Download Cases of Crisis: Using International Case Studies to Teach Public

Cases of Crisis:
Using International Case Studies to
Teach Public Administration
Marco Castillo, Ph.D
New York City College of Technology - CUNY
Introduction
Despite internationalization of curriculum, PA students continue to have a national
focus
Understandable, as most will seek employment within national, state, or local
boundaries
But is there a value for traditional PA students in exploring international PA cases
and topics?
Exploring international topics helps us understand PA in greater depth
Introduction
In this paper, I explore how international case studies can be used to help
students learn about PA and its essential tenets, elements, presuppositions
By studying how nations cope with cases of crisis, instructors and students can
find opportunities to learn more about PA
Utilizing international cases allow us to see PA in new light, allowing for a fuller
understanding of the field
Allows us to reconsider the key facts, values, & premises, allowing for deeper
understanding and more effective practice
Origins
Perhaps starts with a basic curiosity, desire for knowledge, about PA in other
national contexts
ATP notes that much of the literature on bureaucracy published in English refers
to a limited number of countries
Bureaucracy characterizes and internalizes the tensions and paradoxes inherent
in the liberal democratic project.
But there is a need for knowledge about how bureaucracy operates not just in the
US, but in international contexts
Origins
So what about the international context? The less developed world?
How is bureaucracy interpreted and understood by other world populations?
What does a comparative approach reveal about PA as an art and science?
These served as the initial impetus for this research project
But this investigation and research project has also been a learning experience
than can be translated into assignments and projects in the classroom
The Case of Ecuador
Coincided with a personal experience
My own experience visiting Ecuador in 1999 and then in 2014.
For all the controversies and political turbulence, a profound change in
Ecuadorean society
Piqued my own interest in just what happened and the role of public administration
in accommodating and making such change.
Metrics and Indicators
Ecuador has undergone significant change since the turn of the 21st century,
transforming from a politically and economically troubled nation
A stronger economy, improved infrastructure, and a greater array of social
programs and investments to fight poverty and protect the health and welfare.
Ecuador’s GDP has grown substantially, growing from $18.3 billion in 2000 to over
$90 billion in 2014 (World Bank, 2015a).
Ecuador's poverty rate dropped from about 50% at the turn of the century to 25%
in 2014 (World Bank, 2014). Its Gini coefficient, a measure of nation’s distribution
of income, dropped from 56.4 in 2000 to 48.6, an indicator that economic growth is
benefiting the poorest in Ecuadorean society (World Bank, 2014, 2015b).
Metrics and Indicators
Ecuador’s advancements go beyond these measures of
economic progress
Starting with the Bono de Desarrollo Humano in 2000, a
direct cash benefit program for the poor, Ecuador has
expanded its public welfare expenditures, access to public
hospitals and clinics, reduced the price of medications,
increased access to public education, and provided subsidies
for housing (Ray & Kozameh, 2012).
Metrics and Indicators
As a result of these investments, Ecuador has considerably improved its
HDI (Human Development Index) score, a composite measure of national
well-being developed by the United Nations that takes into account factors
such as life expectancy, education, and income.
Ecuador now has an HDI score of 0.711, ranking 98th out 187 countries
and territories and moving from the category of medium human
development in 2006 to that of high human development in 2014 (United
Nations Development Programme, 2014).
Metrics and Indicators
How did Ecuador get here, making such significant improvements in a relatively
short time period?
These improvements in the economic and social well-being of Ecuador were born
of governmental response to an economic crisis that emerged in Ecuador at the
end of the 20th century.
Despite the difficulties of the economic crisis, it allowed Ecuador to radically
reconfigure several key aspects of its politics and policy, allowing the country to
make changes that brought real improvements to the living conditions of broad
swaths of the Ecuadorean populace.
The Ecuadorean Financial Crisis
It was Ecuador’s national response to the financial crisis that emerged in the late
20th century that arguably created the conditions allowing for the policy and
programmatic changes resulting in the aforementioned improvements.
Most specifically, it was Ecuador’s policy of dollarization, adopted at the end of the
20th century, that helped provide the economic stability necessary for Ecuador’s
subsequent economic growth in the 21st century, economic growth that provided
the Ecuadorean government the fiscal capacity to make the programmatic
changes resulting in improvements in the living conditions of the citizenry.
