Journal of Administrative Science

Vol.xx, Issue 2, 2020

Available online at http:jas.uitm.edu.my

New Public Management (NPM) in Developing Countries: Challenges

and Prospects
Shahrul Firdaus1, Danial Asyraf2, Fakhri Azim3, Aliff Izzat4 and Syed Fazeen3
a
Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA (UiTM)

Abstract

New Public Management (NPM) it is one of the reformation idea that have been develop in most developing
or developed country. The usage of NPM are being use mostly due to substitute an old management system
in the government that called Traditional Public Administration (TPA). Receiving its focus since the early
of 1980’s, the studies of NPM is still relevant until today. The purpose of this study is to examine the
prospects and challenges of NPM in developing countries. The method that are chosen by the researcher
in performing this study are by reviewing the secondary resources which it consists of several article
journals by relevant scholars, government website, and books. In related to the topic, there are several
challenges and prospects of using this NPM in developing countries on the future. Which the challenges
are consist of in regarding an element of NPM such as decentralization of government agencies and
downsizing or outsourcing employees. There are also several prospects that are useful in regarding the
usage of NPM that will benefits the countries that also might be helpful for the developing countries to
refer at a developed countries as to well manage their own management in being a developed country.

Keywords: New Public Management, NPM, Developing Countries, Prospects, Challenges

INTRODUCTION

New Public Management (NPM) is one of the reformation system that have been
applied in most developed and as well as developing countries. The aim of implementing this
NPM is to enhance the efficiency and effectiveness of government services. Over the past three
decades, public management has went through lots of changes in both develop and developed
countries. The advanced managerial framework came into reality in the 19th century. Until the
1960s, the interventionist character of the administration was very apparent underway,
arrangement and administrative exercises (Elias, 2006). The reason of the emerging of NPM is
due to replace the Traditional Public Administration (TPA) that have a lots of criticism such as
the organizational structure are centralized, the budgeting were focusing on stability and the
focus of control were also only focused on rules and procedure. Unlike NPM, NPM structure are
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more decentralized based on units that provide the services, the budgeting also focusing on
efficiency and aim to cutting the resources to reduce cost, also NPM focusing more on output
and results (Keeler, 2008).

As this study mention earlier, over the last three decades, many countries has develop
and implement this NPM system. Such as in the United Kingdom, New Zealand, Australia, North
America and also Latin America. Following the ways blasted by developed nations and the
weights forced by the global benefactor organizations, many developing nations have been
trying to reshape their managerial frameworks along the rationale of NPM. This study is an
adequate method to analyse the challenges and as well as the prospect of NPM in the future
with particular reference to the challenges of NPM in Zimbabwe, reformation of Local
Government in Tanzania and others

LITERATURE REVIEW

An Overview of the New Public Management (NPM)

The New Public Management (NPM) was first introduced in the United Kingdom (UK)
and the United States (US) in the early 1980’s (Rubakula, 2014). New Public Management or also
can be known as NPM can be explained as a management practices that are commonly used by
the governments in the developing countries since the 1980’s in order to upgrade the quality of
the public sector (Polidano, 1999). The New Public Management (NPM) also can be defined as
rearrange and reorganize the public sector management on achieving the standard company
practices to be implemented in the public sector (Gautam, 2017). In short, this NPM actually
the implementation of strategies that are used in the private sector’s management into a public
sector’s management (Osborne & S, 2006). The NPM is believed have the ability in addressing
and solving the issues that commonly occurs in the public sector, such as accountability of the
government servant, government scale, the efficiency of a government and the government
bureaucratic structure (Kalimullah, Ahsan, Alam, & Nour, 2012). The conventional ways are
proven to be such a failure due to many performance failure, mismanagement occurred and
corruption among the bureaucrats in a country. Due to that, the NPM idea was introduced and
replacing the traditional management method.

