Issues in the Designing of Public Sector Reform

“Civil service reform,” which has become the nickname for public sector management reform in the parlance of development economics, has only recently and grudgingly been accepted by those who advise on policy in the poor countries. Even then, the approach is somewhat paternalistic in that it emphasises externally-designed rules and processes for management, organisation, audit and accountability. It recognises the role of people in terms of noting that incentives and employment policies matter but only in terms of right-sizing the government and second to the need to spread budgetary resources over the politically chosen level of employment. What it does not accept is that and the drive to manage the public sector better has to be led and implemented by the domestic talent and in that they must have both the incentive and the honour of doing just that. This paper argues that the main reason that the public sector management has suffered in many of the poor countries is that incentives have been allowed to erode rapidly as public sector employment was viewed politically as a means of providing welfare. This lead to the outflow of many of the better quality people form the civil service and through adverse selection of the decline of work and ethical standards.