Peters-The Role of Public Servants-2009 - Cópia

ISSN 1648-2603 (print)

ISSN 2029-2872 (online)

MYKOLAS ROMERIS UNIVERSITY

KAUNAS UNIVERSITY OF TECHNOLOGY

PUBLIC POLICY AND ADMINISTRATION

No. 30

Vilnius * Publishing Center, Mykolas Romeris University * 2009

Editors: Prof. Dr. Habil. Vladislavas Domarkas, Kaunas University of Technology Assoc. Prof. Dr. Tadas Sudnickas, Mykolas Romeris University

Editorial Board Prof. PhD Erik Aalbek, Aalborg University, Denmark Prof. PhD Maria Aristiqueta, University of South Florida, USA Prof. PhD Larry Bakken, Hamline University, USA Prof. PhD Howard Balanoff, Southwest Texas State University, USA Prof. Dr. Viktorija Barauskien, Kaunas University of Technology Prof. Dr. Eugenijus Chlivickas, Lithuanian Association of Public Administration

Trainers Prof. Dr. Habil. Eduardas Janauskas, The General Jonas emaitis Military Academy

of Lithuania Prof. Dr. Algis Krupaviius, Kaunas University of Technology Prof. Dr. Alan Lawton, University of Hull, United Kingdom Prof. Dr. Habil. Borisas Melnikas, Vilnius Gediminas Technical University Prof. Dr. Habil. Vladimiras Obrazcovas, Mykolas Romeris University Prof. Dr. Jolanta Palidauskait, Kaunas University of Technology Prof. Dr. Rimantas Petrauskas, Mykolas Romeris University Prof. Dr. Alvydas Pumputis, Mykolas Romeris University Prof. Dr. Habil. Stasys Pukorius, Mykolas Romeris University Prof. Dr. Alvydas Raipa, Kaunas University of Technology Assoc. Prof. Dr. Vainius Smalskys, Mykolas Romeris University Dr. Jurgita iugdinien, Kaunas University of Technology Assoc. Prof. Dr. Rasa naptien, Kaunas University of Technology Prof. Dr. Norbert Thom, Bern University, Switzerland Prof. Dr. Theo Toonen, Leiden University, Netherlands Prof. Dr. Habil. Edvins Vanags, University of Latvia, Latvia Prof. Dr. Michiel S. de Vries, University of Nijmegen, The Netherlands

Editor of this issue Prof. Dr. Habil. Vladislavas Domarkas

Executive secretary Assoc. Prof. Dr. Aleksandras Patapas

Internet addresses: http://www.ktu.lt/vpa http://www.mruni.eu/leidyba.html

Editorial offices: Department of Public Administration Department of Public Administration Faculty of Public Administration Faculty of Social Sciences Mykolas Romeris University Kaunas University of Technology Ateities str. 20K. Donelaiio str. 20 08303 Vilnius 44239 Kaunas, E-mail: [email protected] E-mail: [email protected]

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ISSN 16482603 (print) VIEOJI POLITIKA IR ADMINISTRAVIMAS ISSN 2029-2872 (online) PUBLIC POLICY AND ADMINISTRATION 2009, Nr. 30

CONTENTS

Leading Article Still the Century of Bureaucracy?: The Roles of Public

Servants.

B. Guy PETERS

7

Comparative

Analysis of

Public Policy

and

Administrative

Practice

The Directions and Tendencies of Changes in Modern

Public Governance

Alvydas RAIPA

Characteristics of the Modern Swedish Model of

Economic and Social Development...

Yuri KRIVOROTKO

The Roles of a Research Administrator at a University

Loreta TAUGINIEN

22

33

45

Civil Service Is there Space for Hybrid Management Models of Senior

Civil Service across Political-Administrative Systems?...

David FERRAZ

The Managerial Competencies of Civil Servants in

Lithuania

Egl BUTKEVIIENEgl VAIDELYT

57

68

Knowledge

Society

Two Dysfunctions in High-Tech Research and

Development..

Kazunobu OYAMA

Measuring Knowledge Economy: Towards an

Institutional Approach... ilvinas IDONIS

Aspects of Decentralization in Management Reforms of

the Education System in Lithuania

Jolanta URBANOVI

82

92

102

Non-

Governmental

Sector

The Non-Governmental Sector and Democracy

Empirical Reflections and Findings in the Baltic States:

Results of Meta-Analysis (Part I)..

Saul MAIUKAIT-VINIEN

114

Conference

Review

The Implementation of Managerial (Administrative)

Concepts in Practice..

Saulius NEFAS

129

Information Notes for Contributors..

Subscription form..

133

137

ISSN 16482603 (print) VIEOJI POLITIKA IR ADMINISTRAVIMAS ISSN 2029-2872 (online) PUBLIC POLICY AND ADMINISTRATION 2009, Nr. 30, p. 721

B. Guy Peters Pitsburgo universiteto Politologijos katedros profesorius. University of Pittsburgh, De-

partment of Political Science, Professor.

el. patas / e-mail: [email protected]

Straipsnis teiktas redakcijai 2009 m. rugsjo mn.; recenzuotas; parengtas spausdinti 2009 m. gruodio

mn.

STILL THE CENTURY OF BUREAUCRACY?:

THE ROLES OF PUBLIC SERVANTS

B. Guy Peters

University of Pittsburgh

The civil service, and public employment more generally, is often seen as stable, predictable, and frankly rather boring. The public bureaucrat has been, and contin-ues to be, an object of scorn as well as an easy target for humorists, and the task of implementing public policy continues to be seen as largely the same as it has been for decades or even centuries. Despite that apparent predictability, the job of the civil servant, as well as much of the environment within which he or she functions, has been transforming rapidly and the public sector is nothing like it was several decades ago. Intellectually, the consideration of public administration has also re-mained rather stable. Despite numerous changes in the public sector Max Webers conceptions of bureaucracy still constitute the starting point for most discussions (Derlien, 1999).

Keywords: public servant, bureaucrat, manager, governance Raktaodiai: valstybs tarnautojas, biurokratas, vadybininkas, vieasis valdy-

mas.

The above having been said, the changes within the public sector have not been

consistent or uniform, and indeed some approaches to change often have been inter-

nally contradictory. Just as many aspects of the public sector have been largely im-

mutable, then paradoxically change has been ubiquitous in government. Change and

continuity have existed side by side for most of the history of governing. Therefore,

we need to better understand what has happened with the world of the civil servant

and with the job that these individuals now perform.

One premise of this article is that the post-modernizing of the public sector has

been associated with decline in the certainties that we associate with the modern, bu-

reaucratic system. If bureaucracy has declined as a paradigm for the public sector,

B. Guy Peterts. Still the Century of Bureaucracy?: The Roles of Public Servants

8

however, it has not been replaced with any single model that can provide descriptive

and prescriptive certainty (see Peters, 2001; Frederickson, 2007). Neither scholars at-

tempting to capture the reality of contemporary public administration, nor politicians

and managers attempting to make the system work on a day to day basis have any

simple model of what the contemporary reality is. Many analysts are consequently

forced to examine some aspects of governing and ignore others or to develop ad hoc conceptions and prescriptions.

This loss of certainty about managing in the public sector is very unsatisfying for

many academics and perhaps for more practitioners, but as well as reflecting con-

temporary agnosticismor the presence perhaps of numerous heresies when seen

from the old orthodoxydoes capture the struggle to find better ways of governing.

To some extent, however, even the definition of better is contested about govern-

ing, and the multiple goals that have always been present in public administration

have become all the more evident (Rothstein and Toerell, 2008). Thus, the contem-

porary period continues to juggle values of efficiency, democracy, equity probity and

accountability (to name but a limited though important set) and to understand that

choosing any one to maximize will tend to create problems for at least some of the

others.

