from those of
the liberal state are understood. As suggested by state-centered approaches, “strong state and weak
society” relations have been prevalent through the Korean government and the bureaucracy in spite of
domestically growing societal pressures as well as internationally deepening globalization.
By taking advantage of the legacy of state-society relations, therefore, the Korean government has
functioned an efficient bulwark for the government itself and its bureaucracy against the reforms initiated
by outsiders in particular, which may undermine their vested own interests. In other words, if reform
agendas are in favor of their interests, they will be a first priority, while if they are against their interests,
the government and its bureaucracy will be lukewarm to them in order to maintain the statusquo. This
means that government and its bureaucracy in Korea are still remain one of the most formidable power
blocks to formulate and reform policy on the basis of their own interests against the mobilized interests of
civil society, while the ability of the government to manipulate the society has increasingly been eroded
due to the expansion of democratization and globalization since the 1990s.
In short, even though it is true that the exercise of government power has become challenged compared
with the developmental state as in authoritarian era, the government and its bureaucratic power is still one
of the most significant factors to consider before launching any reform in Korea. If one takes account of
the legacy of the developmental state in terms of state-society relations, which is distinct from that of the
liberal state as in the so-called developed countries, it becomes uncertain whether the NPM reforms in
Korea are successful.
2.
Two State Perspectives on the Relationships between Public
Administration and Society
As governments in the 1970s, 1980s, and 1990s have become less hierarchical and more decentralized,
they are willing to cede their role to the private sector (Kettl, 2000). The rise of the “hollow state,” a
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metaphor for government that reduces its role as a direct supplier of public goods by contracting public
service provision out to private or nonprofits organizations, witnesses the collapse of orthodox public
administration that bureaucracies within centralized policy jurisdictions could no longer be considered as
a dominant policy actor (Frederikson and Smith, 2003, pp. 207-208). Such changed government roles
have blurred the boundary between the public and the private. However, in order to analyze the NPM
reforms, it is essential to identify the relationship between public employees and ordinary people derived
from the relationship between the state and society.
Table 1. An Overview on The Developmental and The Liberal State
State
Developmental
Liberal
Nature of the State
Paternalistic, Sacred
Competitive, Secular
State-Society Relations
Society (Market)
State Dominance
Dominance
State-led Economic
Market-driven Economic
Development
(Collectivism)
Development
(Individual Liberty)
Role of the State in Market
Guide (Protection, Support)
Referee (Fair Competition)
Power Orientation in
Centralized with Powerful
Pilot Agency
Decentralized without
Interest Emphasis
Bureaucracy
Powerful Pilot Agency
Again, as discussed in the above, Korea has a developmental state tradition with the strong state-weak
society relationship, which has been derived from ideological weapons of Confucianism and anticommunism. This facilitated state-led development strategy. The authoritarian governments between the
1970s and the 1980s were preoccupied with rapid economic growth as compensation for a lack of
political legitimacy in order to buy popular support. Economic growth was possible not only by the state’s
coercive power to guide the economy but also by the insulation of the pilot economic bureaucracy such as
the Economic Planning Board (EPB) and the well-coordinated institutional mechanism policymaking and
implementation (Koo, 1993). Using the powerful institutional mechanism, the holder of state power, the
pilot economic bureaucracy, in particular, has played a monopolistic role in public affair and quickly
succeeded in demobilizing civil society.
Considering this context, it is hard to deny that the bureaucratic power is still formidable in relation to
civil society and that the administrative culture may be seen as hierarchical, paternal, and authoritative in
Korea. This is difficult to be compatible with the principles of the “new public management” in the
current governance era.
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However, developed or Western countries, which have embraced the ideas of “new public management”
and have already established the reform initiatives, have more strong tradition of the liberal state
characterized by pluralism. State actions are explained by the interplay of interest groups. Government
may thus be considered as an arena within which interest groups struggle in the governmental setting to
insure the success of their own particular preferences (Frederickson, 1997, p. 3; Almond, 1990, p. 197).
Consequently, the major function of public employees is to make sure that the game is played fairly,
supporting the notions of individualism and private ownership. If public institutions are seen as a referee
or figurative cash register, the state could not be designated as monopolistic actor with autonomous
preferences capable of manipulating and even restructuring its own society, as found in the developmental
state.
Specialization, as evidence of supporting pluralism, is a key tenet of public administration. The
designation of governmental agencies is based on specialties, and effective interest groups will try to find
allies in particular specialized governmental agencies and to work closely with them or will sometimes
pressure them to maximize their own interests. Due to this nature, unlike the developmental state, a
powerful pilot agency is irrelevant; the autonomous decision-making capacity of governmental
institutions is clearly limited. Since that compatible interests groups and governmental agencies often
form friendly networks, so-called policy community, consensus building process is essential before
implementing any reform or public policy. Thus, it should be no surprise that civil society cannot accept
strong bureaucratic control designed to effectively yield the public good, in the traditions of the liberal
state characterized by pluralism.
