Bank, and with the support of powerful bilateral donors such as the USA’s
Agency for International Development, some Third World governments
have been obliged to undergo structural adjustment programmes. Others,
such as China and Thailand, have embraced such reforms autonomously
(Worthley and Tsao, 1999; Bowornwathana, 2000).
These have included reducing the size of the public sector through the
privatization of state-owned enterprises. The same international agencies
have also required and supported administrative reforms according to the
principles of NPM. The results of these policies for the role of bureaucracies
in the politics of Third World states have been mixed, and by no means all
in the direction of securing greater democratic control over public officials
(Turner and Hulme, 1997, pp. 229–36; Hughes, 1998, ch. 10).
On the face of it a programme of privatization would seem inevitably to
reduce the power of bureaucrats simply by taking the production of goods and
services out of their hands and selling them off to the private sector. There is
then much less for bureaucrats to manage. However, no sooner had Third
World states been instructed to privatize than they were advised to regulate.
As part of its discovery that the state must after all play a central role in devel-
oping its country the World Bank revealed that ‘governments are learning that
market reforms and fast-changing technology pose their own regulatory chal-
lenges. States cannot abandon regulation’ (World Bank, 1997, p. 61).
Depending on local administrative capabilities, states need officials to
enforce rules that support competitive markets, protect the environment,
foster industrial innovation, prevent the abuse of monopoly powers,
enlighten consumers and workers (e.g. about health and safety risks in pro-
duction or consumption), safeguard the health of the financial system (e.g.
by regulating banking), and protect savers and borrowers from ‘information
asymmetry’. Regulation has to be performed by public administrators, and
regulators need discretionary power to respond flexibly to changing cir-
cumstances. Once again the public interest and welfare are heavily depend-
ent upon the competence and integrity of public officials.
The NPM approach to administrative reform also has among its aims a
reduction in the size of the bureaucracy. A central requirement of NPM is to
make grater use of the private sector by contracting out to private firms
activities that were once performed ‘in-house’, in the expectation that com-
petition will ensure reduced costs and therefore greater efficiency in the
achievement of public goals. Governments would be more concerned with
‘enabling’ the supply of services than with their direct production.
Other principles of NPM, however, point to an increase in the autonomy
and therefore power of public officials in both their enabling and service
170 Understanding Third World Politics