In this essay I will attempt to lay out at least five contending roles of the current

public administrator and discuss how they describe the contemporary reality of pub-

lic administration, as well as the extent to which they coexist. Any individual admin-

istrator may therefore be required to make some choices for him- or herself, and may

have to select different values at different times. Likewise, politicians may be forced

to choose one or more value to emphasize as they attempt to govern. Having these

multiple conceptions does not have to produce chaos and indeed one of the important

activities in contemporary governance may be clarifying the approaches being taken

more explicitly and with that clarifying the values that any particular system of gov-

ernance is attempting to maximize. The history of governance often involved mask-

ing those preferences but now they can be addressed more directly and the political

choices involved can also be clarified.

The roles of public servants As already noted, the role played by public employees in contemporary govern-

ance is not as clear as it once was. While the clarity and simplicity of old-fashioned

government could clearly be over-stated, there was some sense of how the system

would be managed and what the role of the civil servant in that system was (Walsh

and Stewart, 1994). That perceived (and real) role for the civil service differed to

some extent across countries (Peters, 2009) but at the core, there was some common

role for public servants as well as substantial predictability. That predictability was

especially evident for the lower levels of public organizations and their tasks of rou-

tine implementation seemed quite stable and often numbingly predictable.

Vieoji politika ir administravimas. 2009, Nr. 30, p. 721

9

As already noted, in Europe much of that traditional model of the public bu-

reaucracy was based on the work of Max Weber. The Weberian model is now com-

monly reviled in theory and practice, but we must remember that much of the legal-

ism and formality within the model was designed to ensure equality of services, and

political neutrality among public servants. Further, the emphasis on files and rules

also ensured predictability for both employees and for clients, something far different

from the extreme versions of discretion that characterized pre-bureaucratic adminis-

trative systems.

The Weberian model continues to serve as the intellectual foundation for think-

ing about governing, and as the model against which most attempts to reform are di-

rected. Indeed, the neo-Weberian model of the State has become important as a

means of understanding what is happening with government after the reforms of the

New Public Management have run their course (Bouckaert and Pollitt, 2004;

Raanma-Liiv, 2009). The basic logic of the Neo-Weberian State is to retain many of

the efficiency values associated with the New Public Management while recapturing

some of the emphasis on probity and accountability that were more central to tradi-

tional models of the public sector.

In the United States, on the other hand, the Wilsonian model, the separation of

roles between the political and the bureaucratic sectors, was applied. Wilsons model

was less concerned with the internal management of public organizations than it was

with the role of bureaucracy in a democratic political system. Wilson did, however,

also reflect the scientific management values of his era. Although he accepted the le-

gitimate dominance of political actors over public policy, he also stressed the superi-

ority of administration as a science, while politics was merely an art. Thus, even then

public administrators were in the somewhat ambiguous position of having to follow

orders, even if they considered themselves more capable than their nominal superiors

in the organizations.

The most remarkable change in the role of the public service and for governing

in general is that there is much less predictability and there are often competing de-

mands placed upon people at all stages of governingfrom ministers through to the

lowest level clerks. This reduced predictability represents the spread of a number of

cultural and intellectual challenges to the role of the public sector, as well changes in

the real policy challenges being confronted by the public sector. These changes mean

that individual public servants may be in a position to define their own role, or have

such a definition thrust upon them.

Choice is never easy, but is confounded in this instance because there are several

roles that are available to the civil servant, and these all, to some extent, need to be

played at different times by the same individuals.1 Thus, one of the defining features

of the public servant in an era of post-modernity is that he or she must constantly be

moving among these different roles. Certainly their position within an organizational

1 The roles identified by Aberbach, Putnam and Rockman (1980) in their seminal study tended to be more fixed for an individual at any one time, although that question did not appear to be addressed

specifically.


10

structure or their specific policy area may affect the extent of change, but almost all

public servants will wear several hats in the course of a week or a day, or even an

hour. The need to make these choices appropriately also increases the chance of error

and of some loss of job satisfaction for the individual.2

It is also important to remember that most of the roles mentioned below are not

new.3 These roles have been, to some extent, expected of the public servant for some

time. What is different, however, is that in the modern bureaucratic age the major-

ity of possible roles were subordinate to the dominant role of being a proper bureau-

crat. The public servant could always resort to the law and to enforcing formal stan-

dards within the organization, and doing so was rarely incorrect. In what we are de-

scribing as a post-modern administration, that role may still be available but it is less

reliable as a means of producing good results for the individual, the organization, or

government as a whole. In some cases the bureaucratic response may be effective,

while in many others the public will no longer accept the legalism. Even many mem-

bers of the public sector itself will not want to rely on it.

Back to the futurethe bureaucrat One choice available to contemporary bureaucrats that is discussed less often

than others is to return to bureaucratic styles of governing. While many observers in

and out of government would consider this a retrograde step, there has been an im-

portant resurgence in thinking about the role of more formalized styles of managing

within government. Reforms during the past several decades have produced a num-

ber of improvements in the efficiency and effectiveness of the public sector, and the

market-based logic of this approach has been widely accepted. Although successful

in some ways, this approach to managing the public sector has a number of important

dysfunctions for governing (see Christensen and Laegreid, 2001). Further, this ap-

proach challenges a number of understandings about what good administration in the

public sector should be, especially the importance of emphasizing the public in pub-

lic administration.4

The logic of returning to at least some aspects of bureaucracy in the public sec-

tor is that the probity and predictability of bureaucracy are no less important in the

contemporary public sector than they have been in the past (Olsen, 2006; Du Gay,

2005). The public often denigrates bureaucracy but at the same time demands to be

treated fairly and equally by the public sector. Most of the reforms that have dimin-

ished the formality of bureaucracy have also tended to produce greater variability in

2 On the one hand having a more diverse job may increase satisfaction, but on the other , the need to make complex choices may produce some frustration and indecision.

3 The most probable exception to that statement is the role as Democrat. That said, the egalitarian components, even within Webers model, can be conceptualized as to some extent democratic.

4 This is now commonly discussed in terms of public value and the reassertion of the public interest (Moore, 1995).


11

the services provided to citizens. Choice is good, provided that there is some cer-

tainty for adequate and equitable services.

The creation, or recreation, of bureaucratic forms of governing is especially im-

portant for transitional regimes, whether in third world countries, or in the still con-

solidating democracies of Central and Eastern Europe (Verheijen, 2009). As these

political systems attempt to institutionalize new styles of governing after decades of

authoritarian rule of various types, there is a need to create formal, legal styles of

governing prior to considering any other styles of reform. The New Public Manage-

ment and other contemporary formats for governing tend to assume the presence of

an accepted ethos that will guide the behavior of public servants. Without that ethos,

the emphasis on managerial freedom within contemporary public management would

significantly reduce accountability and control.

The Neo-Weberian model is therefore particularly apt for transitional govern-

ments. It is also important for administrative systems that have been undergoing the

rapid changes already mentioned. In many ways, this model of administration re-

flects some of the ambiguity that we are discussing with reference to individual pub-

lic administrators. The Neo-Weberian State is, in essence, a hybrid between the

managerial and hollowed out state that had been created during the reform era, and

therefore may have the capacity to provide some improvements in efficiency as well

as probity. Likewise, the individual public servant will have to manifest that set of

skills.

The manager

A second role for the contemporary public administrator is that of a manager. As

noted above concerning the New Public Management (NPM), the most important

change in the public sector has been to emphasize the need for decisive and autono-

mous public management. NPM may not really be new, it is often not public, but it is

management. In this view of the public sector, the principal means of enhancing the

quality of services to the consumer (rather than citizen) is to improve the efficiency

of service delivery. By providing better services the managerial approach will also

reduce the total costs of government and thereby further enhance the legitimacy of

government.

Most of the discussion of NPM has been directed at the roles of senior public

managers, but some of the ideas associated with this movement have also affected

the lower levels of the public sector. For example, the idea of empowerment (Kerna-

ghan, 2008) has been central to some versions of NPM, and in this view it appears

that the lower level officials in government are also provided with greater power over

the policies they are delivering. Not only does the enhanced role for the lower eche-

lon employee make his or her job more interesting and more motivating, but the abil-

ity of these individuals to make more decisions should also improve the quality of the

services provided.


