Developments in Strategic and Public Management: Studies in the US and Europe

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HAUS – a state-owned company, a stakeholder unit within the administration

But why European Perspectives?

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It is necessary to distinguish between these two approaches. The one, EPA, takes the contingencies and features of Europe into account. It starts from the European specificities and moves to the general and generic levels. The other PAE is about applying general knowledge to the European sphere of public administration. Both approaches invite for comparative research and learning from other practices. There are specific problems in Europe which need to be addressed, also by European scholars. Studying the functioning of the European Institutions, their policies, and their interactions with the Member-Countries, is one of the most significant topics where European Public Administration needs to increase its relevance and its capacity to be part of the solutions.

At the same time, Europe is about an ethno-linguistic and cultural diversity. There are 24 official languages in the European Union. Transformations of public administration systems in Europe is a combination of causality and path-dependency as a push factor, but also and even more of a teleological drive as a pull- factor. The European Union moved from a chapter in foreign policy to a chapter in domestic policy and politics.

This needs the broad umbrella of European Perspectives for Public Administration. Even though these undertakings offer many inspirations, we are convinced that this discussion needs new inputs, and that we need a distinctively European view. Our basic question is how we, as researchers and teachers will and should deal with the changing role of public administrations and the public sector in Europe.

Understanding Public Administration

Our aims are to define the role of Public Administration as an academic undertaking in the future university and the academic world, to take alternative cultures and futures into account, to take inter- and multidisciplinarity seriously, and to strengthen the European voice in the world. The first topic is about re-emphasizing the existing and necessary contributions of economics, law, psychology, political science, history, anthropology, and other relevant disciplines in the field of Public Administration. How can we establish new forms of cooperation and learning, and how can we avoid or at least diminish academic silos and established misunderstandings?

The second topic focuses on the fact that academic Public Administration has been for many years very Anglo-Saxon oriented, for example basically ignoring the contributions of public law and different national cultures. How can we enlarge this parochial view? The third topic asks how a special type of 'possible futures' such as utopias and dystopias or scenarios appeal to public administrations and to Public Administration.

How should we deal with them in academic teaching and research? Just ignoring them, does not seem to be a very convincing option. The fourth topic is finally about organizing the accumulation of knowledge in Public Administration. How can we strengthen comparative research and teaching and how can we integrate different disciplines and scientific approaches with public administration practices? The project is a collaboration between Potsdam University and KU Leuven and for the period of Its purpose is to build academic capacity and sustainable results for an academic community within the philosophy of Alexander von Humboldt.

From a timing perspective, the sequence could be as follows:.

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According to the Law on HAUS Finnish Institute of Public Management, HAUS has a specific role as a strategic partner of the Government in planning and implementing the state personnel policy, public administration reforms, training of civil servants, HRM, and organisational development of the ministries and other state agencies. HAUS is a full-service training institute. The HAUS curriculum covers the state administration, both vertically and horizontally.

HAUS organizes open and tailor-made training programmes and courses, as well as coaching, consulting and career development services for ministries and other state agencies. HAUS runs than training events a year, with a total of 10, participants. HAUS has excellent experience and a very good reputation in conducting training needs assessments and operationalizing them into practical solutions meeting the needs of the customer.

Thus, on macro level we can discuss both external and internal economic and political variables affecting development policy trajectories and how the role of the state in development is perceived and positioned e. This should also make it clearer that capacity can never be a static and universal concept, but is dependent on the context of a country, policy field, technological regime and is also evolutionary.

Based on our framework, it can be seen that the policy capacity is dependent on the evolution of many variables and any model of it will necessarily remain incomplete, especially if applied to a single region or country. We concentrate here on some of the variables we see as under-theorized in development policy literature. We argue that the most crucial limitation of this literature is that both public management as discussed above and finance see also Kattel et al.

That is, most development theories assume that public-management structures and financial institutions work in a specific way and thus can be treated as mostly exogenous factors in development proper notwithstanding whether the latter is unleashed via technological or competitive pressures or via some sort of combination of both. In other words, even strictly evolutionary theories - and notwithstanding Schumpeter's original emphasis on finance in processes of development and innovation , pp.

We might say that even evolutionary economic theory treats financial institutions and public-management practices as quasi-evolutionary. Given these limitations, we propose that we can make better sense how development policies and private-sector dynamism co-evolve forming different types of policy capacity by looking at three interrelated complexes of policy arenas and 'choices', each fundamentally evolutionary in nature: policy choices on understanding the nature and sources of technical change and innovation; policy choices on the ways of financing economic growth, in particular technical change; and third, policy choices on the nature of public management to deliver and implement both previous sets of policy choices.

