Creating competitive environments in the public sector: experiences in OECD countries and Korea

Abstract

As part of the shift to a more results-oriented approach to management and accountability, some OECD countries like the United Kingdom Australia, Canada, and New Zealand recognized, to varying degrees, that to more effectively and efficiently manage their programs and achieve significant improvements in performance, agencies and managers must be provided with greater flexibility over resources and incentives. In a sense, these countries implemented reforms which reflected a shift toward more business like methods. They eliminated detailed central control of departments' operating expenditures and staffing levels and provided departments with more authority to manage resources within overall their budget ceilings. In the four countries mentioned above, to provide flexibility and incentives to line management, central management departments and central management within line departments sought to devolve greater decision-making authority over financial and human resources and provide incentives in the form of shared productivity gains and market-type mechanisms (MTMs), such as increased competition and user-charging.