12

Although these ideas of empowering public employees have been to some extent

successful, they also generate important management problems. In particular, if all

the actors involved in the policy process believe that they are empowered, then no

one really is (Peters and Pierre, 2000). The managerial role, perhaps more than even

the bureaucratic role, involves the ability to provide direction to other actors. There-

fore, if the role is not clearly defined then the role becomes extremely difficult to im-

plement effectively and without conflict. The conflict from other empowered actors

must also be considered in light of continued assertions of the power to rule from po-

litical actors.

The role of manager is one that is likely to be most comfortable for public ser-

vants, especially for higher level public servants. These officials have often ex-

pressed frustration when their roles are limited either politically or through formal

rules, e.g., about personnel management. Acceptance of the role of manager, how-

ever, may make accepting other roles, e.g., that of democrat (see below) more diffi-

cult.

The policy-maker

Public servants have always had some role in making policy, but that role does

appear to be changing. The traditional policy role for the public service was to serve

as advisors for political leaders. Although this role clearly appeared subordinate to

the position of the political leader, it was often crucial in the policy-making process.

Politicians are rarely selected for their knowledge of policy issues so they may well

be dependent upon their civil servants for making good policy. This policy focus

from public servants is especially apparent when organizations in the public sector

have a clear commitment to a particular policy perspective.

Although the emphasis on policy-roles played by public servants is usually at the

upper levels of the system, the lower echelons also play these roles. For example,

Page and Jenkins (2005) have pointed out that middle-level bureaucrats have a very

significant role in shaping policy, and that they can do so to a great extent independ-

ent of the influence of their nominal political masters. Further, the lowest level of the

public bureaucracy can also have a very direct impact on policy; they must make

numerous decisions about individual clients and the summation of those decisions

help to define the real nature of public policies. The logic of the bureaucratic role,

and of Weberian bureaucracy, is largely to deny the exercise of discretion, although

it is abundantly clear that street-level bureaucrats do have substantial discretion and

do exercise it.

The policy-making role was generally seen as the major alternative to the clas-

sic bureaucratic role of implementer and manager of a staff. In that conception, the

policy tasks were primarily giving advice to the political masters. This version of the

policy making public servant remained (at least in principle) subservient to the politi-

cal powers. As reforms of public administration have proceeded, however, the policy

roles appear to have expanded to necessitate more direct involvement in policy mak-


13

ing. In particular, part of the logic of the New Public Management has been to em-

power managers to have more of a say in policy and thereby to reduce the policy role

of the inexpert and often fractious political leaders.

The development of a more powerful policy role for public servants to some ex-

tent alters fundamentally the bargains made between public servants and their nomi-

nal political masters (Hood and Lodge, 2007). The anonymous, yet influential, public

servants have been replaced by public servants with greater powers but without the

job protections and security they once would have enjoyed. In many ways they have

become the unelected policy-makers that critics of the bureaucracy have frequently

accused them of being. This power, in turn, has produced more attempts on the part

of political leaders to control those officials, and to influence the selection process of

senior public officials.

The negotiator

The fourth possible role for the contemporary public servant follows rather natu-

rally on the role of being a policy-maker. The policy role has been a central feature

of the activities of the senior public service for some time, and represented the major

option for the classical public servants described by Aberbach, Putnam and Rockman

(1981). This role of negotiator may have been available for some time, but has be-

come one of the major activities of public servants more recently. This role reflects

the tendency of the public sector to provide fewer public services itself and to rely

more on the private sectormeaning both the market and social actorsto provide

those services.

Contemporary public policy delivery relies heavily on market actors, linked to

the public sector through contracts and partnerships. Even before the New Public

Management gained iconic status in some countries, a number of efforts were being

made to out-source various rather routine functions in the public sector. The interest

in using the market has only grown and now extends to much more than (relatively)

simple functions such as cleaning and rubbish collection. Partnerships and contracts

now involve almost the full range of public sector activities, and often include very

complex issues such as financing public works (Lonsdale, 2005) or providing social

services. These services are difficult enough to manage when in government, but are

all the more difficult when there must be a contract that specifies both the nature of

the product and the means of producing it.

The general ideological movement in the direction of contracts and partnerships

has been driven by political leaders, but most of the actual work of negotiating and

managing these relationships must be done by members of the public service. Not

only are they more likely to have the expertise to do this well, but they are also the

more enduring members of the public sector. Politicians may come and go, but the

public servants tend to remain. This is especially important for the negotiator role be-

cause most of the contracting in the public sector is in essence relational contracting

(Peters, 2002). Given that it is difficult to specify all the details for social services or


14

many other public programs, it is important to build strong relationships between the

providers of services and the public servants who supervise the contracts.

The negotiations of public servants are not confined to managing contracts with

market actors, but also extend to working with members of social networks who are

actively involved in policy and administration. These relationships with actors in the

private sector must be built on trust, more so than on relationships involving formal

contracts. A contract has more specific constraints on the behaviour of the parties in-

volved than does the membership of a social network, so the informality of the net-

works imposes greater demands on public servants for the ability to negotiate. The

role of the public servant in these relationships is more continuous and more innova-

tive than with contracts, so it permits a more active involvement in shaping policy

and forms of democratic involvement.

Again, it is crucial to note that members of the public service will be more im-

portant than politicians in defining these relationships with social actors. In the first

place, the networks often interact directly with relatively low levels of the public sec-

tor and therefore are more likely to encounter public servants than political leaders,

even at the local level. In addition, if these relationships for making and implement-

ing services are to be successful, they must endure. Therefore, public servants are on

average involved in the process much longer than politicians. Finally, the role defini-

tions of public servants are less likely to be threatened by the involvement of other

political actors in the process than are those of politicians, so they can provide

greater stability and a collective memory for governments.

The negotiator role for the public servant may be a means of encompassing sev-

eral of the other roles, especially those of manager and democrat. As the public ser-

vant negotiates with private sector actors, he or she has the opportunity to stress pub-

lic values and democratic control in contrast to the market values that have become

prevalent in many policy areas. Further, he or she is also capable of achieving man-

agement goals through negotiation with market and social actors.

The democrat

Finally, although this role might usually be seen as the antithesis of being a pub-

lic servant, the contemporary public servant is often called upon to play a significant

democratic role in his or her government. This emerging role for the public servant

reflects in part the declining efficacy of more traditional forms of democracy. In most

established democracies, fewer people are voting, and many fewer people are now

members of established political parties (Dalton and Wattenberg, 2000; Mair and van

Biezen, 2001). A great deal of political participation is now being channelled into

flash political parties, as well as into other less conventional forms of involvement

with the public sector.

While many of the principal instruments of political democracy have apparently

become weaker over the past several decades, there has been a shift toward using the

permanent public bureaucracy (here used in the generic sense) as a locus for public


15

participation. The use of networks of social actors mentioned above has been one

manifestation of that shift toward participation in the public bureaucracy, given that

these actors now influence the choices of policy and the manner of implementation.

In addition, the public appears to be more concerned with the provision of particular,

often local, public services rather than with broad issues of public policy.

This change in the nature of public participation to some extent reflects a con-

tinuing shift toward the output legitimation of public action, rather than producing

that legitimation through inputs into the political system (Peters, 2010; see also

Keane, 2009). The traditional model of democratic legitimation has been twofold: the

possibility for the public to vote reflected their choice of policy, and the retrospective

judgements of the public on the programs of sitting governments further provided

some legitimacy for public action.5 As political democracy has become less central to

processes of governing, this source of legitimation has also become less viable.

The alternative to conventional forms of legitimation is for the public sector to

legitimate itself through its policies and its performance. This shift, and the associ-

ated role for the public service, is manifested in a number of ways. In general, gov-

ernments have begun to emphasize their role as service providers rather than as po-

litical institutions that emphasize processes and deliberation. For example, one of the

central components of the New Public Management has been that government should

serve the customer rather than be concerned with the political process per se. This approach to governing, therefore, has explicitly transformed the public from citizens

to consumers of public services, and although this may enhance services, it tends to

denigrate the political role of citizens.