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The Components of New Public Management (NPM)

Components of New Public Management (NPM)

• Utilizing economic market models for political and administrative relationships
• Decentralization
• Downsizing the government

Table 1

From the above table, Essentially the privatizations is the main agenda in the NPM, in
which, this involves the transition of interest and several government activities into the private
sector in order to serve the public effectively. This privatization idea that came from the NPM
based is actually to reduce the cost of the operating that currently funded by the government
and increase the efficiency in delivering the service to the public (Dholakia & Dholakia, 1994).
The main concern of the privatization is to reducing the government’s burden in the terms of
financial and administrative. In the terms of financial, the expenditure in delivering the service
to the public is high. Thus, by creating the partnership and privatization, it could attract the
stakeholders and investors in funding the operating expenditure in order to provide efficient
services to the publics as well as customer (Savas, 2001). On the other hand, administrative
burden, the government did not have enough time to manage and monitoring all activities that
are carried out by the public sector. Due to the time constrained, restrictive rules and procedure,
it could reduce the efficiency in delivering service to the public (Dholakia & Dholakia, 1994).
Since the private sector is be seen as more competence and efficient, the idea of transferring
several of the government activities and interest is believed to be seen as the perfect remedy in
order to overcome the heavy government’s burden in providing the best service to the public.

Furthermore, decentralization can be explained as the distributing the power and

authority to the other level in a hierarchy or a structure in an organizations (Sr & Chikulo, 2000).
In applying this decentralization concept in the New Public Management, this is done through
the federal government transferring the authority and the responsibility to the local government
in order to increase and improving the quality and efficiency in delivering services to the public.
Due to the time constraints and red tape which led to the failure of the conventional and
traditional ways of management, by decentralizing the authority to the local government or
other level of management, it can improves the government responsiveness and speed up the
decision making process (Dholakia & Dholakia, 1994). This component of NPM has also
empowered the publics and other government body in getting involved and participate in the
decision making, development and planning. By having this systematic monitoring system, it has
indirectly enhanced and developed the better governance (Sr & Chikulo, 2000).

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As for downsizing, it can be defined as the reducing the size of the government in terms
of reducing the public servant and also consolidating and merged the government department
in order to cut down the operating expenditure (Loudersamy, 2018). The bigger size of the
government, it will only lead to the overlapping functions problem and as a result many of the
government’s programs are mismanaged due to the lack of resources and too many confusion
between government body and agencies (Edwards, 2010). Furthermore, by reducing the size of
the government, it will ease the government to monitor all the government’s activities in order
to making sure the efficiency of the governance of a government. It is important for the
government to emphasize on the concept of quality over the quantity in order to deliver a good
service to the public.

Which Country Use New Public Management (NPM)

The New Public Management (NPM) was first introduced in the United Kingdom (UK)
and the United States, but in the late 1980s, most of the capitalist nations started to adopt the
New Public Management as the way of governance. During the 1990s, many of the developing
countries such as Malaysia, South Africa and other developing countries have started to adopt
the NPM. This New Public Management brings the same concept to all countries, but the
implementation or how the NPM is adopted is different from one another

In the early 1990’s in South Africa, they are facing such huge challenges among the
public sector to overcome the massive poverty, disease and economy instability. With the global
recession, it has makes the situation even worst (Rubakula, 2014). During that period, the
governance seems to be inefficient, slow and costly. However, the NPM was seen to be the way
out to these problems.

Meanwhile in Malaysia, there are 2 phases in implementing the NPM. First phase is the
pre-NPM. After Malaysia gained its independence, the public sector are more focusing on
building the structure of the government, but in the late 1960’s, the government had changed
to focus on the economic development. In the early 1980’s, the public sector has move towards
the NPM. For example, Look East Policy in 1982, the Privatization Policy in 1983 and other policy
and programs that are implemented in Malaysia within that period.

