THE NEW PUBLIC MANAGEMENT IS NOT THAT BAD AFTER ALL: EVIDENCE FROM ESTONIA, HUNGARY AND ROMANIA.

• Author: Dan, Sorin

1. Introduction

   The adoption of New Public Management (NPM) ideas has arguably been one of the major developments in public administration and management in the past decades. There has been an increasing need for evidence on the impact of these changes, especially outputs and outcomes beyond the administrative system itself. The interest exists but the evidence is still weak, fragmented, and sometimes contradictory (for example Pollitt and Dan, 2011; Pollitt and Dan, 2013; Savoie, 1998). This is the case in countries which have experimented widely with this type of public policy, and even more so in Central and Eastern Europe (CEE) which began to make use of NPM later. Few public management reform initiatives have been successfully applied in the CEE region (Bouckaert et al., 2008; Dunn, Staronova and Pushkarev, 2006; Nemec, 2008). Although implementation issues are not specific to former communist countries alone, Dunn, Staronova and Pushkarev (2006) noticed a pattern of poor implementation across the region.

   Past reviews of the impact of NPM in CEE have drawn mixed conclusions about its success (Bouckaert et al., 2008; Bouckaert, Nakrosis and Nemec, 2011; Caddy and Vintar, 2002; Dunn, Staronova and Pushkarev, 2006; Nemec, 2010; Nemec and de Vries, 2012). A recent study has surveyed the empirical NPM literature across Central and Eastern Europe in the past ten years and has argued that 'NPM can work' if the right context and adequate administrative capacity are in place (Dan and Pollitt, 2014). It is clear that NPM has sparked a good deal of debate and controversy which have continued to this day, and are likely to continue in the future. This article reviews NPM studies in Central and Eastern Europe, looking particularly at reforms in Estonia, Hungary and Romania. It distinguishes between effects on internal processes (or activities), outputs and outcomes, and codes the effects using these three dimensions. Then, it distinguishes between improvements, deteriorations and lack of change, and codes the findings accordingly. After this general picture, the paper discusses patterns in the impact of NPM policy, and provides specific examples of reforms implemented in the three countries.

2. Setting the context: NPM in Estonia, Hungary and Romania

   NPM-type ideas have found relatively more adherence in the small, decentralized administrative system of Estonia than in other CEE countries. It is common for the public management literature to portray Estonia as the NPM enthusiast in the region (for example, Bouckaert et al., 2008, p. 352). A common theme of Estonian public sector modernization has been to increase the efficiency of public institutions and decrease the role of the state by promoting market-type mechanisms (Bouckaert et al., 2008, p. 352). Unlike other former communist states, where social democratic ideas prevailed for much of the transition period (as in Romania), Estonia benefited (and still benefits) from a higher degree of market appreciation, sometimes even idealization (Tonnisson and Randma-Liiv, 2008, p. 95). Despite this, Estonian authorities failed to implement a comprehensive NPM program, although they formally promoted it especially starting with late 1990s and early 2000s. Estonia, nevertheless, managed to implement specific NPM tools such as performance-related pay, but these changes are just a part of larger public sector modernization efforts. They contained a mix of Weberian, NPM and post-NPM initiatives. This makes the evaluation of the effects of NPM difficult--NPM is just a part of a bigger whole. Distinguishing the reforms that managed to be implemented from those that did not is not readily straightforward. Table 1 below includes a list of the main NPM initiatives since the country's independence in 1991 along with the implementation status of each initiative. To assess implementation status, I relied on existing academic sources. For each specific reform I checked more than one academic source. If all sources indicated that a policy was implemented, I followed this conclusion. However, the tables distinguish between partial and complete implementation, in line with the existing evidence. In the tables that follow, partially implemented initiatives are referred to as 'partial' while completely implemented reforms are denoted by the word 'implemented'. If studies disagreed or were unclear, I drew the conclusion that the status was uncertain. This same approach was used for all three countries (reported in Tables 1 to 3).