In a model of the State dependent upon output legitimation, the public service,

and perhaps especially the lower levels of the public service, becomes even more

crucial than in more conventional models of governing. The public service is in con-

tact with the public and is responsible for the actual delivery of the public services. It

is not only the quality of the services being provided that is important in these con-

tacts. The manner in which they treat their clients influence the way the public views

their government. For the average citizens, the policeman on the beat, the social

worker, or the postal clerk is the State, and how they are treated does matter. The

good news is that most studies find that citizens are treated well, but the bad news is

that this often does not transfer into a more positive opinion of the bureaucracy, or

the public sector in general.

The role of the democrat may not come naturally to many public servants, even

those not steeped in traditional bureaucratic ethics. The assumption in most political

systems is that politics and bureaucracy, and perhaps especially democratic politics,

are to some extent opposite approaches to governing. Bureaucracies are often por-

trayed as placing a barrier to the exercise of democracy, but given the problems of

contemporary representative institutions, bureaucracy may be an effective alterna-

tive. The underlying problem for playing this role is that citizens in many societies

5 For a classic statement of the difficulties of using elections for steering governance, see Rose (1974).


16

may not yet recognize the possibilities of influencing policy through the bureaucracy,

and may not send the role.6

Criteria for choice

While it is important to understand the different roles that may be available to

public administrators in the contemporary public sector, that is only the beginning for

gaining an understanding of the manner in which those public servants will behave

while carrying out their duties. The more difficult question is how they choose to

play one role or another, and when they make those choices. Although some indi-

viduals may opt for one of the roles for all or most of their working life, one impor-

tant aspect of the post-modern public servant is that they may be changing their

roles from time to time and attempting to adjust their behaviour to the multiple ex-

pectations about their performance.7

Some choices for the individual appear rather easy to make. When the public

servant must manage a network structure, or a contract, in order to deliver a service,

it is rather obvious that he or she must become a negotiator. Likewise, when called

upon to advise a minister on policy, he or she must put on a policy-making hat to do

the job well. A skilful public servant, as indeed would a skilful employee in a private

firm, will usually be able to find the right combination of skills and approaches to the

job in order to carry out the tasks appropriately and make their programs perform as

expected.

Not all choices are so clear for the contemporary public servant, and even those

that appear simple may not be. For example, while the public servant may think that

the negotiator role is most suitable when building and managing networks, the public

servant must remember that he or she also represents the public sector in these nego-

tiations. In the end, he or she may have to revert to playing a more legalistic, bureau-

cratic role in order to protect the public interest. As managerial market values have

permeated the public sector, maintaining the distinction between the public interest

and the interest of the participants may be more difficult, but it is important to re-

member that distinction. This point only emphasizes the extent to which the tradi-

tional bureaucratic model of governing remains viable, and at times necessary.

These difficulties reflect the extent to which conventional models of the public

sector have been eroded and no clear alternative has been institutionalized to replace

them. Although we have noted that in a number of ways restoring the Weberian bu-

reaucracy model may not have many benefits for society, this notion remains a con-

venient solution for the public employee, even if it is not always suited to the particu-

6 In role theory, the society, or the individuals with whom an individual interacts, transmits a role that the individual must perceive correctly. Of course, if the individual misperceives the role then his or

her behavior will be inappropriate. 7 One aspect of role theory is that there are a set of expectations about the behavior of an incumbent of

a position. Further, any individual may have to play a number of different roles and therefore must be

sufficiently flexible, and sufficiently astute, to adapt to the different expectations.


17

lar circumstances. Reliance on the rules of the organization and established practices

is, as it has always been, an important protection for public employees and may be-

come even more important once the circumstances of governing become more am-

biguous. What may yet be missing, however, is the service orientation that has be-

come more central to governing in the reformed public sector.

The external linkage functions that have become important for contemporary

public servants provide them a source of power within the organization. Therefore,

rather than adopting more defensive stances by relying on the rules of bureaucracy,

public servants can take more positive stances, using their roles as negotiators with

private sector actors. This gain in relative organizational power reflects the extent to

which contemporary public organizations depend upon their partnerships with exter-

nal actors to provide services, and as the liaison with those external actors, the rela-

tive position of the public servant is enhanced. Therefore, the ambitious public ser-

vant has an incentive to adopt that role to the furthest extent possible.

To some extent, playing the role of democrat provides public servants with some

of the same internal political advantages as are available to them outside the organi-

zation. This role involves the public servant looking outside his or her own organiza-

tion to serve broader political constituencies, and to promote what may be alternative

values and policies within the organization. Public servants have always been in po-

sitions that span the boundaries between the public and the private sectors, but em-

phasizing that role and its potential for democracy does serve as a means of comple-

menting existing democratic institutions. This is especially true when, as noted, some

of the traditional political institutions are now less effective in mobilizing public

support. It also functions as a means of promoting policies and values that are de-

rived from the connections with society.

The uses of ambiguity

Describing the position and the role of contemporary public servants as ambigu-

ous might be thought to describe a significant problem for these actors. To some ex-

tent that may be true, given that learning to be an effective public servant is now a

less clearly defined task than in the past, and that the public servant will have to

make more individual choices when carrying out their tasks in the public sector. This

more ambiguous world may not be the most preferred by more conventional bu-

reaucrats, who prefer an orderly and rule-defined existence that does not involve po-

tentially difficult interactions with clients.

Despite the inherent problems in ambiguity, there are also a number of advan-

tages (see Christensen and Rvik, 1999) for the contemporary public servant. The

most important of those advantages is that the latitude for action for the individual is

enhanced. One of the common complaints by public employees is that the formal

definitions of their tasks do not allow for innovation and for individual initiative.

While the reforms of the last twenty years have to some extent softened the stereo-

type of the position of the public servant, they have by no means done so entirely and


18

public servants can only welcome more room for defining and redefining their own

positions within the processes of governing.

In addition, the more entrepreneurial among the public service can utilize the

ambiguity of roles to increase their powers relative to their nominal political masters.

The conventional definition of the role of the public servant has been rather con-

straining and has defined that role in non-political terms. The ambiguity of contem-

porary role definitions allows the individual public servant to do more to define their

own roles and to mobilize political support from outside the organization. This does

not mean that public servants necessarily are the power-seeking, utility-maximizing

actors they are sometimes assumed to be (see Niskanen, 1971), but it does mean that

they are not the political ciphers that others might have them be. Public servants have

ideas and they do have clients, and a more ambiguous definition of their place in the

public sector will enable them to exert more of an independent influence.

Finally, ambiguous roles enable the public servant to mix and match responses

to the needs of particular policy circumstances, and to provide more nuanced re-

sponses to those competing demands than would be possible with more strictly de-

fined roles. The more conventional, uniform conceptions of managing the public sec-

tor require rather predictable responses from public employees, but the post-modern

style of governing provides more options. The key point is indeed that governance is

no longer a simple, hierarchical activity but rather involves more complex interac-

tions between the public and private sectors (see Kooiman, 2003; Peters and Pierre,

2006), and among a number of organizations within the public sector itself. That

complexity, in turn, creates a need for individuals who have themselves greater flexi-

bility. With that flexibility must go a significant commitment to the integrity of the

policy process in order to manage the inherent complexity of governing.

Conclusion

The task of being a public administrator has never been an easy one. Even when

the role was more clearly defined, the necessity of coping with the complexity sur-

rounding most public programs presented a number of challenges to those public ser-

vants. The shift toward a less clearly defined understanding of the role of the public

administrator in contemporary society has to some extent made the life of the public

administrator more difficult. There is a much wider range of possible demands on the

public servant, and it is now impossible to rely on the familiar role of bureaucrat as

implementer of the law. The individual public servant to some extent has always

been responsible for making choices about their choices, but those choices now are

even more basic.