These choices go back to political, economic and ideological factors characterizing specific time periods, regions, and economies; and are characterized by long-term processes via creating legacies and path dependencies , but also by punctuations such as crises that lead to important changes in the policy trajectories. The interactions between these policy choices and eventual outcomes in terms of institutional characteristics of development policy, and its feedback and learning systems on different levels, etc. The impact of these choices and their co-evolutionary results or, assessments of policy effectiveness and capacities are revealed in private sector dynamism, or performance.

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Thus, for the analysis of development policies, not the exact policy choices per se but the evolutionary processes resulting from these choices are more important as the former can be often only conceptually delineated. We can provide in each of the policy complexes a snapshot view of possible policy options or alternative paths and respective evolutionary processes often associated with these choices.

The nature and sources of technical change. One of the fundamental issues of development is the understanding of what is the most sustainable way of creating and developing technological capabilities. This is partly related to understanding the dynamics of technological developments, such as the implications of different technological paradigms on production and innovation systems see Ernst, ; Perez, ; Yeung, Partly, it is also an ideological question conditioned by politico-economic traditions and context including current levels of development, political constraints, and external political and economic pressures.

The most robust options can be characterized by two extremes: technological development based on foreign-investment-led processes vs domestic upgrading processes. The former assumes technical change will happen through spill-overs and similar mechanisms from transfer of knowledge, technology, etc. In many ways, however, the choices about the nature of technical change come down to understanding what competition does in an economy.

One way is to understand competition as the main driver of innovation and technical change, and thus competition creates efficiencies in the economy. The other, almost opposing view is to understand technical change as asymmetric benefits and profits bestowed on innovators are not proportional with other market actors , which leads to imperfect competition but also growth; thus competition is about bringing forth market inefficiencies in the form of new products, services, knowledge, etc.

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These assumptions obviously lead to a widely differing role for Government involvement per se , but also in more specific policy choices in such areas as intellectual property rights, trade regulations, support for universities, vocational training and so forth. In our context what is important is that the array of these choices depends on existing institutional patterns and leads to evolutionary processes in economic structure and specialization, and that feeds crucially into the financial system or how the financing of technological change is structured, but also into public management or how the different policy choices are implemented.

And, of course, also vice versa: choices on financial institutions and public-management practices feed into choices on technology and innovation policies. Financing technical change. An equally important factor is the question of how to finance growth and investments in technological development.

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Here, again, we have alternative views that are conditioned and influenced by the understanding of the nature and sources of technical change, but also technological trajectories, and other political and economic concerns from international relations to national politics. In short, choices or alternatives about financing of growth are about answering a seemingly simple question: where does the money come from that can be invested into technological upgrading new machinery and factories, product development, marketing innovation, hiring engineers.

While the answer to this question is about the nature of financial systems and regulations to deal with systemic fragilities, it also boils down to two extremes: foreign vs domestic savings. Particularly in the development context this is often a fundamental policy choice, whether to rely on foreign investments, aid and borrowing, or whether to mobilize domestic savings and to opt for an integrated central-bank-based approach Kregel, Development literature, especially in its early incarnation during the s, has brought out ample strengths and weaknesses for both choices for financing technological change for an overview, see Kattel et al.

A foreign-savings-based strategy of development and growth is often prone to two problems: reversal of flows that plunges economies into deep crisis, and conflicts between the interests of foreign investors and domestic developmental needs. At the same time, with globalization of finance, foreign savings are often readily at hand. However, the choices of financing of growth run obviously deeper than a simple foreign vs domestic juxtaposition: e. These choices obviously have various theoretical and ideological backgrounds; these in turn change strongly over time.

What is key in our context is that all of these choices depend again on existing institutional patterns including legacies, traditions, interests, skills and lead to manifold evolutionary processes in economic policies, structure and specialization.

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The nature of public management. Choices on public-management systems tend to be both more long-term and historical or with stronger path-dependencies , and much less clear-cut. While fundamental changes in public management are relatively rare in the sense that for instance what is a ministry is radically redefined or the overall structure of governance is centrally re-drawn , incremental changes are seemingly permanent see Pollitt, However, the public-management system is also where technical and other skills are located and where day-to-day interaction with policy makers, entrepreneurs and others take place.

