Foundations of public administration: The role of economics
Vitaliy L. Tambovtsev
Irina A. Rozhdestvenskaya
TERRA ECONOMICUS, 2022, Vol. 20 (no. 2),
The science of public administration is widely recognized as interdisciplinary, integrating a number of other social sciences. Although there is no unity about the sciences that should be included in the composition of the sources for the public administration’s study, the most common in the world literature are suggestions about political, managerial, legal sciences, and sociology. Economics is also mentioned, however, the theories and models that can make a significant contribution to improving the current state of the public administration science are not discussed. This article analyzes a widespread concept of New Public Management. We show how the elements that generate negative consequences in the provision of a number of public services, such as healthcare and education, are “embedded” in the design of this approach to reform the public administration system. These consequences occur due to the use of incentive contracts in which the valid measures of quality of services cannot be implemented. This fact encourages employees to engage in opportunistic behavior in the form of gaming. Many people call these negative consequences “unintended”, although they are such only because the reformers did not know a number of the principal-agent model and contract theory statements, which were already obtained at the beginning of the wide proliferation of the New Public Management. However, in the world literature there is a widespread point of view according to which the principal-agent model is among the scientific foundations of the New Public Management, which is far from reality. The article substantiates a number of economic theories to underpin public administration, to improve the quality of scientific foundation, as well as the level of education in this field.
Citation: Tambovtsev V.L., Rozhdestvenskaya I.A. (2022). Foundations of public administration: The role of economics. Terra Economicus20(2), 6–20 (in Russian). DOI: 10.18522/2073-6606-2022-20-2-6-20
Keywords: science of public administration; interdisciplinarity; New Public Management; principal-agent model; opportunistic behavior
JEL codes: D73, H61, O21, P11
- Капогузов Е.А. (2012). Институциональная структура производства государственных услуг: от веберианской бюрократии – к современным реформам государственного управления. Омск: издво ОмГУ. [Kapoguzov, E. (2012). Institutional Structure of the Public Services Production: From Weberian Bureaucracy to Contemporary Reforms of Public Administration. Omsk: Omsk State University Publ. (in Russian).]
- Капогузов Е.А. (2016). Дискретные институциональные альтернативы реформ государственного управления в странах с развитой и развивающейся институциональной средой. Journal of Institutional Studies 8(3), 102–115. [Kapoguzov, E. (2016). Discrete institutional alternatives of public administration reforms in countries with developed and developing institutional environment. Journal of Institutional Studies 8(3), 102–115 (in Russian).]
- Коркунов Н.М. (1909). Русское государственное право, Т. 1. СПб.: Типография М.М. Стасюлевича.[Korkunov, N. (1909). Russian State Law, Vol. 1. Saint-Petersburg: M.M. Stasyulevich Printing House(in Russian).] http://istmat.info/node/24926
- Охотский Е.В. (2015). Теория и механизмы современного государственного управления: В 2 т. Т. 1: Учебник и практикум для бакалавриата и магистратуры. М.: Юрайт. [Okhotski, E. (2015). Theory and mechanisms of the contemporary state administration: In 2 vols. Vol. 1: Textbook and Practicum for Baccalaureate and Master’s Programs. Moscow: Yurait Publ. (in Russian).]
- Тамбовцев В.Л. (2020). Непродуктивность попыток методологического синтеза. Вопросы теоретической экономики (3), 7–31. [Tambovtsev, V. (2020). Unproductivity of the methodological fusion’s attempts. Voprosy teoreticheskoj economiki (Theoretical Economics) (3), 7–31 (in Russian).]
- Тамбовцев В.Л., Рождественская И.А. (2021). Эффективность в государственном секторе: иллюзия понимания и ее последствия. Terra Economicus 19(1), 6–31. [Tambovtsev, V., Rozhdestvenskaya, I. (2021). Efficiency in public sector: Illusion of comprehension and its consequences. Terra Economicus 19(1), 6–31 (in Russian).]
- Afonso, A., Schuknecht, L., Tanzi, V. (2020). The size of government. Econ Pol Working Paper № 46. IFO Institute – Leibniz Institute for Economic Research at the University of Munich, Munich.
- Ali, A., Fuenzalida, J., Gomez, M., Williams, M. (2021). Four lenses on people management in the public sector: an evidence review and synthesis. Oxford Review of Economic Policy 37(2), 335–366.
- Allison, G. (1983). Public and private management: Are they fundamentally alike in all unimportant respects? In: Perry, J., Kraemer, K. (eds.) Public Management. Palo Alto, CA: Mayfield, pp. 72–92.
- Bevan, G., Hood, C. (2006). What’s measured is what matters: Targets and gaming in the English public health care system. Public Administration 84(3), 517–538.