On the other hand, after the public sector has been transformed and de-

institutionalized, the working life of the public servant may be both more interesting

and more effective. Having the opportunity, or even the expectation, of playing mul-

tiple roles within the governing process allows public servants not only creativity but

also more capacity for solving problems. These opportunities may also enhance the


19

job satisfaction of public employees, given that they can define their own role, shape

their own careers and also have a more active role in shaping policy than traditional

models would allow them. They have lost numerous protections they may have en-

joyed in the past, but have been able to replace those with a greater degree of free-

dom.

This changing role for the public servant must also be understood in the context

of broader changes within the public sector. In particular, the decentering reforms of

the past several decades have created the need to restore some control over policy

arising in the centre of government. With that shift toward more power in the centre

of government has come the need to empower senior public servants to play a more

significant role in the process of linking the decentered processes to central political

control. The linkage function will employ a range of the role options mentioned

above, but perhaps most notablythe role of negotiator. The negotiations in this

context require the public servants to tread a very thin line between politics and ad-

ministration, and may also require them to be policy entrepreneurs in their own right.

The public servant has often been the object of scorn, but the role is being rein-

vigorated (albeit in a somewhat different guise) by contemporary political and ad-

ministrative change. Public servants may still not be the most popular figures for the

average member of the public, but they do have crucial roles to play in making the

contemporary state function. And it is indeed in part because they have those multi-

ple roles that they are becoming more important to the policy-making process. The

ability to provide a range of solutions for policy and administrative problems enables

these bureaucrats to be central actors in governing. We must be cognizant that the

governing process itself also changes as a result of these changing roles for the bu-

reaucrat, and even the notions of democracy will have to be considered in a different

light.

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Western Democracies. Cambridge, MA: Harvard University Press, 1981.

2. Bouckaert, G. and C. Pollitt. Public Management Reform in Comparative Perspective, 2nd

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3. Christensen, T. and K. A. Rvik. The Ambiguity of Appropriateness, in M. Egeberg

and P. Paegreid, eds., Organizing Political Institutions. Oslo: Universitetsforlaget, 1999.

4. Christensen, T. and P. Laegreid. New Public Management: Transformation of Ideas and

Practice. Aldershot: Ashgate, 2001.

5. Dalton, R. J. and B. Wattenberg. Parties without Partisans. Oxford: Oxford University

Press, 2000.

6. Derlien, H.U. On the Selective Interpretation of Max Webers Concept of Bureaucracy

in Organization Theory and Administrative Science, in P. Ahonen and K. Palonen, eds.,

Dis-embalming Max Weber. Jyvasyla: SoPhi Press, 1999.

7. DuGay, P. In Praise of Bureaucracy. Buckingham: Open University Press, 2005.


20

8. Frederickson, H. G. Whatever Happened to Public Administration?: Governance,

Governance Everywhere in E. Ferlie, L. E. Lynn and C. Pollitt, eds., Oxford Handbook

of Public Management. Oxford: Oxford University Press, 2007.

9. Hood, C. and M. Lodge. The Politics of Public Service Bargains. Oxford: Oxford

University Press, 2006.

10. Keane, J. The Life and Death of Democracy. New York: W. W. Norton, 2009.

11. Kernaghan, K. The Emerging Public Service Culture: Values, Ethics and Reforms,

Canadian Public Administration, no. 37, 2008. p.614-30.

12. Kooiman, J. Governing as Governance. London: Sage, 2003.

13. Lonsdale, C. Post-Contractual Lock-In and the UK Private Finance Initiative, Public

Administration no. 83, 2005. p.67-88.

14. Mair, P. and I. van Biezen Party Membership in Twenty European Democracies, 1980-

2000, Party Politics no. 7, 2001. p.5-21.

15. Moore, M. H. Creating Public Value: Strategic Management in Government. Cambridge,

MA: Harvard University Press, 1995.

16. Niskanen, W. Bureaucracy and Representative Government. Chicago: Aldine/Atherton,

1971.

17. Olsen, J. P. Maybe It Is Time to Rediscover Bureaucracy, Journal of Public

Administration Research and Theory no. 16, 2006. p.1-24.

18. Page, E. C. and B. Jenkins. Policy Bureaucracy. Oxford: Oxford University Press, 2005.

19. Peters, B. G. Contracts and Resource Allocation: Markets and Law as the Basis of

Policy Instruments, in A. Heritier, ed., Common Goods; Reinventing European and

International Governance. Lanham, MD: Rowman and Littlefield, 2002.

20. Peters, B. G. The Politics of Bureaucracy, 6th ed. London: Routledge, 2009.

21. Peters, B. G. Bureaucracy and Democracy, in J. Pierre and J.-M. Eymeri-Douzans,

eds.,

22. Administrative Reform and Democratic Governance. London: Routledge, 2010.

23. Peters, B. G. and J. Pierre. Citizens Versus the New Public Management: The Problem

of Mutual Empowerment, Administration & Society, no. 32, 2000. p.9-28.

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Administration, Journal of Public Administration Research and Theory, no.8, 1998.

p.223-43.

25. Raandma-Liiv, T. The Neo-Weberian State, Halduskultuur, no. 10, 2009. p.15-22.

26. Rose, R. The Problem of Party Government. London: Macmillan, 1974.

27. Rothstein, B. and J. Teorell. What is Quality of Governance: A Theory of Impartial

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Administration, no.70, 1992. p.499-518.

Alvydas Raipa. iuolaikinio vieojo valdymo pokyi kryptys ir tendencijos

32

THE DIRECTIONS AND TENDENCIES OF CHANGES IN MODERN

PUBLIC GOVERNANCE

Alvydas Raipa

Summary

Public sector organizations carry out their activities in a constantly, incremen-

tally changing environment of global society.

In modern society, public sector organizations have been encouraged to change

their role from the provider of services to the monitoring of other organizations that

actually deliver those services. This is particularly true of local authorities who are

encouraged by central government to deliver services through the voluntary or pri-

vate sector. The evolution of New Public Management into new public governance

means that public sector managers are acquiring the role of monitoring and control

over other kinds of organizations and developing skills in managing contracts. Such

an arrangement is blurring the boundary between the public and other sectors, be-

tween policy and administration. A major feature of the reforms and changes in the

public sector is that we can see an evolution from new public management to new

public governance in the start of the twenty-first century.


Yuri Krivorotko Baltarusijos jurisprudencijos universitetas, Apskaitos analizs ir audito katedra,

docentas. The Belarus Institute of Jurisprudence, Department of Accounting, Analyses and Audit Assoc.

Prof.

el. patas / e-mail: [email protected]

Straipsnis teiktas redakcijai 2009 m. kovo mn.; recenzuotas; parengtas spausdinti 2009 m. gruodio

mn.

CHARACTERISTICS OF THE MODERN SWEDISH MODEL

OF ECONOMIC AND SOCIAL DEVELOPMENT1

Yuri Krivorotko

The Belarus Institute of Jurisprudence

3 Korolja str., 220004, Minsk, Belarus

This paper deals with features of the Swedish model of economic and social development from the perspective of Belarus. The paper deals with issues concerning the evolution of the Swedish social-economic model, with emphasis on the latest changes and corrections to the Swedish model. The paper also examines tendencies in the public sector and challenges in local government, as well as issues of foreign trade, migration of the national and foreign capital, Swedish course of European integration and cooperation in relation to post-Soviet countries.

Keywords: Swedish social-economic model, economic development, export,

import, local government, central government, municipalities, counties, European integration, single currency, post-Soviet countries, investments, Swedish-Belarusian cooperation.

Raktaodiai: vedijos socialinis-ekonominis modelis, ekonominis vystymasis,

eksportas, importas, savivalda, vyriausyb, savivaldybs, grafysts, Europos integracija, vienoda valiuta, posovietins alys, investicijos, vedijos ir Baltarusijos bendradarbiavimas.

Introduction The words economic miracle are frequent in the XX century history of

Sweden. Within only several decades, the poor agrarian country has turned into one

1 The author would especially like to thank the Swedish Institute, Bors University, and the Embassy of

the Kingdom of Sweden in Belarus for the opportunity to visit and study the Swedish model of social

development.

