Can Government Think?

Can Government Think? Climate change, fi nancial crises, and other issues of global scale no longer concern only the developed world. The binding power of globalization has placed these challenges at the doorstep of almost every country, testing the evolutionary capacity of monolithic governance systems burdened by institutional legacy and administrative stagnation. This book locates the concept of adaptive governance, used primarily in environmental management, within the context of economic policy. Introducing fl exible economic opportunism, it argues that a particular style of institutional and administrative versatility enables innovative, evidence- based policy development. This book mines institutional economics, public administration, and research theory and practice for complementary elements that can inform an emerging governance paradigm based on fl exible economic opportunism. Through an eclectic suite of cases from the developing and developed worlds, including Asia and North America, this book reveals how patterns of institutional and administrative change impact the effi cacy of public policy. Flexibility may be this century’s most critical dimension of global competitiveness, and systems confi gured to quickly and comprehensively capture economic opportunities will win the mar- ketplace of development ideas. This book advances that discussion. Kris Hartley is a Singapore-based researcher and consultant focusing on economic development, public policy, and urbanization. With a decade of public and private sector experience, he has consulted on a variety of topics, including earth- quake recovery, fi nancial regulation, infrastructure asset management, and nuclear energy policy. Working on solutions with high economic and social impact, Kris is currently conducting research about urban revitalization and water resource management in Singapore and Hong Kong, provincial governance and economic competitiveness in Vietnam, and industrial estate development in Thailand. This page intentionally left blank Can Government Think? Flexible economic opportunism and the pursuit of global competitiveness Kris Hartley First published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2015 Kris Hartley The right of Kris Hartley to be identifi ed as author of this work has been asserted by him in accordance with the Copyright, Designs and Patent Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identifi cation and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Hartley, Kris. Can government think? : fl exible economic opportunism and the pursuit of global competitiveness / Kris Hartley. pages cm Includes bibliographical references and index. 1. Economic policy. 2. Economic development—Planning. 3. Institutional economics. 4. Public administration. I. Title. HD87.H367 2015 338.6′048—dc23 2014019285 ISBN: 978-1-138-78275-4 (hbk) ISBN: 978-1-315-74467-4 (ebk) Typeset in Galliard by Apex CoVantage, LLC Contents Introduction 1 PART I Institutions 1 Understanding institutions 15 2 Institutions in research and practice 26 3 Institutions and economic development 36 4 Institutions and political power 51 5 Institutions and global urbanization 64 PART II Public administration 6 Contrasting administration paradigms: traditional bureaucracy and collaborative governance 81 7 Emerging administration paradigms: from neoclassical to postmodern 94 8 Local and national administration 108 PART III Evidence-based policy 9 Foundational thinkers in epistemology 123 10 Research methods and empirical validity 134 vi Contents 11 Use of evidence in environmental regulation 144 12 Nationalizing benefi ts and localizing costs in industrial development 161 13 Evidence-based intervention for housing markets 174 Conclusion 189 Bibliography 197 Index 217 Introduction Government is back, for now. The “great recession” has exposed the weaknesses of a free-market purism that trivializes the role of the state. However, economic cyclicality guarantees that the private sector will eventually regain its swagger – presumably until the next crisis. Political quarrels about public-private balance can be productive but are also increasingly destructive. For example, the American government shutdown of 2013 showed how costly domestic policy stalemates can be, especially when ideological tribalism outshouts evidence. Is there a better way? Can economic policy respond to opportunity by shifting orientation from market to state, and back, without the political noise? Can a new governance model accommodate divergent ideologies without being destructively revolution- ary or rigidly orthodox? Innovative and pragmatic governance has the potential to transcend these costly battles. Interactions among government bodies, institutions, the private sector, and civil society can be structured to avoid slow and even counterproduc- tive policy processes. To that end, this book introduces the concept of fl exible economic opportunism, a governance model for theory and practice that empha- sizes adaptability and pragmatism over ideology and patronage. It advocates timely accommodation of global economic trends, enabled by a structural orientation towards economic competitiveness and policy pragmatism. The model’s fundamental proposition is that supportive institutional and administrative conditions can nurture an environment where evidence guides policy and innovation drives governance. As such, fl exible economic opportunism is not a belief system or a normative philosophy but a systemic architecture that most effi ciently accom- modates the will of the state – as expressed through any number of different political systems – while maximizing competitive potential. Globalization has brought the tug-of-war between market and state to all cor- ners of the world. At the doorstep of any liberalizing economy now lies a Pan- dora’s box of mutually confl icting policy challenges concerning corporate infl uence, social welfare, and ecological sustainability. Narratives that emphasize statist models fi ercely compete against those advocating free markets for the policy attention of governments in both developing and developed countries. Failure of market or state – a recession or a government debt crisis – is often accompanied by a cacophony of interest-driven punditry and pseudo-scientifi c fl imfl am about 2 Introduction which model to embrace. In many cases, alarmed impulsiveness compels governments to jerk the steering wheel left or right to avoid political fallout of further economic damage, resulting in a momentary policy shift towards the subdomi- nant model. However, the new policy may be reversed soon thereafter, often during the next crisis or administration, and the result is a near-permanent state of policy disequilibrium as economic and political cycles rarely overlap. This inces- sant push and pull – resembling a dog watching tennis – destabilizes markets and creates investor uncertainty that in turn magnifi es crises, generating an economi- cally fatal feedback loop. The post-partisan approach of fl exible economic opportunism does not prescribe a universal policy or model. Rather, it establishes the conditions for existing governance structures to adapt more quickly to economic cycles that are becoming shorter and more severe. This pragmatic, reform-minded approach values institutional fl exibility, innovative governance, and a robust focus on evidence. The value of the concept is its neutrality; embracing the spectrum of political and economic systems, it remains silent about seemingly irreconcilable debates over representation, wealth distribution, and the appropriate scope of government authority. Flexible economic opportunism has academic roots in common-pool resource management and institutional economics. Adaptive governance has typically addressed issues such as agricultural sustainability and water scarcity. Flexible economic opportunism imports adaptive governance into administrative design and applies it to a broad range of economic, political, and social issues. The connec- tion between fl exible economic opportunism and adaptive governance rests on the argument that the economic opportunities generated by globalization exhibit some characteristics of a common-pool resource—namely, the diffi culty of exclud- ing users and the zero-sum outcome. For example, many countries have access to borderless consumer markets through globalization, but internal structural con- straints often impede the development or implementation of innovative strategies to exploit economic opportunities. Furthermore, countries must compete in a global market for capital that is almost always growing but nonetheless fi nite and subject to wide fl uctuations in price. The competitive environment can therefore be described as a collective “free-for-all,” something to which all parties aspire but fewer succeed. States

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