- Brehm, J., Gates, S. (1997). Working, Shirking and Sabotage: Bureaucratic Response to a Democratic Public. Ann Arbor: University of Michigan Press.
- Cairney, P. (2013). Standing on the shoulders of giants: How do we combine the insights of multiple theories in public policy studies? Policy Studies Journal 41(1), 1–21.
- Cavalcante, P., Lotta, G. (2021). Are governance modes alike? An analysis based on bureaucratic relationships and skills. International Journal of Public Administration, in press. DOI: 10.1080/01900692.2021.1874983
- Christensen, R., Goerdel, H., Nicholson-Crotty, S. (2011). Management, law, and the pursuit of the public good in public administration. Journal of Public Administration Research and Theory 21 (special issue), i125–i140.
- Churchill, S., Ugur, M., Yew, S. (2017). Does government size affect per-capita income growth? A hierarchical meta-regression analysis. Economic Record 93(300), 142–171.
- Churchman, C. (1967). Guest editorial: Wicked problems. Management Science 14(4), 141–142.
- Curry, D., Van de Walle, S., Gadella, S. (2014). Public administration as an academic discipline: Trends and changes in the COCOPS academic survey of European Public Administration scholars. COCOPS Report Work Package 8. https://core.ac.uk/download/pdf/80802443.pdf
- Dahl, R. (1947). The science of public administration: Three problems. Public Administration Review 7(1), 1–11. de Witte, K., Moesen, W. (2010). Sizing the government. Public Choice 145(1-2), 39–55.
- Denhardt, R. (1989). Public Administration: An Action Orientation. Dunfermline, UK: Wadsworth.
- Diamond, J. (1989). Government expenditure and economic growth: An empirical investigation. IFM Working Paper № 89/45.
- Dixit, A. (1997). Power of incentives in private versus public organizations. American Economic Review 87(2), 378–382.
- Dixit, A. (2002). Incentives and organizations in the public sector: An interpretative review. Journal of Human Resources 37(4), 696–727.
- Drucker, P. (1980). The deadly sins in public administration. Public Administration Review 40(2), 103–106.
- Dunleavy, P., Margetts, H., Bastow, S., Tinkler, J. (2006). New public management is dead: Long live digitalera governance. Journal of Public Administration Research and Theory 16(3), 467–494.
- Durant, B., Rosenbloom, D. (2017). The hollowing of American public administration. American Review of Public Administration 47(7), 719–736.
- Eisenhardt, K. (1989). Agency theory: An assessment and review. Academy of Management Review 14(1), 57–74.
- Evans, P., Rauch, J. (1999). Bureaucracy and growth: A cross-national analysis of the effects of “Weberian” state structures on economic growth. American Sociological Review 64(5), 748–765.
- Evans, P., Rueschemeyer, D., Skocpol, T. (eds.) (1985). Bringing the State Back In. Cambridge, UK: Cambridge University Press.
- Fatas, A., Mihov, I. (2013). Policy volatility, institutions, and economic growth. Review of Economics and Statistics 95(2), 362–376.
- Fernandez-Carro, R.,Lapuente-Gine, V. (2016). The emperor’s clothes and the pied piper: Bureaucracy and scientific productivity. Science and Public Policy 43(4), 546–561.
- Gerrish, E. (2015). The impact of performance management on performance in public organizations: A meta-analysis. Public Administration Review 76(1), 48–66.
- Ghobadian, A., Viney, H., Redwood, J. (2009). Explaining the unintended consequences of public sector reform. Management Decision 47(10), 1514–1535.
- Ghoshal, S., Moran, P. (1996). Bad for practice: A critique of the transaction cost theory. Academy of Management Review 21(1), 13–47.
- Gibson, P., Stolcis, G. (2006). Reenacting, retracing, and rediscovering history: Making a connection in the public administration curriculum. Journal of Public Affairs Education 12(1), 63–80i.
- Gulick, L. (1937). Science, values and public administration. In: Gulick, L., Urwick, L. (eds.) Papers on the Science of Administration. New York: Institute of Public Administration, рр. 189–193.
- Holmstrom, B., Milgrom, P. (1991). Multitask principal-agent analyses: Incentive contracts, asset ownership, and job design. Journal of Law, Economics, & Organization 7 (special issue), 24–52.
- Holzer, M., Xu, C. (2018). Introduction. In: Holzer, M., Flug, J., Meyer, S., Xu, C., McAuliffe, L. (eds.) Research Resources in Public Administration: A Companion Guide to the Public Administration Gateway. Washington, DC: American Society for Public Administration, рр. 1–6. https://www.aspanet.org/ASPADocs/PAGateway/PAGatewayManual.pdf
- Honig, D. (2021). Supportive management practice and intrinsic motivation go together in the public service. Proceedings of the National Academy of Sciences (PNAS) 118(13), article e2015124118. DOI: 10.1073/pnas.2015124118
- Hood, C. (1991). A public management for all seasons? Public Administration 69(1), 3–19.