Yuri Krivorotko. Swedish Model of Economicand Social Development

34

of the richest and most advanced industrial powers. Rapid industrialization,

absence of conflicts in the labour market, traditional means of solving social

conflicts, abstention from wars and destruction were the basic preconditions for the

emergence of a society of general prosperity. Many years after the Second World

War, Sweden stands as an example of a successfully developed state and well

organized society with its own third way between capitalism and socialism.

Experts abroad have devoted much attention to the general welfare of the

Swedish state. Its experience has to some extent appeared comprehensible for other

countries. It should be noted that the last decades of the XX century have brought

truly revolutionary changes to the world in areas of technology, economic and social

development. Scientific and technological revolution, European integration,

globalization, the wave of neo-conservatism, the collapse of Communism have also

had an impact on the economy and policy of the small country. External factors have

considerably strengthened the effect of internal changes that have proved essential in

renewing of terms and principles of common good. Facing the challenges of post-

industrialism, globalization and individualization, the institutions, politicians and

ideology of the Swedish model have recognized their historically passing character.

The factors mentioned above have seriously undermined the mechanism of national-

state regulation of the Keynesian type and have posed a problem for the country to

introduce corrective measures to the existing model. In economic policy, a period of

social and economic development characterized by neo-conservatism and neo-

liberalism has grown as a new paradigm, replacing the previous one.

Swedish economic success and high rates of economic growth during the last ten

years confirm that the paths of reform in Sweden have been chosen correctly.

Therefore, a study of Swedish experience is important for both, economic science

and post-Soviet practice.

Development stages of the Swedish model

It is possible to identify three stages in the economic development of Sweden. In

the first stage (between 1870 and 1914), Sweden transformed from an agrarian

country into an industrial-agrarian country. During the second stage (between 1920

and 1970) Sweden became an industrially developed country. During the third stage

(between 1970 and the present) Sweden has been a post-industrial country with a

high standard of living as compared to other states with high rates of economic

growth. An analysis of the economic2 structure and industrial branch structure of the

economy allows us to conclude that the structure of the Swedish economy has

considerably changed under the influence of such factors as scientific and

technological progress, growth of foreign relations and EU accession. The structure

of the Swedish economy completely corresponds to the economic structure of other

developed countries: shares of agriculture, and industry and services (respectively

2 Structure which includes divisions in national economy: industry, agriculture, services etc.


35

1.95% and 70.3% of GDP in 2008)3. Despite of low share of agricultural production

in GDP and the number of employees occupied in this sphere, Sweden provides more

than 90 % of its own production and is also an exporter of grain, meat and oil. The

country entered a post-industrial stage in the seventies and a considerable share of

services is provided by the state sector of the economy (nearby one third), in contrast

to other developed countries.

Evolution of the Swedish model

A modernization mechanism of the economic model emerged in the late 1960s.

For a long time, its basic aims were full employment and income equalization for the

population. In view of considerable differentiation in conditions between the South

and the North of Sweden, problems of equalization were very relevant. In the

implementation of these aims, a leading part was played by the state sector. Sweden

ranks first in the world among developed countries in terms of state interventionism

in the national economy. This is expressed by such indicators as the share of state

expenditures in areas of consumption, investments and transfers, which made up

49.2% of the GDP in 2008. Furthermore, the state sector in Sweden accounts for

about one third of all employment in the country. However, the share of state

businesses is rather low: only 5% of population are occupied in state enterprises and

they comprise 6% of the GDP. The nationalized entities mainly function in the raw

materials sector (mining, ferrous metallurgy), transport, communications, energy

sector and the public services sector.

By means of active state regulation, especially the highest tax burden in the

world, Sweden has achieved a state of general welfare in the XX century. It provides

for free education, children care, elderly care, health and medical care, high pensions

and other elements of the social protection mechanism. However, in the second half

of the 1970s, the Swedish model has started exhibiting glitches in the functioning of

its mechanism. Rates of GDP increase in the period of 1976-1989 were twice below

the rates of the first part of the 1970s. As labour costs were about 20% above other

competitor countries, the competitiveness of the Swedish industry has sharply

decreased. Decrease in duration of the working day, decrease of pension age and

increase of the holiday period have led to a decrease in the rates of labour

productivity. The overestimated exchange of a fixed rate of the krona to the dollar

has led to stagnation of export, outflow of capital abroad, and interest rate growth.

Under a high tax burden, the labour motivation of the population decreased and

existing restrictions of the Swedish government on inflow of foreign investments did

not promote economic development and increase of competitiveness of domestic

production.

3 Hereafter, the absence of references to sources means that the data was received and calculated by the

author on the basis of statistics from the the Statistical Central Bureau of Sweden (www.scb.se), the

Swedish Riksbank (www.riksbank.se), the Government Office of Sweden (www.regeringen.se), and

the WTO (//start.wto.org).


36

As a result, Sweden initiated a process of governmental modernization of

economic management in the 1990s. It entailed a transition from demand regulation

to supply stimulation, a decrease of state expenditures (they decreased from 73% of

GDP in 1983 to 53% in 2006), decrease of taxation level, dismantlement of

regulation in some branches, privatization of some enterprises, labour market

liberalization, transition of the Swedish krona from fixed to floating rate, and

liberalization of the foreign investments regime.

The banking sector of the Swedish economy is represented by 126 commercial

banks, of which 31 are universal deposit banks, 68savings banks, 25branches of

foreign banks, and 2co-operative banks. Total assets of the Swedish banking sector

amount to 5,129 billion Swedish krona. In Sweden, however, five banks are system-

based banks: Handelsbanken, SEB, Nordea Bank, Swedbank, and Danske Bank. The

share of their assets is around 90% of the whole Swedish banking system. All banks

listed above are diversified financial institutions, with affiliated structures as

mortgage financial institutions, funds of operating companies, investment banks,

insurance and financial companies. The system-based banks provide loans not only

in Sweden but also in other countries: Norway, Finland, Poland, Germany, and the

Baltic states [6].

Challenges in the local government model

As the Fredrik Reinfeldt government took office in October of 2006, a transition

took place from a traditionally strict state approach to local government

administration to an approach based on alliance between the structures of power and

business.

It was argued that the state, with its financial resources, can no longer maintain

the developed social model of general prosperity that evolved in the 1970s. The

municipal sector in Sweden occupies an important place in the national economy. It

is enough to note that in 2008, the share of public services consumption in GDP was

20%, while the local governments consumption compared to the central government

consumption was 72.8% [5]. The development of the Swedish local government

model, in which the top level is represented by 21 counties4 and the bottomby 290

municipalities, compels the local governments to engage in commercial activity,

actively enter the capital markets, and thus ensure their own security. The tendency

of expanding commercialization in the public sector and in public utilities provides

possibilities for the replenishing of local treasuries and reduction of public services

costs. At present, the central and local governments are interested in attracting small

and medium businesses to the public sector. This strategy was first implemented by

means of municipalprivate partnerships in communities and counties. First of all,

such partnerships are connected with the industrial-financial activity of enterprises in

the territory irrespective of ownership types. Many local governments have started

4 Two regions Skne "and" Vstra Gtaland are included in number of counties indicated, as well.


37

creating centres for business support. The local government plays a vital role in

sustaining this interaction. In the presence of local government, municipal and

private sectors are not antagonists; they are interconnected and require each other.

The private sector becomes an element of the municipal economy.

The main modes in mutual relations between local authorities and business

entities include complex territorial planning, placing of municipal orders, supply of

capital, granting of assurances, granting of contracts for provision of public utilities

and investment agreements. This field of activity encompassed both, large and small-

scale businessindividual and co-operative. Examples of forms of coordination

between local authorities and business include: alliances and partnerships of

municipal and corporate sectors, non-commercial and economic associations, joint-

stock companies where local authorities and municipal enterprises may act as

shareholders. There are known examples of effective activity in this area, e.g. the

municipalities in the cities of Gothenburg, Eskilstuna, Malm, etc.