The Ecuadorean Financial Crisis
Dollarization, the policy of shedding a nation’s currency and adopting the United
States dollar as the official medium of exchange, is considered a radical economic
policy, taken only in extreme economic circumstances when all other efforts have
failed to stem the rapid devaluation of a nation’s currency (Jameson, 2003).
It is important to understand the broader context in which this decision was made
and the economic events and conditions leading to this decision.
The Context
We should note that Ecuador’s economic vulnerabilities preceded the financial
crisis of the late 1990s; indeed, they were built into the very structure of the
nation’s economic functioning.
- Exports and fluctuations
- Exogenous factors (El Nino)
- Oil exports and fluctuating prices
- Liberal banking regulations
The Context
In efforts to alleviate economic pressures, Ecuador engaged in a policy of
periodically resetting exchange rates…
Misuse / abuse of this policy resulted in a precipitous downward spiral, a massive
devaluation of the sucre, bringing Ecuador to the brink of hyperinflation
In opposition to the policy preferences of Ecuador’s central bank, the Mahuad
administration took the radical step of dollarizing the economy
By the end of 2000, the sucre was abolished as a medium of exchange in the
Ecuadorean economy.
The Effects
By forcing a conservative monetary policy, dollarization immediately halted
Ecuador’s most pressing economic problem -- hyperinflation.
Numerous other benefits
But not without its costs
Through dollarization, a nation effectively cedes control over its monetary policy to
the United States Federal Reserve, making the country “in effect a monetary
dependency, a client of the United States” (Cohen, 2002).
Public Administrative Issues
Opportunities for a comparative analysis
Allows us to reflect generally on the administrative state, the capacity of
government to take effective action
Looking at an international case of financial crisis allows us to reflect
How have we dealt with financial crisis? Have we taken similar actions? What
does this case reveal about our own patterns of governance, our own
administrative state?
Lessons through Comparative Reflection
The US experience with financial crisis
Allows students to study in greater depth and focus
What issues do reconsideration raise?
What does this reveal about the American administrative state?
Reflections on Administrative Effectiveness
Prompts reflections on past American crises, especially early 20th century
regulation of the economy, the Great Depression, and ensuing financial regulation
The American administrative state was built in large part in response to economic
crisis
Early 20th century antitrust laws were passed to regulate economic imbalances
The Great Depression prompted the federal government to increase action to
regulate the national economy to protect the wellbeing of citizens
Examples of Buildup of the Administrative State
FLSA and the regulation of the employer-employee relationship
Regulation of banks through the Banking Act of 1933
FDIC
PWA
National Recovery Administration
Ecuadorean Economic Crisis
Taking aggressive policy action
Empowerment of some sectors of the Ecuadorean government; disempowerment
of others
But the policy ideas are not based on a new or clean intellectual slate, which is
something to think about
Ecuador and other nations must take action in accordance with an orthodox set of
ideas developed by developed world nations
Coercion or Consensus?
The power of ideas
While most agree of the benefits of dollarization, voices increasingly counter this
course of action
Dollarization disempowered the Ecuadorean Central Bank
Illustrates the power of the US Fed
Implications of responses to crisis for national administrative state
Coercion or Consensus?
Perspectives can differ and literature from foreign sources can reveal tensions
In his book, President Correa reveals opposition
Economic crises reveals different perspectives on “policy science”
International cases such as this case reveal the limits of policy science
Relativism?
Dollarization puts Ecuador in the position of “boxing with one arm”
Coercion or Consensus?
In reality, since the crisis of 1999, Ecuador has been amongst the countries with
the best fiscal results in Latin America…[this is] not necessarily good, as there is a
great difference between being thin due to practicing sports and…[being thin] due
to having one’s mouth sewn shut” (Correa, 2009).
Coercion or Consensus
Correa notes that the Ecuadorean state is restricted
The interests of debt holders is prioritized, resulting in improvements in economic
metrics while limiting the ability and autonomy of the state to act for the benefit of
the citizenry
Severe limits on protectionism
Limits economic development
“Competitive advantage” leaves less developed nations in present economic state
Coercion or Consensus
Limits and normative nature of policy science
Correa questions this notion; claims that the acceptance of orthodoxy and science
limits public debate about what is really a contestable field (present US debate)
Ecuador becomes victim to the “arrogance of the international bureaucracy and of
many academics” who seek to “present economics as a positivist science, with a
supposedly general theory, that is equally valid for Argentina or Indonesia.”
