The set of institutions, norms and rules that determine how state agencies and human resources are managed plays a central role in the development of Latin American countries. This chapter assesses public administration in Latin America within the framework of the functions assumed by the state. These functions do not differ much from those of the OECD economies; they include the provision of public goods, the fostering of social equity, the delivery of social services, the redistribution of resources, and the stabilisation of the economy (section 2.2). What differentiates Latin American states from more developed countries is the magnitude of the needs that must be met and the limited resources available to accomplish this task. This creates a substantial and complex challenge. The region also faces other common challenges such as the quality of civil service, excessive bureaucracy, the transparency of governance and greater centralisation than in OECD economies (section 2.3). Policy makers in Latin America should be particularly mindful of the nature of the trade-offs between the short-term costs of addressing these challenges and the long-term benefits of public-sector reform. There are no shortcuts for developing an effective, efficient, transparent public sector (section 2.4). 

This chapter confirms that Latin America is now well positioned to reform its public sector and build states that are able to meet their development needs. The economies of the region are growing, the volatility of public finances has been reduced and the burden of debt service is smaller. There have also been significant advances and innovations in public policy in the social sector, in infrastructure and in productive development. The consolidation of democratic institutions and technological development has created new opportunities for improving public administration. This must not, however, lead to complacency or an underestimation of the magnitude of the challenges faced by the countries in the region. 

Bearing in mind differences between countries, the creation of states that meet the region’s development needs requires special attention to various areas of public policy (section 2.5). the fundamental elements of the reform agenda in Latin America include: i) improvements in the mobilisation of fiscal resources, ii) a professional civil service, iii) the mobilisation of different actors, iv) appropriate use of new technologies, and v) mechanisms to make government more transparent. Around these elements, mechanisms can be established for inter-regional dialogue that will help disseminate best practices and identify lessons learned. International agencies have an important role to play in the articulation of these networks and in the promotion and dissemination of the reforms. 

Fiscal reform is a necessary condition for states to increase the resources they need to fulfil their responsibilities. There are also significant challenges in budgetary management, human resources, access to electronic government systems, information, transparency, and the integrity of public administration. The limited use of evidence in budgetary decisions in Latin America requires the development of new budgetary management systems based on outcomes. This calls for the development of monitoring and evaluation systems capable of generating timely and relevant information on outcomes and adjusting budgetary processes so that this information is used in decision making. 

Given that states depend on their staff to perform their functions, Latin America needs to professionalise its civil service. It is important to distinguish between the various functions exercised by state employees and to develop appropriate working arrangements for each function, combining the objectives of merit and flexibility on a case-by-case basis. Appropriate use of new information and communication technologies can help governments shape a more flexible, agile and transparent public sector that has a greater capacity to respond. Information technology must be considered as a means of communication in both directions, able to facilitate transactions but also offering a space for citizen participation; public administrations must be adapted to achieve this. 

At the same time, it is necessary to strengthen the citizens’ trust in the state. Solutions encompass a combination of instruments, both public and private, that countries can use to reduce the risk of mistrust in the state, such as declarations of interest, information-access systems and codes of ethics. Latin American countries can also benefit from the participation of different stakeholders and actors in public policy. In order to provide public services more effectively and efficiently, governments can combine their inputs, policies and knowledge with those of other actors, including non-state actors, sub-national administrations and commercial providers of public goods.