The advantages of municipalprivate partnership widen the scope of the

municipal establishment and expand the local potential of municipalities and

counties. Clearly, the local government is more proximate to all types of entities than

the central and regional authorities, since the operations of any active organization

are based on local resources. The local governments can use their standing in the

interests of local community, including the solving of financial problems. Municipal

private partnerships can be very useful, especially in building of schools, hospitals,

highways, other municipal projects. The task of designing, building, and servicing

municipal objects goes to private sector. In initiating these ventures, municipalities

receive revenue and, if the project is effectively implemented, private entities may

derive income from services provided, e.g., road toll collection.

In the marriage of power and business the local authorities do not play a

subordinated role, since many financial problems can only be solved by binding the

income of the real sector to the territory. Therefore, the development of municipal

private partnerships in this sphere supports medium and small, individual and co-

operative businesses.

We should examine one more feature of local government in Swedenthe

integration of municipalities. Integration processes, however, are carried out not from

the top but from the bottomon the initiative of inhabitants. Thus, enthusiasm

for unifying municipalities arises not only in one county. Here again the central

government meets popular desires for changing borders by administratively-

territorially redistributing the regions. Characteristic features of local community

development are constant experiments and searches for optimal fund distribution in

municipalities and counties. Now such experiments are implemented in two regions -

Skne and Vstra Gtaland.


38

The tendencies of foreign trade development and migration of Swedish and foreign capital

The specificity of the Swedish model of social and economic development

cannot be understood without an analysis of Swedens foreign economic relations.

They have always played a significant and vital role in the national economy.

Sweden has traditionally exercised a liberal foreign trade policy, adhering to the

concept of open economy connected to those of other countries, on the basis of a

smaller market which cannot facilitate modern specialized manufacture of optimum

capacity and competitive level of costs. By our calculations, the countrys foreign

trade quota has increased from 42.0% in 1950 to 94.4% on the average during the

period of 2005-2007. The export and import structure is presented by types of

production illustrated in Table 1 below.

Table 1. Export and import structure in Sweden by the item of products in 2006

(per cent)

Export Share (in

per cent).Import

Share (in

per cent).

Mechanical engineering products 50% Mechanical engineering products 44%

Cellulose and paper industry

production

12% Chemical goods and products 12%

Wood-processing industry products 12% Energy raw materials

11.8%

Mineral raw materials 12%

Other types of products 14%

Other types of products

32.2%

Source: Calculations by the author, based on data from the Statistical Central Bureau of

Sweden (www.scb.se).

As the table shows, the production of mechanical engineering, pulp-and-paper,

wood-processing goods, chemical industry products, and mineral raw materials

prevails in Swedish export. Among leading articles of Swedish import are

mechanical engineering products, chemical goods, energy raw materials. Swedens

main trading partners in 2007 were the EU countries (60.9 %), Norway (9.4 %), the

USA (7.6 %), Russia (2.0 %), and China (1.9 %). Partnership parity has developed

by import as follows: the EU countries (71.6 %), Norway (8.6 %), China (3.5 %), the

USA (3.1 %), and Russia (2.9 %) [5].

Over the last 1015 years, Swedens place in the system of international

specialization and competition has essentially changed because of shifts in

international labour division. The intensification of these processes has brought about

new areas of specialization in Sweden. In particular, Sweden belongs to the so-called

niche specialization, i.e. it concentrates its efforts on a considerably narrow

assortment of goods with the purpose of satisfying world-wide demand for such

goods. This assortment consists of both, simple Swedish products, such as matches,


39

bearings, and the most technically sophisticated types of production in the fields of

electronics, biotechnology, pharmaceuticals, nuclear engineering.

Swedish companies have a long history of exporting capital. The first industrial

branches abroad appeared in 1875, and currently, leading Swedish industrial

companies have a strongly pronounced international orientation. The degree of

internationalization among Swedish firms5 is defined as a parity of shares held in

foreign branches to an aggregate number of shares held in trans-national corporations

(multinational corporations), including the employment of parental companies.

According to this measure, Sweden has one of the highest indicators in the world. An

increasing portion of industrial potential is also being transferred abroad. Most of

Swedish capital is vested in large multinational corporations, where national capital

by origin is international capital by sphere of application. The leading role in

transferring industrial production abroad belongs to the machine-building companies.

Among them, we may single out Electrolux with degree of internationalization at

92%, Eriksson59%, Volvo 66%.

About one million employees or a total of 2/3 those employed at Swedish

multinational corporations work at enterprises run by Swedish state capital. It should

be noted that essential changes in the geography of Swedish foreign investments

have not taken place over the last two decades. A traditional area of investment is the

countries of OESR (90% of industrial investments). However, some concentration of

Swedish capital is found in individual countries, such as the USA, Finland, UK, the

Netherlands and Norway, in which 60% of the shares belong to Swedish investments.

Swedish participation in European integration

Integration processes have made a serious impact on the development of

Swedens national economy. For several decades, Sweden did not show much

interest in Western European integration, adhering to its policy of neutrality. This

was a unique disposition in Swedens foreign policy.

The idea to participate in European economic space was first stated in 1989.

Subsequently, Sweden chose its course and the country worked on closer market

integration and fulfilment of political obligations towards a full membership in the

EU. After the fall of the Berlin Wall, it became obvious that Sweden would not be

satisfied with its role as a younger partner and will demand full rights, including the

right to decision-making. In 1991, Sweden declared its desire to join the EU.

As a whole, joining the EU was less for a problem for Sweden, since the country

was at the same level of economic, social and political development as the states at

the core of the EU. For example, in 1995 Swedish GDP per capita was at 102.6%

compared to the level in EU-126. In 19911995, Sweden implemented many changes

5 This indicator is calculated according to the technique of internationalisation accepted in Sweden 6 The EU-12 list includes: Germany, France, Belgium, the Netherlands, Luxemburg, Denmark, UK,

Ireland, Portugal, Spain, Greece, and Italy.


40

to its national legislation for the purpose of adaptation to standard documents of the

EU.

The motivation of the government and business circles in Sweden for joining the

EU was based on the necessity of finding more economic dynamics. It was

contended that it would have a positive effect on economic growth, employment and

innovative processes.

Relatively little time has passed since Swedish accession into the EU for us to

speak about its long-term consequences. However, it is possible to speak about the

short-term consequences. The accession has certainly facilitated more successful

solutions to Swedens major macroeconomic problems, such as the stability of

economic growth, decrease in the rate of inflation, unemployment and deficits in the

state budget. An analysis of the recent ten years reveals that the national economy

developed rapidly over the first five years (from 1995 to 2000). However, during the

period from 2001 to 2003 a decrease in the level of GDP growth was observed.

During the period from 2004 to 2008, it began growing rapidly once again. As a

whole, the growth of Swedish GDP after joining the EU exceeds the average levels

of other European Union countries.

On two other important macroeconomic indicators, the rates of inflation and

unemployment, Sweden continues to take preferable positions. In 2006,

unemployment comprised 4%. In the conditions of the 2008-2009 financial crisis,

however, it has reached 8.3%. There is still synchronism in development of

inflationary processes and the decreasing indicators of the country are incomparably

better than the EU average. Under the conditions of the raging financial crisis, the

inflation rate in Sweden is currently 0.9%, considerably below the control indicator

target inflation rate of 2%.

The problem of public debt reduction within the limits of EU is quite

successfully resolved. It was decreasing during the period between 1995 and 2008,

from 73.7% to 34.5% of GDP (for comparison, the average in EU-25 countries was

65% in 2005). At the same time, the state budget was reduced with a surplus since

1998. In other EU countries, the balancing of state budgets is more difficult. In 2006,

the average deficit of EU-25 was 2.3%. Similar observations may be applied to the

balance of payments in Sweden. During the period between 1970 and 1995, Sweden

had a negative trade balance, while during the period from 1995 to 2006, there was a

surplus. It comprised 3.9% of the GDP on the average, including the period between

2000 and 2006 when it comprised about 7% of the GDP [6, 7].