Again, given that triggers for the evolution of NPM are increasing cynicism regarding government
bureaucracies’ responsiveness to citizen concerns, as well as dissatisfaction with governmental programs
(Aucoin, 1995; Manning, 2000), one of the prerequisites for successful NPM initiatives is that there must
be a continuing source of pressure from politically natured civil society for public sector performance
improvements (Romzek, 2000). From this point of view, western or developed governments, whose major
function is to insure the transformation of citizens’ preferences, not state own preferences into results,
often find considerable common ground in explaining why NPM reforms are necessary. Accordingly, the
reforms have delivered more than implemented in governments that have the strong traditions of the
developmental state whose overdeveloped bureaucracies hindered the activation of the society.
To summarize, for countries with the legacies of the developmental state that do not trace back to the
liberal state on the basis of society-centeredness to public affairs, it is difficult to transplant western NPM
reforms and to have a full effect of the reforms. In other words, a “cultural preparedness” for appropriate
applications matters before carrying out NPM reforms because they, by their nature, are constrained by
the embedded state-society relationship.
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3.
Are NPM Reforms on the Right Track in Korea?
3.1
Direction of Reform
In the midst of the so-called Asian Crisis in 1997, Kim Dae Jung administration launched reform with a
philosophy of “parallel development of democracy and the market economy.” The administration set
three objectives for performing Korea’s pubic sector restructuring program. The three objectives are as
follows: 1) to realize “a small but efficient government” by streamlining government functions and
reducing its size; 2) to achieve “a highly competitive government” by introducing the principle of
competition among civil service organizations and personnel; 3) to bring about “a better-serving
government” by fostering desirable actions and attitudes of civil servants (Kim, 2000, p. 147). These are
in line with NPM tenets characterized by providing flexibility, devolving authority, ensuring
performance, and developing competition in the public sector (Kickert, 1997).
However, such market-driven reforms have finally led to the reduction of the state influence in providing
public service. The businesslike reform has diminished the “publicness” of public service as an authentic
public domain. This growing concern for the status of public service has reflected a broader international
discourse over NPM reforms (Haque, 2001).
3.2
Reorganization
Wide-ranging reshuffling programs were undertaken in the name of streamlining the structure and
functions of government organizations. The programs for the central government structure were launched
in February 1998. Thanks to them, the number of cabinet numbers was reduced from 21 to 17, with 20%
reduction of staff and the Ministry of Government Administration and the Ministry of Home Affairs were
merged to form the Ministry of Government Administration and Home Affairs (MOGAHA). By taking
advantage of tradition of developmental state, the powerful bureaucrats of the MOGAD have imposed
diverse charters on local governments. The proliferation of characters was possible because of coercive
institutionalization. This reform made the MOGAD reinforce its control over local governments and other
ministries.
Kim Dae Jung administration tried to reform the government by newly establishing a regular government
agency that takes charge of administrating reform. Therefore, the Planning and Budget Commission was
set up in 1998. The agency has been renamed Ministry of Planning and Budget (MPB) to play a key role
in government reform. In this sense, the government’s reform strategy was based on bureaucraticcentered one whose reform agenda was monopolized by the MPB and implemented in a top-down
manner. Additionally, the Kim government undertook management consulting in all 17 ministries and
agencies in the central government, which was done by foreign consulting firms such as Anderson
Consulting and AT Kearney. The management review was carried out from October 1998 to February
1999. Based on the final report of this management review, the government reshuffled governmental
organizations in May 1999.
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Combined with the privatization of 8 Social Enterprises, as of 2001, the Kim government reduced the
number of public employees in the central government by about 16% or 22400 persons (Ministry of
Planning and Budget, 2002, p. 43, and p. 93). At a glance, these results seem to be consistent with the
main ideas of NPM reforms. But the structural reform did not meet the public’s expectations that render
inefficient agencies shape a small government or give autonomy to the privatized organizations.
According to the original proposal made by the Planning and Budget Commission, the Ministry of
Information of Communication, the Ministry of Science and Technology, and the ministry of Industry and
Resources were to be combined but the plan could not be realized. Rather, the consecutive reshuffling
plan newly established the Ministry of Women Affairs and additionally created the two positions of the
Deputy Prime Minister for Economy and Human Resource Development in 2000. This development
means that the government itself violated the logic of making the small government while pushing the
private sector for restructuring. For that reason, it is no more than a “political rhetoric.”
3.3 Executive Agency System or Agencification
Korea adopted the British style of executive agency to be shifted out of the ministerial organizations.
Twenty-three administrative offices were designated as executive agencies including the National
Hospital, Driving and Vehicle Agency, and National Theatre. Obviously, the designation of the executive
agencies was designed to promote autonomous and responsible for operational management
independently of the ministry. As a result, this development will enhance customer-oriented service
provision and facilitate a performance-centered culture in the government with increased autonomy for
agencies in terms of flexibility in resource use.