In essence, the public-management system is, then, fundamental to the way policies of financing and sustaining technical change are devised, implemented and evaluated. Our contention is that these key evolving policy arenas, or policy choices, are tightly interlinked and interactions between these arenas generate specific forms of policy capacity that lead to or try to create specific paths and types of economic development and technological processes in the private sector.

Obviously, foreigninvestment-led and -financed development policy ideally requires and eventually evolves towards a different set of public-sector skills, coordination practices, decision-making structures and means of assessing performance and accountability than development policy based on building domestic value chains, either financed by foreign or domestic savings. Thus, these arenas have almost an infinite number of possible interactions and the cases of East Asian developmental state especially as witnesses in the Republic of Korea and the Republic of China - Taiwan and the Eastern European transition period especially in countries that have moved from the socialist economy to full members of the European Union highlight probably the most contrasting empirical cases from the recent history see also Lim , who implicitly argues that these regions can be treated as most different cases for the analysis of development policies.

Indeed, East Asian economies in the ss and Eastern European countries in the s started to pursue its' autonomous development strategies and policies within clearly different techno-economic paradigms mass production vs ICT-based production paradigm - see Ernst, ; Perez, ; Soete, , and within largely different international policy and ideational contexts post-WWII developmental, largely protectionist consensus vs Washington-Consensus-based, clearly liberalization-oriented strategy - see Hall, ; Wade, and , relying on different political systems authoritarian vs liberal democracies , yet wanted to achieve similar development goals: technological upgrading and economic catching-up via export-led growth.

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  • In the following sections we will not describe in detail how the key policy choices of development emerged in these regions as it is relatively well established in the literature how East Asian and Eastern European policies have resulted in almost opposite institutional systems for financing, building and managing technoeconomic systems we have tried to summarize the key elements - goals, instruments, practices, processes - into Figure 1 , see p. What we want to elaborate upon is how these differences led to different forms of policy capacity and technoeconomic performance.

    Further, we want to show that the reversal or change of these paths and capacities - if desired by political or economic elites, or prescribed by techno-economic changes on a global scale - is inevitably again a 'messy' processes of co-evolutionary change between and spurred by the three at least policy arenas and choices we have depicted above.

    Policy capacity in the east asian developmental state. Despite the more or less pronounced political, ethnical, cultural and economic difference between East Asian economies, we can state at some level of generalization especially as compared to other regions and time periods that the developmental state's understanding of how technological and economic development can be sustained was based on the nurturing and development of domestic capabilities.

    The brief experiences of import-substitution-industrialization and subsequent shift to export-led growth strategies supported by the carefully state-steered use of mostly foreign financing foreign loans for national development can be interpreted as a pragmatic and incremental compromise in trying to sustain complementarities between developmental strategies and finance, and to achieve economic development guaranteeing national independence and autonomy from external pressures see Haggard for the most detailed comparative analysis; also Amsden, ; Haggard, ; Whitley, ; Wade, Given the counter-intuitive character of this development strategy use of foreign financing and exporting to foreign markets for national political and economic autonomy , it is generally agreed that the policy-making and implementation practices of East Asian economies were highly complex.

    The key feature of this policy mix was bold prioritization of economic activities with potential increasing returns and feedback linkages to other sectors of the economy that was made feasible by the authoritarian political practices allowing reforms to de-privilege or control existing wealth-based elites also labor and business and reaching to sectorspecificity from macroeconomic policies in the form of preferential interest rates and loans to targeted industries, etc. While the ultimate goal, or performance criteria, of industrialization and development policies was external competitiveness or export-performance, the domestic markets were insulated behind protective tariffs and other administrative means, which made it possible to use the domestic market as experimenting and learning ground, both for policy-makers to design general upgrading strategies and for firms and industries for developing specific capabilities.

    Institutionally, design and implementation of this policy mix required bureaucracy that was not only highly skilled and often also sealed off from the general bureaucratic processes covering other policy fields; for comparative analysis, see Cheng et al. The concept of 'embedded autonomy' see Evans, covers the two sides of this context: bureaucratic autonomy from political and generic pressures complemented with close linkages, or embeddedness, to the policy targets companies, industries.

    The developmental state typically attempted to retain managed competition within the prioritized sectors through such measures as 'sunset clauses' and performance targets especially related to export success , set both on bureaucracy i. Such a policy intervention model was assumed to engender dynamic inefficiencies in essence to create market 'failures' or 'getting the prices wrong' in the form of faster productivity growth in prioritized sectors and diffusing through supplier and other networks into wider economy as enforced learning processes and also higher wages.