- Howlett, M. (2014). Why are policy innovations rare and so often negative? Blame avoidance and problem denial in climate change policy-making. Global Environmental Change 29, 395–403.
- Howlett, M., Ramesh, M., Wu, X. (2015). Understanding the persistence of policy failures: The role of politics, governance and uncertainty. Public Policy and Administration 30(3-4), 209–220.
- Jackson, A. (2002). Gaming of performance indicators: A classification related to impact. In: Neely, A., Walters, A.(eds.) Performance Management Association 2002 conference proceedings. Boston: PMA, pp. 723–727.
- Jones, L., Thompson, F., Zumeta, W. (2001). Public management for the new millennium: Developing relevant and integrated professional curricula? International Public Management Review 2(2), 19–38.
- Kalimullah, N., Alam, K., Nour, A. (2012). New Public Management: Emergence and principles. Bangladesh University of Professionals Journal 1(1), 1–22.
- Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal 18(4), 769–783.
- Klein, J., Newell, W. (1998). Advancing interdisciplinary studies. In: Newell, W. (ed.) Interdisciplinarity: Essays from the Literature. New York: College Entrance Examination Board, pp. 3–22.
- Klenk, T., Reiter, R. (2019). Post-New Public Management: Reform ideas and their application in the field of social services. International Review of Administrative Sciences 85(1), 3–10.
- Knack, S., Keefer, P. (1995). Institutions and economic performance: Cross-country tests using alternative institutional measures. Economics and Politics 7(3), 207–227.
- Landau, D. (1983). Government expenditure and economic growth: A cross-country study. Southern Economic Journal 49(3), 783–792.
- Lane, J.-E. (2000). New Public Management. London and New York: Routledge.
- Lapuente, V., Van de Walle, S. (2020). The effects of new public management on the quality of public services. Governance 33(3), 461–475.
- Li, D., Maskin, E. (2021). Government and economics: An emerging field of study. Journal of Government and Economics 1, article 100005. DOI: 10.1016/j.jge.2021.100005
- Mainzer, L. (1994). Public administration in search of a theory: The interdisciplinary delusion. Administration & Society 26(3), 359–394.
- Mannion, R., Braithwaite, J. (2012). Unintended consequences of performance measurement in healthcare: 20 salutary lessons from the English National Health Service. Internal Medicine Journal 42(5), 569–574.
- Metzger, G. (2015). Administrative law, public administration, and the administrative conference of the United States. George Washington Law Review 83(4/5), 1517–1539.
- Milgrom, P. (1988). Employment contracts, influence activities, and efficient organization design. Journal of Political Economy 96(1), 42–60.
- Milgrom, P., Roberts, J. (1988). An economic approach to influence activities in organizations. American Journal of Sociology 94(supplement), S154–S179.
- Moe, T. (1984). The new economics of organization. American Journal of Political Science 28(4), 739–777.
- Moe, T. (1990). The politics of structural choice: Toward a theory of public bureaucracy. In: Williamson, O. (ed.) Organizational Theory from Chester Bernard to the Present. Oxford: Oxford University Press, pp. 116–153.
- Nistotskaya, M., Cingolani, L. (2016). Bureaucratic structure, regulatory quality, and entrepreneurship in a comparative perspective: Cross-sectional and panel data evidence. Journal of Public Administration Research and Theory 26(3), 519–534.
- North, D. (1990). A transaction cost theory of politics. Journal of Theoretical Politics 2(4), 355–367.
- North, D., Wallis, J., Weingast, B. (2009). Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History. Cambridge: Cambridge University Press.
- Ongaro, E. (2019). The teaching of philosophy in public administration programmes. Teaching Public Administration 37(2), 135–146.
- Ostrom, V., Ostrom, E. (1971). Public choice: A different approach to the study of public administration. Public Administration Review 31(2), 203–216.
- Pearce, J., Perry, J. (1983). Federal merit pay: A longitudinal analysis. Public Administration Review 43(4), 315–325.
- Perry, J., Wise, L. (1990). The motivational bases of public service. Public Administration Review 50(3), 367–73.
- Peters, B., Pierre, J. (2017). Two roads to nowhere: Appraising 30 years of public administration research. Governance 30(1), 11–16.
- Raadschelders, J. (2009). Trends in the American study of public administration: What could they mean for Korean public administration? Korean Journal of Policy Studies 23(2), 1–24.
- Raadschelders, J. (2010). Identity without boundaries: Public administration’s canon(s) of integration. Administration & Society 42(2), 131–159.