However, the concept of an executive agency, which separates executive functions from the policymaking role, is not clear to Korean bureaucrats. The determination of the services transformed into
agencies was influenced by power game within the government bureaucracies. The so-called “powerful
ministries” such as the Ministry of Economy and Finance and General Affairs and Decentralization were
not affected by this reform; only one service became agencified from the two ministries respectively and
the ministries, who officially supervise the agencies, continued control over them (Im, 2003, p. 95).
3.4 Open Position System (OPS)
The system was designed to recruit competent personnel through open competition among the applicants
from public and private sectors. In particular, for highly specialized positions, candidates with
outstanding talent and expert were to be sought both inside and outside of the public sector. The Civil
Service Commission (CSC), an agency newly established in May 1999, exercised an overriding power
during the OPS position selection phase. The CSC finally selected 129 OPS positions in spite of
opposition from most of the Ministries that are reluctant to open core policy planning positions to the
private sectors. For example, such positions as Assistant Minister for Economic Policy Coordination
(grade 1) of the Office for Government Policy Coordination, Direct General for Trade Policy (grade 2) of
the Ministry of Commerce, Industry and Energy are the core policy planning positions. In the midst of
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such unwillingness, the appointments were taken up; among the appointments as of December 2002, 95
officials were from the same Ministry and 5 officials coming from other Ministries (4.2%) and 18civilans
(15.3%) were appointed. The total of the appointments from outside is only 19.5% (Namkoong, 2003, p.
57).
The statistics suggests that the OPS should be no more than a policy tool to justify the existing promotion
system. This is a good example why the market principle of competition does not work in terms of higher
civil servant appointments in Korea. The rate of the civilian appointments was low because qualified nongovernmental candidates did not apply for the positions. Barriers preventing horizontal job transfer
between the public and private sector, the closed culture of the bureaucratic organizations, and the low
level of payment made competent civilians reluctant to apply for the OPS positions.
In addition, in a response to the OPS each ministry made relatively less important positions become open
positions and continued to keep the more important positions under the existing personnel system. This is
designed to minimize the effect of introducing open positions and to retain their embedded bureaucratic
power. Seen from such a formal response it is hard to say that the initial intention of OPS to invite
qualified civilians to the government organizations is successfully done.
4.
Summary and Imolications for Administrative Reform
Depending on the nature of the reform, the bureaucrats have reacted to the NPM reforms. Neverthless, in
Korea where strong state-weak society relations have been embedded because of the experience of
developmental state, the bureaucracy in particular, the MPB have retained their dominance over the
reforms. Society or market has not developed to the point of keeping powerful ministries from registering
their own bureaucratic interests in the process of the reforms and has benefited from powerful
bureaucrats.
Table 2. Summary of Reform Effects
Reform
Official Results
20% Retrenchment of Staff
Reorgarnization
8 SOEs Privatized
Executive
Agency
23 Agencies Changed Legal
Status
Bureaucrats’ Response
Increase the Size of Powerful
Ministries
Keep indirect influence
Exclude Powerful Agencies
Keep Controlling Power
Exclude Key Positions
Open Position
129 Positions Opened
Only 15% more Civilians
Recruited
* Source : Reorganized from Im(2003), Table 3, P. 96.
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Consequently, the NPM reforms themselves have paradoxically reinforced bureaucratic power. Why were
the true effects of reform contrary to originally expected ones? To answer this puzzle, it is helpful to
recall the experiences of Korean bureaucrats in times of developmental state as summarized in the table 1
above. Korean bureaucracy has enjoyed relative high degree of independent bureaucratic power from
market or social forces. The administrative culture different from that of western advanced countries
should be the driving factor in determining the suitability of NPM reform.
In reforming the public sector the construction of small, efficient or businesslike government that is a
tenet of NPM represents the language of the market, competition, performance and entrepreneurial
management that originate from the West. In considering the embedded experiences of developmental
state in which the state dominates the market, it would be successful for the administrative reform
movement in Korea to build on some ideas that have come from foreign countries? The point here is to
filter the public management reform approaches suitable for Korean administrative soils before simply
following them. In other words, it is imperative that Korean scholars and practitioners should see their
problems from their own point of view with taking their own historical experiences into account.
In addition to considering historical experiences, what should be done to achieve administrative reform
appropriately? Korean government needs to build managerial capacity and confidence as well as to
engage the public in businesslike practices in government without maddening bureaucracy. For the
successful administrative reform the promotion of democratization of administration and politics with
robust markets is necessary in advance, instead of concentration of sheer increase in efficiency in the
operation of government.
Market-based reforms have produced tangible changes in the way government provides public service in
Korea, but the questions remain about how much, in what ways, and whether the provision of public
service should be done as western countries should. A number of adjustments should be made before the
way western countries reform the public sector is embraced.
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