Toward the Reformation of Local Government through the Adoption of New Public Management

ABSTRACT

There is an impending financial crisis for local governments in Japan. In order to reform their administrative systems, an increasing number of local governments are trying to implement "New Public Management" (NPM), such as performance measurement and accrual accounting. A recent survey on the topic of NPM reveals that many local governments currently introducing NPM methods are acknowledging positive effects. The survey also suggests that firm intentions toward reform and actual government commitment to NPM have a positive influence on the effectiveness of these methods. Furthermore, the survey also suggests an insufficiency of know-how in efficiently handling NPM methods.

Local governments have consistently led the way in the implementation of performance measurement, which plays a key role in NPM. However, various problems still remain to be solved, such as (1) managing performance measurement, (2) implementing management cycle in administration, (3) building relations beyond the borders of local governments, such as between administrative evaluation and city residents, (4) attitude, capability, and behavior of government officials, and (5) developing, acquiring, and accumulating methodology, know-how, and policy tools.

Administrative evaluation reveals three conditions that must be met for the successful practice of performance measurement as a key element of NPM: (1) well prepared reform strategy, (2) accurate measurement of efficiency as a fundamental principle, and (3) full understanding of the customer-oriented approach.

Introduction