Despite obvious improvement to Swedish macroeconomic indicators in the EU

statistical base, competition in the Swedish domestic market appears slightly worse

in comparison to other EU countries. The consumer price index in Sweden was at

20.6% above the average price index of EU-25 in 2006. Recently, the consumer price

index has continued growing and has increased from January, 2007 to December,

2008, arriving at 6.9%. It speaks to the high costs on wages and taxes in the country.

Swedish membership in the EU monetary union is more problematic. In recent

years, two referenda have been carried out on this issue. In both cases, the population

of Sweden expressed a desire to keep its own currency. Only the current financial


41

crisis has provoked the populace to reconsider the pros and cons. However, one

important argument remains. Under current conditions of financial crisis, and under

an active export position and positive balance of payments, a decrease in the national

currencys exchange rate with regard to the USD and EURO brings in more currency

reserves and promotes stronger monetary circulation. Upon entering the Eurozone,

however, all such export advantages would utterly dissolve due to the single

European currency. Therefore, this argument acts as a deterrent to the countrys entry

into the Eurozone.

It is possible to ascertain that Swedish membership in the EU has brought to it

desirable results such as high economic growth, inflow of foreign investments,

strengthening of competitiveness and decrease in price levels.

Measure of economic cooperation with post-Soviet countries

Historically, active cooperation between Sweden and Russia began at the end of

XIX and beginning of the XX century. It was later interrupted by the October

Revolution and the ensuing Civil War. As a result of comprehensive nationalization

carried out in Russia, the creation of a monopoly for foreign trade and other anti-

market measures, the interest of Swedish businessmen were undermined in Soviet

Russia.

Only after the disintegration of the Soviet Union, and with the beginning of

radical economic reforms in the CIS did the situation change for the better.

The prospects for Swedish trade with post-Soviet countries, including Belarus,

are primarily connected with improvements to the export structure of the post-Soviet

countries, and improvements to the quality and diversification of export deliveries.

The export position of the CIS countries with regard to Sweden obviously includes

raw goods and fuel (more than 90%). It is bound to increase in volume and share in

the foreseeable future. However, the semi-finished products and the processed goods

have both technological and consumer potential in the future. Growth of processed-

good exports, including cars, manufacturing equipment and the volume and diversity

of finished imports in the CIS countries are constantly expanding.

A major problem of exports from CIS countries to Sweden includes the

industrialization of its structure and increase of scientific-capacity products. This will

require active expansion of economic cooperation, moving away from the practices

of simple barter, an establishment of strong industrial contacts, R&D cooperation,

and introduction of joint business into the practice of mutual business ties.

As to investment cooperation with CIS countries, Sweden is included among the

ten major foreign investors into the economy of these countries and occupies the fifth

place since the middle of the 1990s. By estimations of the Swedish Riksbank, the

total sum of Swedish direct investments into CIS countries has reached more than 3

billion USD by the end of 2006 [6]. However, these investments are not yet

considerable and make up only 1.5% from all direct investments which are taken out

of the country. Swedish investments into Belarus are quite small as well. In 2007,


42

45.9 million USD in Swedish investments (17.2 million USD for the similar period

of 2006), including 18.5 million USD as direct investments have come into Belarus.

For the first quarter of 2008, 12.4 million USD in investments from Sweden,

including 3.1 million USD in direct investments have come into Belarus. Currently,

12 enterprises with Swedish capital are functioning in Belarus, of which 6 are joint

enterprises and 6foreign ones. In the authorized capitals of these enterprises,

Swedish investors have listed 2.7 million USD. Besides, 14 representatives of

Swedish companies, including Ericsson, Volvo, IKEA, and ABB Group

have opened in Belarus.

In trade relations between Sweden and Belarus, the following positions have

emerged in the period between 2000 and 2007, as characterized in Table 2 below.

Table 2. Dynamics of the foreign trade relations between Sweden and Belarus

(mln. USD)

Years Trade turnover Export Import Deficit(+),

Surplus (-)

2000 48.2 13.0 35.1 +21.5

2001 80.6 20.3 60.3 +40.0

2002 126.5 27.2 99.3 +72.1

2003 163.7 65.4 98.3 +32.9

2004 235.7 136.9 98.4 -38.5

2005 351.6 262.6 89.0 +173.6

2006 480.5 365.7 114.8 +250.9

2007 212 77.1 134.9 -57.8

8 month 2008 162.1 65.5 96.75 -31.45

Source: Belarusian Agency of Financial News (AFN)

In 2008, the growth of Swedish imports into Belarus has continued and between

January and August of 2008, increased from 72 million USD to 96.75 million

USDby 148.9%. Positive dynamics of Belarusian exports to Sweden may also be

noted. Between January and August of 2008, the volume of Belarusian exports to

Sweden has comprised 65.5 million dollars or 147.1% in comparison to levels in the

previous year (excluding mineral oil) [4]. We should also mention the delivery of

Belarusian washing machines in 2008. Despite the presence of the largest world

manufacturer of home appliances Electrolux in Sweden, the advancement of the

production of the Joint-Stock Company Atlant in the Swedish marketthe official

dealer of company in Sweden being Atlas Vitvaror ABis dynamically

expanding.

Among other important processes, we should mention measures for increasing

energy efficiency in centralized heating systems as well as recycling and processing

of waste. The interests of Sweden in Belarus are revealed in the activities of the well-


43

known IKEA Company, whose diversified activity includes large forest areas for the

manufacture of quality furniture with prices accessible for majority of the population.

The IKEA Company has been invited to the Belarusian market by the Belarusian

government to participate in capital formation in order to develop corresponding

branches. Negotiations between the IKEA Company and the Belarusian government

have continued throughout 2009 [4].

Great interest in Belarus has been shown by the Swedish company Rindi

Energy. The company is going to invest into Belarus for the development of biofuel

and export of wood waste.

Conclusions Swedish experience is valuable in both, the purely scientific and the practical

sense. Conditions for economic reform in Belarus are conducive to a variety of the

important components and characteristic features of the Swedish model. In

Swedish political culture, there is mutual understanding between central and local

governments, businesses and government of different tiers, businessmen and

employees, municipalprivate partnerships, the search of optimum decisions on the

basis of broad compromise and consensus between the parties, attraction of public

associations and organizations to the solution of governmental problems on both, the

local and the central level. Finally, the principle of fair equalization of living

conditions between the centre and remote places would be useful to implement in

Belarusian social policy. Certainly, it would make little sense to copy the experience

of Sweden and mechanically transfer it to Belarusian soil. Therefore it is necessary to

borrow everything that would promote softening of political and social confrontation

between power and opposition in Belarus.

Literature

1. Bjrn Brorstrm. De-cermonialisation for Success Institutions, Reforms and Individuals.

Reports on Bors, No.3 Spring 2007. Hgskolan i Bors.

2. . . ed. . . 2000. [Local Government.

Experience of Sweden].

3. . . . 2005. [Local

Government in Belarus and other countries]. Minsk: Tonpik, 2005.

4. Reports and dates of Byelorussian informational Agency (AFN) www.afn.by

5. Statistical database of the Statistical Central Bureau of Sweden www.scb.se

6. Statistical data and reports of the Central Bank of Sweden (Riksbank) www.riksbank.se

7. Statistical date and reports of the Government Office of Sweden (www.regeringen.se)

8. Hggroth S., K. Kronvall., C. Riberdahl and K. Rudebeck. Swedish Local Government.

Transitions and Reforms, The Swedish Institute, 1999.

9. The New Proposed Equalization System for Municipalities and County Councils in

Sweden. Ministry of Finance, 1995.


Loreta Tauginien Mykolo Romerio universiteto Strateginio valdymo ir politikos fakulteto Valdymo

teorijos katedros doktorant. Mykolas Romeris University, Faculty of Strategic Management and Policy,

Department of Management Theory, Post-Graduate Student.

e. patas

Documents

Peters-The Role of Public Servants-2009 - Cópia