   Hungarian NPM shares many of the features common in Estonia and the CEE more generally. Issues such as political instability, lack of a unified vision, implementation problems and limited administrative capacity have characterized the public sector in Hungary (Hajnal, 2008; Hajnal and Jenei, 2008). One of the central goals of state reform during transition was to create and consolidate a functional Rechtsstaat, and address corruption. As in other CEE countries, NPM policies lacked the support of a fully functional bureaucratic system. A major difference between NPM policy in Hungary and Estonia lies in the timing of its adoption. In Estonia NPM has partially lost momentum since no major, comprehensive reform program has been adopted in recent years whereas Hungarian policy makers have increasingly appealed to NPM ideas especially since the change of government in 2006 (as shown in Table 2). Rather than going down, interest in NPM has gone up. This may be explained by the new prevailing political ideas as well as by an earlier and more dynamic adoption of NPM in Estonia compared to Hungary and Romania.

   In many respects changes in the Romanian public sector resemble those in Hungary, although the pace of change in the early 1990s was slower. During transition and Europeanization, the main goals were (and to some extent still are) to build the legal and institutional framework of a democratic state and market economy (Hintea, 2008, p. 277). There are a few characteristics that set Romania apart, however. First, Romania is a larger country and has a bigger administrative system. Second, some have argued that the communist regime in Romania became more intense in the 1980s compared to other countries in the region (for example Molnar, 2000). While others were considering opening up, the Romanian state was closing in. Third, the political will to adopt 'tough' measures fluctuated during transition. Whereas Estonia rebuilt its public service on completely different grounds after independence, Romania did not. The Romanian approach was incremental par excellence, and relied to a large extent on the same civil service apparatus as before 1989. The first attempt to develop an accelerated, comprehensive public administration reform came late in 2001 only, followed by a second major program in 2005 after negotiations with the European Commission. In 2005 the European Commission recommended three main areas for improvement: civil service, local public administration reform through accelerating the decentralization process, and changes in public policy formulation. None of these changes were pure NPM (other than ad-hoc downsizing and restructuring in the context of budget deficits and the recent financial crisis). They have, however, contained certain NPM measures such as experimentation with the common assessment framework (CAF) and multiannual modernization plans (MMPs). Some authors have noted that the interest in NPM has been growing in recent years and is expected to grow in the future (Androniceanu, 2006, p. 94; Hintea, 2008, p. 281). This may indicate that especially in a context of financial stringency and budget cuts following the 2008 financial crisis, Romanian policy makers have considered using NPM ideas to respond to fiscal pressures and modernize the public sector. In Romania, as in Hungary, rather than being something of the past, interest in NPM has been on the rise across different sectors (Table 3 below). For example, most public hospitals were decentralized (ownership was transferred from central government to counties or local administrations) in 2010 following a major public hospital decentralization law. Furthermore, the new education law in 2011 emphasized institutional and individual performance and ranked higher education institutions in each field of study.

3. Literature search

   The selection of the three countries follows both theoretical and practical reasons. First, Estonia is typically considered to be a NPM enthusiast in Central and Eastern Europe, and is often used in comparative public management research. Second, Hungary adopted a more mixed and gradual model of adherence to NPM principles, lower before 2006 and more confident after 2006. Reforms in Romania are closer to the changes in Hungary and have increasingly incorporated NPM ideas. Third, at a high level of abstraction, all three countries share a relatively common historical legacy, which includes communist regimes, but goes beyond it to include common trajectories of democratization and Europeanization. Fourth, the administrative systems in CEE have been characterized by legalism and a focus on procedure rather than results (Nemec, 2008, p. 350). Finally, I selected the three countries for practical reasons including native Romanian language skills and availability of documents and local expertise through the network of the project Coordinating for Cohesion in the Public Sector of the Future (COCOPS) (see Pollitt and Dan, 2011 for more details). The identification of NPM studies included in this article followed two main steps:

   Step A: Creation of a database of NPM studies across Europe

   The database was identified as part of the comparative project on which this research is based. A set of criteria guided the search and selection. To increase the population of studies and portray a more comprehensive picture of the literature, the project team included both academic and...