    Crucially, such inefficiencies brought about 'feedback' loops into the political governance of the economy as previous policy choices - in terms of the role of the state in development and its' finance and more detailed selections of instruments and practices - were regarded as validated, and thus further priorities-based policy action became strongly legitimized. Thus, the interlinkages and tight inter-dependence between politics, policy and business became self-legitimizing tools for the development model, and the political system in particular.

    Of course, more detailed analysis can reveal important differences in this general trajectory between different countries. In Korea, these institutional interactions have been probably most visible as political actors actively intervened in daily policy-making in fact affecting the levels of bureaucratic autonomy from politics , the industrial policy space and scope was very broad industrial policy goals resided over macroeconomic policy , and the state had very close ties with very few business actors i.

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    As a result, bureaucracy became relatively centralized - in terms of political control of it, but also in task accumulation - and subsequently more generalist in its expertise and orientation. The blurring of political and bureaucratic tasks diffused political and administrative autonomy and made policy rather fluid or prone to reversals, con-stant reforms in the development path. Thus, while in the case of Korea the Government and business sector were highly intertwined from coordination of industrial planning to Government bailouts and policy loans to key businesses to 'descent from heaven' avenues for political and bureaucratic elites - for critical accounts see also Kang, ; Gomez , in Taiwan the Government was more distanced from the business sector and the Government has relied on more formalized forms of collaboration with the industry granting of subsidies, technological licenses, etc via a more transparent or predictable policy process and on state-led development strategies e.

    These differences - we argue - are incremental deviations in the general common path of understanding development and were caused by contextual differences, past legacies and how the coevolutionary processes between development strategies, finance and public management played out in specific context; thus, also East Asian policy capacity has been evolutionary and dynamic within this overall path. Policy capacity in the eastern european transition. The analysis and assessment of the Eastern Europe transition over the last two decades is much more fluid and open-ended and we can distinguish two distinct phases.

    In the early s, the development thinking was centered on Washington Consensus policies and most Eastern European emphasized macro-economic context and left industrial and innovation policies out of policy attention. The general consensus with some exemptions, notably Slovenia was that FDI could or had to work as a panacea for economic restructuring by bringing technological knowledge, skills, and also finance for development. The view of the role of state and policies became relatively straightforward as macroeconomic stability, liberalization, attraction of FDI could all be achieved via universal regulatory policies.

    The only active role for the state remained in 'traditional' tasks, such as in education, in which Eastern European economies had been relatively effective also before. As a result, no substantive thinking about economic bureaucracies emerged and policy implementation systems evolved along generic logic of public management reforms, which neglected Weberian hierarchical principles and opted for institution building via emulating Western economies and private sector management principles see Bouckaert et al.

    On the one hand, many Eastern European economies have been highly successful in transforming its economic systems from socialist planning economies to competitive market economies and in receiving massive amounts of FDI. These developments have indeed turned most of the Eastern European industry upside down, replacing almost all capabilities within a very short period of time see Havlik, Also, a massive influx of foreign funding created real estate and other asset bubbles during the s, skewing the economic structure towards non-technological and non-exporting sectors see Kattel, ; Havlik, As a result, the private sectors tend to be fragmented into groups with diverging interests and views of development: exporters tend to need cheap labor and low taxes; the service sectors tend to need easier access to finance and low taxes.

    During the second period starting in late s, industrial and innovation policy concerns started to gradually take a more central position in economic development debates. As this thinking was externally imposed, there was no significant change in the political perceptions of how development and its financing should be achieved i. Industrial and innovation policy became a competing, but politically inferior, view as Eastern European introduced vast lists of EU financed instruments mostly geared at high-tech and institutions for the implementation of these policies.

    The key focus of institutional design of this new policy arena was on technocratic and managerial efficiency, or performance e. This efficiency-orientated institution building was based on the view that the state and the market are parallel and not complementary institutions.

    Developments in Strategic and Public Management: Studies in the US and Europe Developments in Strategic and Public Management: Studies in the US and Europe
    Developments in Strategic and Public Management: Studies in the US and Europe Developments in Strategic and Public Management: Studies in the US and Europe
    Developments in Strategic and Public Management: Studies in the US and Europe Developments in Strategic and Public Management: Studies in the US and Europe
    Developments in Strategic and Public Management: Studies in the US and Europe Developments in Strategic and Public Management: Studies in the US and Europe
    Developments in Strategic and Public Management: Studies in the US and Europe Developments in Strategic and Public Management: Studies in the US and Europe

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