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Application to International Trade
Evaluation of New Governance
Application of New Governance to International Trade for Free Market
In today's robust world, scholars as well as the think tanks and tools of democracy and beaurcracy have been using a term "governance" or good governance rather frequently. Where governance in needed in every aspect of corporate management and public administration, it is important to understand how the very concept of governance has evolved over time. Old theory of governance has been replaced by its contemporary version which can be seen as a pre-requisite for the free trade regime especially for exporters. Where the new governance theory has a considerable impact on international trade; its effectiveness in public and private sector cannot be ignored.
Background of New Governance
Over past two decades, public and private organizations have followed a path of evolution. 'Rayner's Raiders' and the '3Es' of economy, efficiency and effectiveness shaped the current model of public administration and entrepreneurship (Rhodes, 1996). Generally speaking, governance defines a change in the role, general structure and flow of operations of a governing body which leads to the solution of social problems. Governance tends to have varied definitions and is ambiguous itself. However, generally speaking, as far as general administration is concerned, "it may be unclear whether the reference is to organizational structures, administrative processes, managerial judgment, systems of incentives and rules, administrative philosophies, or combinations of these elements" (Heinrich and Lynn, 2000, p.1). On the other hand, it can also be referred as reform in general administration. Where old and new theories of governance share a common objective: public administration; the methods and tools suggested by both the models helps in establishing a difference and distinction between both theories.
In order to gain understanding of the concept of governance, it is important have an understanding of its various definitions.
As per Lynn, Heinrich and Hill "regimes, laws, rules, judicial decisions, and administrative practices that constrain, prescribe, and enable the provision of publicly supported goals and services," holds strong interest for public administration scholars (2001, p.7). Another version of governance was given by Cleveland, "The organizations that get things done will no longer be hierarchical pyramids with most of the real control at the top. They will be systems -- interlaced webs of tension in which control is loose, power diffused, and centers of decision plural. "Decision-making" will become an increasingly intricate process of multilateral brokerage both inside and outside the organization which thinks it has the responsibility for making, or at least announcing, the decision. Because organizations will be horizontal, the way they are governed is likely to be more collegial, consensual, and consultative. The bigger the problems to be tackled, the more real power is diffused and the larger the number of persons who can exercise it -- if they work at it" (1972, p. 13).
The concept of governance has emerged from the concept of traditional government. It emphasizes on having Public Executives who can exercise duties assigned to them with the senses of welfare, equity, achievement and participation (Cleveland, 1972). The new concept of governance instead of government ensures that the Public executives or representatives are given their due freedom and they exercise this power keeping the basic principles of ethics and morality in consideration. This rather comprehensive concept of the freedom given to public administrators ensures that in a complex social and organizational structure, individuals provided with free space to perform their duties, perform on rational basis. This freedom helps the public executives to develop administrative skills and helps them develop leadership traits over time by exploiting their freedom.
Evaluation of New Governance
Over time, the distinctions between the term government and governance have become rather clear over time. Where the term government deals with exercising controls over processes, governance entails the various ways which is used by entities to manage their common affairs. These entities can be individuals or organizations of public and private nature. Where government promotes strict control which would lead to no conflicts or may suppress conflicts, the new concept of governance accommodates the diversified interest through cooperative action. Where the term 'government' is strictly related to organizations with concrete hierarchy, governance deals with formal organizations which have a sole objective of ensuring compliance, and also individuals who do the same yet in informal manner.
Where the concept of governance possesses an extensive history, major research has taken place in the last two decades in this regard. In order to evaluate the current model and its productivity, John Williamson performed a study which entailed observing the radical reforms in the developed as well as in underdeveloped countries. As per his stud, majority of the countries who have gone through successful reforms had a democratic structure. Similarly, a study conducted by Surjit Bhalla 90 countries of the world in econometric frame of reference; the outcome of this study strengthens the concept that it is freedom of civil and political rights which causes economic growth. It is said that proprietary rights are the pre-requisite for economic growth and they tend to be more secure in democratic environment rather than autocratic one. Similar studies have been conducted Nauro Campos, Monojit Chatterji and Brian Hilmore have also performed studies leading to the similar conclusion. These studies helped in establishing the hypothesis that new governance is more effective than old concept of government, therefore it is necessary to understand what the basic characteristics of governance itself are.
As far as the term, 'governance' is concerned; there can be a unanimous consensus on the basic definition of government and governance. Where the government provides the structure of an organization having an objective, governance provides the guidelines regarding how it should be done. As per Peter and Pierre (2000), both governance and government have governing nature however their methods are rather unique to each other. Where government is a name of direct intervention, governance is management at distance. They further state that steering the situation while maintaining the distance is a politically correct approach in today's era where Public is aware of the details of matters in hand and has a resisting power. Furthermore, governance has more intrusive nature as compared to government which makes is more adaptable and productive.
Furthermore, traditional public administration provides rigid boundaries for organizations to operate and has rather fixed mode of public administration. Traditional public administration possesses a defined and definite hierarchy and is preoccupied with a stable structure with defined internal regulations. However, this model because of its fixed nature only gave rise to disappointment from poor government performance and continuous deficits in various fields. At this point the need for a rather flexible public administration model arises.
Studies have proved that there are four approaches via which public administration can be performed by using the current concept of governance. Governance transformation that has taken place in Great Britain, New Zealand, Australia and United States, has taken place following four models of governance: deregulation, flexible government, participative government and market government.
These four models of governance have distinct features which help in develop clear concepts of each. In market government, internal factors of the market are major policy makers who design the market incentives. In such market, the general customer is interested in the low cost of goods and services. Market government emphasizes on paying for the efforts or performance whereas in private sector, perks and benefits are also included in reward other than monetary benefits. Such mode of government has a decentralized structure and scattered nodes of power. Market government is principally diagnosed to have monopoly.
Participative government involves input given by various factors of the market. It has a hierarchical structure with organizations trying to achieve total quality management and working on the model defined by it. Here, policy is product of consultation and negotiation that takes place in between team members. Similarly, public's interest is also considered at the time of negotiations and representatives from public are allowed to participate.
Flexible government is another name of experimentation. This form of government works on testing model where various practices are tested and one which tends to be successful in achieving the target is considered to be viable one. Public interest is rules by low cost factor as most of the processes are taking place in the form of trial. Flexible government comprises of virtual organizations with temporary workforce and is coordinated by the team leaders in a virtual manner. The main objective of this form of governance is to obtain permanence.
As far as deregulated government is concerned, the control of such government is at minimum level. It provides greater managerial control to other stakeholders and allowed market forces to operate freely. Public tends to get interest in unique and creative services providing optimum productivity and satisfaction. Also, it doesn't have any defined structure. The deregulated government has a policy structure which is designed by entrepreneurial forces of the market who also try to control internal regulations as well (Peter, 2001).…[continue]
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