New Public Management is an attempt to reorient and restructure public bureaucracy in the era of globalisation, liberalisation. Following are the main factors which contributed to the growth of New Public Management perspectives:
1. Reaction against Bureaucratic Administration and Elephantine growth of governmental expenditure: The impact of globalisation has been significant on the public administration. The globalisation prompted such changes such as increased interdependence among states, reduction intrade barriers among nations, growing use of information and communication technology and close realignment of public and private sectors.
The prevailing state bureaucracy was not able to face these challenges as it was too unwieldy, unresponsive, inefficient, ineffective and not suitable to face emerging competition.
In the decade of 1980, the bureaucracy came under severe criticism for the above deficiency. Also, in 1970s and 1980s, due to public welfare orientation, there was an excessive growth in government expenditure which was poorly managed by the large state bureaucracy. Under these circumstances both the size and role of the state was questioned under the prevailing conditions.
2. Impact of Neo-liberalism: The political ideology of neo-liberalism has held a dominating presence during 1980s and 1990s as far as the nature and role of the state is concerned. Neo-liberalism advocated dominant presence of markets against state, rolling-back the state in welfare activities, maximizing individual liberty and freedoms. The tenets of neo-liberalism have close bearing on the rise of New Public Management.
3. Hold of New Right Philosophy in U.K. and U.S.A.: The New Right philosophy with more efficient allocation of resources through market mechanism and less role of the state in social and economic sphere held its sway in 1970s in the U.K. and the U.S.A. Thus, it is not surprising that the new public management perspective was most popular in these countries.
4. Washington Consensus: The Washington consensus is a set of economic reform measures evolved in 1989 by IMF, World Bank, U.s. Congress and scholars such as Williamson to restructure economies in view of financial crisis of 1980s in Latin American countries. It is a structural adjustment and economic stabilisation programme which advocated trade and financial liberalisation, privatisation and deregulation of domestic markets. The tenets of Washington consensus bear close affinity with the New Public Management perspective.
5. Influence of Public Choice Approach: The public choice approach pro-pounded byeconomists such as Fullock, Niskanen, Buchanen, argues that the dominant feature of human behaviour is self interest, which should be maximised through the arrangement of multiple public service agencies that would amplify the scope of people’s choice. It emphasises on the competition and efficiency among the multiple public service delivery mechanism. This approach has influenced the fundamental principles of the New Public Management.
Thus, the New Public Management perspective is the result of a number of pull factors such as inefficiency of the state and traditional bureaucracy and certain pull factors such as neo-liberalism, New Right Philosophy, public choice approach and Washington consensus which inter alias supported roll-back of the state, dominance of Market mechanism and need of competition and efficiency