- Raadschelders, J. (2011). The future of the study of public administration: Embedding research object and methodology in epistemology and ontology. Public Administration Review 71(6), 916–924.
- Ram, R. (1986). Government size and economic growth: A new framework and some evidence from crosssection and time-series data. American Economic Review 76(1), 191–203.
- Reiter, R., Klenk, T. (2019). The manifold meanings of ‘post-New Public Management’ – A systematic literature review. International Review of Administrative Sciences 85(1), 11–27.
- Rittel, H., Webber, M. (1973). Dilemmas in a general theory of planning. Policy Sciences 4(2), 155–169.
- Rosenbloom, D. (1983). Public administrative theory and the separation of powers. Public Administration Review 43(3), 219–227.
- Rosenbloom, D. (2017). Beyond efficiency: Value frameworks for public administration. Chinese Public Administration Review 8(1), 37–46.
- Rutgers, M. (1994). Can the study of public administration do without a concept of the state? Reflections on the work of Lorenz von Stein. Administration & Society 26(3), 395–412.
- Sant'Ana, T., Lopes, A., Miranda, R., Bermejo, P., Demo, G. (2020). Scientific research on the efficiency of public expenditures: How and where is it going? International Journal of Public Administration 43(11), 926–936.
- Scaff, L., Ingram, H. (1987). Politics, policy, & public choice: A critique & a proposal. Polity 19(4), 613–636.
- Schwartz-Shea, P. (2021). Under threat? Methodological pluralism in public administration. Public Performance & Management Review 44(5), 975–1005.
- Scully, G. (1989). The size of the state, economic growth and the efficient utilization of national resources. Public Choice 63(2), 149–164.
- Smith, P. (1993). Outcome-related performance indicators and organizational control in the public sector. British Journal of Management 4(3), 135–151.
- Spekle, R., Verbeeten, F. (2014). The use of performance measurement systems in the public sector: Effects on performance. Management Accounting Research 25(2), 131–146.
- Stiglitz, J., Rosengard, J. (2015). Economics of the Public Sector. New York: W. W. Norton.
- Stillman, R. (1976). Public Administration: Concepts and Cases. Boston and London: Houghton Mifflin Co.
- Suzuki, K., Demirci oglu, M. (2019). The association between administrative characteristics and national level innovative activity: Findings from a cross-national study. Public Performance & Management Review 42(4), 755–782.
- Suzuki, K., Hur, H. (2020). Bureaucratic structures and organizational commitment: findings from a comparative study of 20 European countries. Public Management Review 22(6), 877–907.
- Tolofari, S. (2005). New Public Management and education. Policy Futures in Education 3(1), 75–89.
- Turk-Browne, N., Junge, J., Scholl, B. (2005). The automaticity of visual statistical learning. Journal of Experimental Psychology: General 134(4), 552–564.
- Van de Walle, S. (2008). Comparing the performance of national public sectors: Conceptual problems. International Journal of Productivity and Performance Management 57(4), 329–338.
- Wade, L. (1979). Public administration, public choice and the pathos of reform. Review of Politics 41(3), 344–374.
- Wamsley, G. (1998). A response to C. Kurt Zorn: Unmasking economics: a critical perspective. International Journal of Public Administration 21(6-8), 1137–1140.
- Wang, Y. (2021). State-in-society 2.0: Toward fourth-generation theories of the state. Comparative Politics 54(1), 175–198.
- Waterman, R., Meier, K. (1998). Principal-agent models: An expansion? Journal of Public Administration Research and Theory 8(2),173–202.
- Williamson, O. (1975). Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.
- Williamson, O. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics 22(2), 233–261.
- Williamson, O. (1997). Transaction cost economics and public administration. In: Boorsma, P., Aarts, K., Steenge, A. (eds.) Public Priority Setting: Rules and Costs. Dordrecht: Springer, pp. 19–37.
- Williamson, O. (1999). Public and private bureaucracies: A transaction cost economics perspective. Journal of Law, Economics & Organization 15(1), 306–342.
- Wilson, W. (1887). The study of administration. Political Science Quarterly 2(2), 197–222.
- Wright, B. (2011). Public administration as an interdisciplinary field: Assessing its relationship with the fields of law, management, and political science. Public Administration Review 71(1), 96–101.
- Yang, L. (2019). Public administration as a dynamic balance and integrative science across politics,management, and law: Rosenbloom's framework and Chinese experiences. American Review of Public Administration 49(1), 79–97.
- Zalmanovitch, Y. (2014). Don’t reinvent the wheel: The search for an identity for public administration. International Review of Administrative Sciences 80(4), 808–826.
Publisher: Southern Federal University
Founder: Southern Federal University
Founder: Southern Federal University