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METHODOLOGY

Methodology is the entire framework or design of the research. There are many ways
to explore research questions and to create new knowledge which is by choosing tools or
technique. For our purposes, we have chosen to use the secondary resources which is we use
the article that are related to our topics. The method is the availability of data on the internet is
the most popular way collecting secondary data is using the internet. There always have a data
on the internet that are easy to retrieve and free of charge without need to pay to get the data.
But some data need to be pay in certain amount but still the price is reasonable for the one who
want it. As we know, websites have a lot of information that consists of various aspect, example
educational institutions can use the websites to search any information related and suitable for
their research purpose. And the information that gathered can be trusted as the information
are written by official writer. However, we also can get the information by directly go to the
educational institutions and request the data straight for them. Last but not least, we can get
the data by using the commercial information sources like local newspaper, journals, magazines,
radio and television stations. All these sources are secondary data as they are taken then being
write again and being showed to people. Secondary data review is the method of evaluating
data obtained by another study, who gathered this data specifically for a particular reason.
Researchers exploit secondary data to conserve time and money that will be wasted on
gathering primary data.
Secondary data processing can be conducted quantitatively or qualitatively, based on
the sort of data that the researcher is concerned with. The quantitative approach of secondary
data processing is based on analytical data that is mathematically interpreted, while the
qualitative system utilizes vocabulary to include in-depth statistical information. The secondary
sources which are also based on tried and tested data which is previously analyzed and filtered.
Data may or may not be according to the requirement of a researcher. But they can trust the
data as it has been confirmed by the authority. The method carried out for seminar paper is by
gathering all the secondary data that we retrieved from the internet. We believed the data we
get from the internet is true and was verified by the involve party. We find article that related
to our topics and the article must have the writer, date and time and another requirement to
make sure the article is useful. This is because article is secondary research that are being tried
on tested on data collected on previous data. So, we believe the article we use as our secondary
data can be useful and help us in our topics.

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FINDING AND DISCUSSION

Implementation of NPM in Developing Countries

As New Public Management (NPM) is a special management philosophy that to increase

efficiency, effectiveness and cost saving in public sector by employing private sector
characteristics and market mechanisms that used by the government. It has become global
phenomenon not only OECD countries but also other countries especially developing countries.
In developing countries, Manning (2001) noted that NPM offers a selection of options, rather
than a single one. NPM compared to a menu of strategies, and developing countries are
experimenting with some items on the NPM menu (Batley & Larbi, 2004). Nevertheless, NPM
has not yet been the only public management model in developing countries, because NPM's
market-based concepts have not significantly substituted the organization principle of
bureaucracy. Manning (2001) highlights that most of the government functions in developing
countries still carried out by vertically integrated bureaucracies.

I. Thailand

The first example of developing countries that implement NPM is Thailand. Thailand tried
for several decades to overcome the challenges of bureaucracy and bureaucratic inefficiency so
they started a public sector reform as early as the 19th century (Malee, 2003). Thai government
to introduce broad-based public sector reforms to strengthen the government's ability to
manage economic affairs in order to boost quality of service and to put greater efficiency into
public sector management. The initial reform proposal for the Thai public sector aimed at
implementing a result-based approach in accordance to the New Public Management principles
(OCSC, 2002). With the Thai public service, the old practices of public administration developed
around social esteem, hierarchical organizational structure and high levels of centralization. The
NPM strategy aims at overthrowing these bureaucratic features and replacing them with
structures, procedures and orientations that value economic results that have proved to be
effective in the private sector (Borins, 2000). The Government has implemented and begun to
execute a strategic plan based on five areas: roles and functions, budget, personnel, law and
culture (OCSC, 2001)

II. Singapore

In Singapore, this country had special economic, political, and social circumstances behind
the progress of the NPM reforms implemented. With a driving factor in rapidly improving
economic development to cope with other countries in the world, the Government put foreign
investment attraction and the expansion of private sector operations at the top of its priorities.
In order to establish an acceptable environment for foreign investment and favorable conditions
for private sector development, reform of the public sector needed. The goal of the Government

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was to strengthen political stability and develop good governance (Sarker, 2006). The
implementation of the NPM driven public administration reform initiatives formally initiated in
1994 when Singapore adopted the reform component of Budgeting for Performance, of which
the distribution of the budget focused on priorities and performance. The government started
creating autonomous authority for nearly all ministries in 1997, granting them the right to make
their own decisions on certain areas of their function, with the exceptions being the 'sovereign
ministries'. In the 1990s, Public Service for the 21st Century Initiative (PS21) launched as an
extension of the wave of public service reforms in Singapore to play a key role in transforming
the country's public administration. The key objective of this initiative is to strengthen the
capacity building of the public sector in order to provide an environment in which high-quality
services delivered and to promote the reform process for more reliable and efficient delivery.
There have been many other remarkable achievements related to NPM in various parts of
Singapore's public sector, such as institutional reforms, privatization, "customer orientation" in
public administration, and reform of local administration.

