Results-oriented Budget Practice in oecd countries odi working Papers 209

Table 3: Hood’s application of cultural theory to public management 
GROUP 

Low 
High 
High
New Zealand 
GRID
Low
Developing 
countries 
Source: adapted from Hood, 1998 
So, instead of moving directly to hard edged contractualism, Schick suggests that developing 
countries need to satisfy a number of pre-conditions. In particular, they need to develop and 
formalise the market economy, establish reliable external controls, including financial management, 
a skilled civil service and real budgets, and establish basic approaches to public management such 
as input control and reliable internal controls. He points to the investment that must be made in 
human resources: 
“Managers must have disciplines and skills necessary to operate in a devolved 
management structure before gradually loosening the bonds of central control” (Schick 
cited in Laking, 1999). 

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15
In his study of the transfer of the New Zealand experiment to Mongolia, Laking identifies a number 
of weaknesses of the Mongolian civil service: 
•
Inadequate expenditure classification; 
•
Multiple funds; 
•
Inadequate monitoring; 
•
Difficulty in imposing financial discipline; and 
•
No publicly accountable external audit (Laking, 1999). 
Hence Mongolia faces a major institution building problem and is not in a position to move to hard 
edged contractualism. As the World Bank notes, “[i]t takes considerable capacity and commitment 
to write and enforce contracts, especially for difficult-to-specify outputs in the social services” 
(cited in Laking, 1999, p 88). 
Laking attempts to identify a number of candidates for reform, New Zealand style: 
“Logical candidates are commercial or quasi-commercial outputs remaining in the 
public sector (central supply functions, for example, such as transport or printing 
services) or assessment and collection of revenues, customs and immigration inspection 
and assessment and payment of entitlements” (Laking, 1999, p 231). 
Bale and Dale offer some aspects of the New Zealand experience that may be transferable. These 
include
•
Separate trading accounts. 
•
Separate policy advice and delivery. 
•
Management systems focusing on outputs which can assist transparency, accountability and 
improved serviced delivery. 
•
Accruals accounting may assist financial performance but there may be a shortage of accountants 
and economists with the appropriate skills mix. They argue that effective cash accounting may 
be a precursor of accruals accounting. 
•
Improved performance reporting to government and the public. 
•
Separation of the roles of managers and politicians (Bale and Dale, 1998).