The increase in the provision of services and transfers has made effectiveness a key element in public administration. The capacity of public administrations to meet commitments set out in the political process and to meet the growing demands of citizens has become a central concern. 

Public services must also meet high standards of transparency. Governments are financed with taxpayers’ money and must act in accordance with specific restrictions and legal mandates. Modern states are accountable to their citizens for the use of public resources and for the results of their actions. the funding mechanisms of many public services often impose transparency requirements that exceed those of the private sector but that are essential to maintaining trust. Transparency is key to limiting the risk of corruption. The predictability of public interventions increases market confidence, reduces risk premiums, and facilitates compliance with regulations. The increased transparency of modern states is also a by-product of information technologies, as citizens of many countries can now access services online and compares situations between countries. 

Efficiency is another important element of public administration. Achieving the same level of public services with fewer inputs will free up resources to address other development deficits. Improved efficiency can also help create public support for state reforms, even those that require a heavier tax burden. While citizens, as voters and users of public services, may deem public services (provided directly by the state or under its supervision) to be scarce and of low quality, as taxpayers they may not be willing to pay the cost of resolving this.1 As a result, states are under increasing pressure to do more with less, making efficiency a third key element in public administration. As societies become more heterogeneous, the demands on the state become more diverse. In Latin America, states are responsible for the provision of public goods, delivery of social services, the promotion of social equity, redistribution of resources and the stabilisation of the economy to the same extent as in high-income countries. In recent years, Latin American states have begun to address needs in the areas of environmental protection, economic integration, gender equality and social and productive development. The resources available to perform all these functions are scarce, not only compared to high-income countries, but also to countries with similar levels of development. 

The gap between the need for public intervention and available resources is considerably higher in Latin America than in developed countries. making the most of scarce public resources is therefore crucial if governments are to fulfil their contribution to development in the region. Whether it is the management of public programmes or the use of private resources for public purposes, public administration is fundamental for states to meet their objectives. 

Box 2.1

Responsibilities & Resources of Modern States

Countries rely on the state for the provision of essential public goods, such as maintaining law and order, defence, protection of intellectual property rights and the awarding of contracts. States also fulfil the function of economic orientation by sending signals to markets, offering incentives through the granting of business licenses and permits, and by the regulation of energy, transport, food security and innovation. Education and health are essential public services and state benefits provided for the welfare of citizens. States also promote culture and recreation and create systems that protect individuals from unemployment, disease and poverty in old age.

The allocation of responsibilities for these functions reflects social preferences. However, it seems that differences among states are more a product of the heterogeneity with which they carry out these functions —through direct provision, regulation or incentives to the private sector— rather than the actual scope of government responsibilities, which, surprisingly, are similar between countries.

States developed considerably during the 20th century, becoming major service providers. This trend over the past hundred years reflects an increase in the size of the state. During the past century, expenditures and the number of employees grew from less than a tenth of national income to slightly less than half of national income in most developed countries. In many countries the state was transformed with the consolidation of democracy, the development of a market economy, the creation of the welfare state and globalisation. However, these changes have not been linear, and many countries have faced a substantial redefinition of the role of the state as a result of fiscal constraints, the need for competitiveness and social change. The most notable feature of the transformation of the public sector during the last seventy years has been its massive development as a major service provider. Since this transformation, the interaction between the state and its citizens has become a daily activity.

Expectations and standards for public services are now significantly higher. Even though modern states do more and spend more, it is worth asking if they are providing better services and meeting the expectations of citizens and the business community. Given current fiscal constraints, the answer is not necessarily “more State” but “better State”, focusing on what the state does best and on building trust and sustainable economic growth. These issues are attracting increasing interest from social scientists. Economists and policy makers are also devoting more attention to the public sector economy because of its growing share of national income and its macroeconomic impact.

States are complex organisations that often pursue many policy objectives simultaneously and that are faced with multiple goals and stakeholders. Public entities and organisations, in lieu of running their own programmes, must respond to the mandates and functions assigned to them by the political process through legislation as well as attend the needs of citizens. This is a process that can generate demands, mandates and objectives that are sometimes vague or even contradictory. Public administration must recognise this reality and reconcile objectives with possibilities. Public administration must integrate the diverse nature of modern states that reflects the relationship between networks of different public bodies. The economy of public choice has helped to improve the understanding of the role and functions of bureaucracy, which is able to pursue precise sectoral objectives on behalf of the general interest.

The complexity of the public sector apparatus requires political responses that are modest yet pragmatic, the implementation of systems of checks and balances, the fostering of openness and transparency, and control mechanisms to reduce the risk of corruption and capture. Similarly, co-ordination is necessary so that, with the contribution of different bodies, the strategic objectives of the state can be accomplished and resources, commitments and implementation are aligned to achieve the expected results.