III. Tanzania

After the economic crisis, the African continent smacked in the 1980s and the poor
performance shown by civil service, inflamed reform of civil service in most African countries.
The reform aimed at downsize the public service and improving its operational efficiency (Sulle,
2011). Tanzania in 1962 to early 1970s, the civil service was small but efficient, productive and
less responsive than it is today to administrative vices. Following the adoption of socialism
associated with the state-controlled economy in 1967, the Government has been a primary
social support provider and actor in socio-economic growth. As an outcome, the civil service
grew quickly due to the socialism policy, where work in the public sector driven by socialist
philosophy and political influence rather than simple logic of management (Sulle, 2011).
Throughout the struggle to recover from the economic crisis, Tanzania agreed to introduce a
reform of the public sector, which involve downsizing of public service. In Larbi (1999) survey,
He stated that in 1993, the aim of the reform was to redefine the role of government as
facilitator and not the character-doer and the aim was to promote greater involvement of the
private sector in the economy. This is because the government will not afford to pay unpaid
public servants, which is why reform of the civil service became necessary.

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Conceptual Framework

Prospects

- Increase accountability to citizens

through greater access of decision
making
- Violation of trust
New Public Management
in Developing Countries

Challenges

- Decentralization
- Downsizing

Figure 2
Prospects of The New Public Management
There are several prospects which probably can happen when a developing country
implemented New Public Management (NPM). From our finding and discussion, by
implementing NPM can offers the prospect of increased the citizens and taxpayer’s
accountability through the greater accessibility of decision making. How it can happen? Since
corruption are being questioned by people due to the decentralization that allow many parties
involve in governance, people see decentralization as opportunities for corruption occur more
widely. Greater accessibility of decision making for citizens seen as a key element in controlling
corruption. Society and media as the essential actors in controlling corruption in government
institution (Johnson, 2016). Corruption can be detecting if there is accessibility and participation
by people which it had been proved by several countries that introduced the ways in given
greater accessibility to their citizens. In Kenya, new grant system had been introduced as the
incentive to improved performance and accountability (Devas, 2005). Citizens can ask questions
of the local government about the use of money grant. The grant will be review consistently by
the state government and have a power to reduce the grant if the document provided are
suspicious and does not meet requirements. After the introduction of the system, there is
almost 100 per cent of local authority in Kenya submit their annual accounts compare to only
five per cent before the introduction. By the displays in a summary of information that represent
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by government have substantially increased transparency and accountability, as well as the

engagement of local authorities with citizens and civil society (Devas, 2005). From the situation,
we see that decentralization of NPM will make people participate with governance matter to
improve monitoring system and prevent corruption.
The next prospect is there will be a violation of trust. Several organizations talk about
implementing systemic prevention programs however most organizations merely use
participatory strategies to abandon the economic model and employees, if structural strategies
are chosen to fit the economic model. The possible isolation of employees, sabotage and
physical violence are deteriorated by moral and loyalty. This dissatisfaction is caused by the fact
that the final factor for many public organizations in the reform agenda is to cut costs by
minimizing the usage of their human resources for the major proportion of their budgets.
Betraying the concept of work and loss of confidence in employees. When the authority is there
the deception of this idea, considered the intent and incentive for function, destroys the
commitment of public staff to very valuable national resource to serve the public and interest.
Downsized public servants who believe in the ethics of the public service the most vulnerable to
such strong violation feelings. All of these individuals worked for democratic, social ideals in the
public sector fair and humanity and the importance of cultural ideals public interest, not just the
employee, is being violate their trust.