Coercion or Consensus
International literature reveals other points
Correa’s arguments are at times less generic, more specific
Points toward the American Administrative State
“America’s foreign policy… is now being run by the IMF, with some coaching from
the Treasury Department”
World Bank, IMF and other international institutions are not seen just as global
forces, but as extensions of the American bureaucracy
Public Administrative Lessons
Less developed world context intensifies lessons
Administrative states will have to contend with globalized contexts
This case study of the Ecuadorean financial crisis illustrates the critical importance
of a sound administrative state
Forces of globalization will not wait and states will need systems to cope with
economic turbulence and other crises
This case illustrates the importance of effective public administration for
sovereignty and national autonomy
Administrative Theory
So how do we cope?
How do developing world nations cope?
Century of public administrative thought is only partially relevant
Luton notes that despite the availability of diverse theoretical streams of thought in
the public administration, only some are relevant in foreign contexts due to the
gap between the concerns of public administration theorists and the real political
and economic conditions facing other nations (Luton, 2004) .
Some theories relevant. Others, less so. This reveals the robustness of some
administrative theory, what is art and what is science.
Comparative Study
International case studies remind us of the importance of comparative study for a
fuller understanding of PA as a science
Woodrow Wilson noted, “It is the more necessary to insist upon thus putting away
all prejudices against looking anywhere in the world but at home for suggestions in
this study, because nowhere else in the whole field of politics, it would seem, can
we make use of the historical, comparative method more safely than in this
province of administration. Perhaps the more novel the forms we study the better”
(Wilson, 1887).
Comparative Study
Nevertheless, a relative dearth of comparative scholarship
In his article reviewing the state of comparative public administration scholarship,
Jamil Jreisat notes that that there are continuing issues facing comparative
scholarship in public administration
Includes issues such as resolving issues of the purpose of comparative studies,
the methods used to engage in these studies, and the need to develop
frameworks to reconcile systematic comparisons of different administrative
systems (Jreisat, 2005, p. 237).
Comparative Study
Reveals the relevance of long standing themes
Centralization vs. Decentralization
The deep relevance of managing local governance with global forces forces us to
consider our own governmental dynamics
Federalism seen in a new light; can inform other world contexts
Comparative Study
Also, the relevance of administrative techniques
Normative nature of managerialism
NPM and neoliberalism
Still, some administrative techniques that can help nations work
Citizen participation practices can help developing nations work, manage the
tensions between the local and the global and more effectively implement public
policies
The relevance of other theories?
Comparative Study
Perspectives on bureaucracy itself
Americans may implicitly assume that our challenge with bureaucracy is universal
US PA has always been highly concerned with legitimacy crisis
But we have been less concerned with the connection between bureaucracy and
sovereignty
International case studies in crisis push us to consider an issue rarely discussed
Comparative Study
The case of Ecuador prompts us to consider this question
Dollarization, a radical policy, was driven by exogenous shocks
Beckerman and Solimano present the political side of this administrative problem,
Due to coastal/inland tensions (the “Sierra” and the “Costa”) have “tended to limit
central political and administrative power.”
“Administrative institutions have been kept weak, both in mandates and
capabilities.”; inability of Ecuador’s government to distribute resources in a way
that furthered the collective national interest.
Comparative Study
Efforts to decentralize government also failed, as there was an equal fear that
excessively empowered regional governments could break the country apart.
These macro level public administrative failures were accompanied by other more
specific public administrative problems, such as a poor tax administration system,
an inability to keep the public sector payroll under control, an inability to manage
the efficiency and quality of public services, and the existence of outmoded
systems of budgetary planning and execution.
Comparative Study
Perhaps in some contexts, less developed nations should be less concerned
about administrative legitimacy?
Properly empowering the administrative state becomes a more pressing issue
American concerns about bureaucracy may be uniquely American and a poor fit
for nations where an empowered administrative state is more essential
Developing world nations will need to develop the proper administrative tools and
capacity to manage their economies and financial systems within a global
economic system in a fashion that allows them to survive, and perhaps even
thrive, without undermining the sovereignty of their nation
Comparative Study
International cases can bring to the fore the challenges of modern PA
Remind us of the importance of building a national bureaucracy; checking populist
rhetoric
Cases of crisis in developing world nations may illustrate for us more powerfully
the importance of an effective administrative state
And perhaps help us start a conversation as to whether these challenges are
really also America’s governmental challenges in the 21st century.