Challenges of The New Public Management

Implementing New Public Management (NPM) has challenges especially for combating
corruption which the concept of decentralization has involve more people in decision making
and it led to the problem of monitoring the accountability. As we had chosen to discuss that
decentralization in NPM have occurred many issues being questioned by people. Criticism of
NPM involves about the decentralization concept (Mongkol, 2011). This become a challenge
toward the country that want to implement NPM whereby government need to ensure they
have to win public trust. The government that want to implement NPM need to cater the
challenge and issue by represent the good performance and accountability. There are factors
that constrained government to work effectively which are limited resources, weak institutional
capacity, inadequate mechanism of accounting and accountability and limited availability of
information (Devas, 2005). These were all issue that government of a country need to face in
decentralization concept or system. However, those issues and challenge already proved by
some developing and developed countries which they were successfully implementing NPM
decentralization by gain public trust through several incentive introduced.
The next challenges for developing countries in implementing NPM is downsizing. As
being explain above, downsizing is being used in developing countries both in the public and
private sector. Extensive downsizing through reduction-in-force techniques, cutback
management, privatization, and contracting out has reduced not only the workforce but the
public service ethic of employees, and the level of moral interaction between individuals in both

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the public and private sectors (Feldheim, 2007). Harm limitation has been triggered by public
service principles and the public interest among public administrators and work actively to
restore the profession’s infrastructure through strategies. Which follows the ethos of the public
service to represent the public interest (Feldheim, 2007). Reduction, restructuring of companies
and organizational approaches. The most commonly encountered the technique form is to
raising the number of workers (RIFs) workers focused on a top-down order establishing a culture
of crisis. In the first position the emphasis is on removing employees and rapidly workforce
reduction approaches reduce the short-term payback headcount (Feldheim, 2007). Public sector
staff reduction began as reduction management and concentrate on drastic measures to reduce
government scale. Policy downsizing also continued to overhaul the organization and
organizational policies. Organizational restructuring approaches remove job reduction rather
than workforce reduction tasks, departments and goods, while organizational downsizing
techniques seek to shift the company structure, behaviors and beliefs of workers in order to
continuously enhance their efficiency.

CONCLUSION AND RECOMMENDATIONS

As what can be conclude on the discussion above, NPM has been considered one of the
successful approaches that is implement by most of developing countries that referred to the
develop countries like United Kingdom and others. Rebuilding the public sector across the earth
is really needed in the meantime as to follow the current century environment. Despites the
failure of implement this NPM throughout the whole world, it is yet to be recognized one of the
most modern approaches that will enhance the public sector companies to fight inefficacious of
public sector to a bigger context. Most of all, NPM can be recognized as a new management
practices that offer lots of benefits in existing agencies to form a whole lot better managements.
Even with the several challenges in regarding decentralization, downsizing of employees and
others, there are also in need to oversee the advantages of this NPM as well. According to (Zia
& Zeb Khan, 2014). Some of the advantages of adopting this NPM in a country is that, NPM
brings the country due to it accentuation on hands-on proficient administration aptitudes for
dynamic, obvious, optional control of associations, express guidelines and proportions of
execution through explanation of objectives, targets, and markers of success, diverse from the
utilization of information controls and bureaucratic methods to rules depending on yield
controls estimated by quantitative execution markers, diverse from brought together
administration frameworks to integration or decentralization of agencies in government sector
and Weight on private-area style the board rehearses for example, the utilization of transient
work gets such as short-term labour contracts and the improvement of corporate plans.

Furthermore, on the recommendation, one of the recommendation is that the

developing countries ought to rather concentrate on setting up increasingly powerful system of
focal command over staffing or fund, since this is the forerunner of any inevitable designation.
Political and authoritative administration responsible in an important roles, thus reformation
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activities should be versatile to nearby condition. New public expectation can play their role
where there is a possibility that resident inclinations will prompt a meaningful change (Salwa,
2003). Such as, it would be worth it for the public to keep pressure the government services as
policy is not being implemented by an elite group. In according to (Elliott, 2009), New Public
Management methodologies in public sector depend more on results, centre around
arrangement of proficient administrations to the citizen, responsibility and a general
administration approach. Thus, based on recent study, it also shows that NPM has several
objectives to the public an as well as the government, such as improvising the management and
hierarchy strategies within the system, improves the management of funding and resources,
decentralization of agencies and also improvising the decision-making attributes.

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