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Title: Globalisation: What Challenges and Opportunities for Governments? Year:1996
Description: Globalisation is changing how governments operate. Even domestic issues are increasingly affected by outside institutions and events that national governments cannot hope to control. Yet fears that national sovereignty is being undermined may be short-sighted. International co-operation can improve the effectiveness of policies and offers the opportunity to address common problems. This paper identifies both challenges and opportunities presented by globalisation and gives selected examples of how OECD governments are gearing up to govern in a global policy environment.
The Need for Structural and Institutional Change
If governments are going to function effectively in an interdependent world, some adjustment in the machinery of government is required. Yet, despite increased recognition of the need to adapt to a new world, government structures remain largely locked in the past. In the absence of particular national strategies, change is occurring slowly and is relatively piecemeal. Individual government institutions &emdash; in particular, the sectoral specialists who work in them &emdash; are themselves adapting to a globalised environment by developing their own transnational linkages. Line ministries and finance ministries now routinely manage international contacts and the international dimensions of their policies. As such, new international networks are developing between policy makers &emdash; who are linked as much by common policy interests as by national loyalties &emdash; while foreign ministries are progressively losing their monopoly in external relations. By blurring institutional and policy boundaries, globalisation is challenging governments' capacities to provide effective and coherent policy responses.
This raises some important machinery-of-government and management challenges to national governments, notably:
* adapting the role of foreign ministries to an environment where they no longer have a monopoly over foreign relations; * improving the internal management of external relations,(6) including the need for greater internal policy co-ordination, mechanisms to manage participation in international fora, and developing strategic direction; * exploiting opportunities for international problem solving and the international exchange of policy strategies; and * developing international skills amongst public officials.
An evolving role for foreign ministries?
The foreign ministry is traditionally one of the great departments of state. The nature of its functions and the quality of its staff meant that it has automatically assumed a central role in defining the national interest and national policy agenda. Yet in almost every country today, questions are being raised about the relevance of the foreign ministry and what is seen as its expensive network of missions abroad. The role of foreign ministries is already in apparent transition, as line ministries manage their own international linkages, and as governments' physical presence abroad is being cut back (often as a cost-cutting measure). Some foreign ministries are taking on sectoral interests such as trade, as is the case in Australia, Canada, Belgium and New Zealand.(7) When everything is "international", then the expertise of the foreign ministry must be carefully defined.
Governments need to examine what are the key functions for foreign ministries, in an environment where it no longer holds a monopoly over foreign contact and where information on international events can be quickly and easily secured through the global mass media. Participants at a recent OECD meeting(8) were unanimous that some adjustment of the traditional foreign affairs function was needed. However, they stopped well short of labelling foreign ministries redundant. Traditional consular services, the provision of negotiation and diplomatic expertise, a source of advice on international law, and maintaining a positive image abroad remain important functions. Foreign affairs ministries also seem to remain the natural home for traditional foreign policy deliberations, including on matters of national security. There may also be some sectoral policy areas that fit best under the foreign affairs umbrella, such as trade, environment, managing overseas aid, etc., as is already the case in some countries. And foreign ministries may be in the best position to co-ordinate international relationships involving other ministries (as discussed below).
Given this transition, it is an opportune time to examine the changing relations between foreign ministries and other ministries, and in particular, their relationships with other central agencies. For example, their relationships with Prime Ministers' Offices may be evolving as a function of the growing personal involvement of Heads of State in foreign relations. Good networks between foreign ministries and advisors at the centre of government are therefore imperative. Finance Ministries and Ministries of Justice are also likely to be central players. Whatever restructuring occurs, care should be taken to ensure that foreign ministries do not duplicate the work of line ministries
The internal management of external relations
If foreign affairs ministries are losing their monopoly over external relations, it is because other institutions are assuming an external relations function. Many line ministries now have international desks or sections to manage these relationships, and to participate in international negotiations in their sectoral area. The extent to which these international sections consult, co-ordinate with or tap the expertise of other stakeholder ministries, including the foreign ministry, is an important variable in the extent to which a co-ordinated national position is presented in international fora.
When individual ministries develop relations with foreign counterparts or negotiate in international fora, there are few guarantees that their actions will reflect the "national interest" or a national position, as opposed to a narrow sectoral perspective. This is especially a risk where the issues at stake are of a technical nature and managed by "experts". Pursuing narrow interests might even undermine the actions carried out by other ministries. For example, environmental officials may support the linking of environmental protection with trade sanctions, and labour officials the linking of labour standards with trade sanctions. Yet, not surprisingly, trade officials will insist on the maintenance of an open world trading system as the most beneficial system for all. Interministerial disputes, and jostling for turf, common in the domestic setting, are thereby transferred to an international setting where the stakes are arguably higher and the possibilities of policy failure more dramatic.
The situation is even more problematic when sub-national governments or their institutions also assume a role on the international stage as they increasingly do. Some sub-national governments are directly represented in international decision-making fora. To give a recent example, in Spain some self-governing communities are setting up direct representation in Brussels; an initiative contested by central government but supported by a ruling of the Constitutional Court.(9) In this situation, how do national governments ensure that the right hand knows what the left hand is doing?
The need for policy co-ordination
Policy co-ordination is likely to be the key problem. Les Metcalfe(10) has defined a policy co-ordination scale as a comparative tool to assess the extent to which countries are co-ordinated at a national level for effective participation at the international level. The scale was defined to compare member states of the EU, but it is broadly applicable.
The Internal Management of External Relations: Policy Co-ordination Scale
* Step 1: Independent Decision Making by Ministries. Each ministry retains autonomy within its own policy domain. * Step 2: Communication to other ministries (information exchange). Ministries keep each other up to date about what issues are arising and how they propose to act in their own areas. Reliable and accepted channels of regular communication must exist. * Step 3: Consultation with other ministries. A two-way process. As well as informing other ministries of what they are doing, individual ministries consult other ministries in the process of formulating their own policies, or position. * Step 4: Avoiding divergences among ministries. Ensuring that ministries do not take divergent negotiating positions and that government speaks with one voice. * Step 5: Interministerial search for agreement (seeking consensus). Beyond negative co-ordination to hide differences, ministries work together, through, for example, joint committees and project teams, because they recognise their interdependence and their mutual interest in resolving policy differences. * Step 6: Arbitration of inter-organisational differences. Where inter-organisational difference of view cannot be resolved by the horizontal co-ordination processes defined in levels 2 to 5, central machinery for arbitration is needed. * Step 7: Setting parameters for organisations. A central organisation of inter-organisational decision-making body may play a more active role by setting parameters on the discretion of individual organisations. These parameters define what organisations must not do, rather than prescribing what they should do. * Step 8: Establishing government priorities. The centre of government may play a more positive role by laying down main lines of policy and establishing priorities. * Step 9: Overall governmental strategy. This case is added for the sake of completeness, but is unlikely to be attainable in practice.
In practical terms, most OECD countries would confess to poor performance against the policy co-ordination scale. Yet co-ordination of international relations is vital, whether those relations take the form of bilateral contacts with counterparts in other administrations, the development of informal or formal specialist networks, or are those that revolve around membership in supranational fora. Membership in supranational organisations requires special adaptations of national administrations. This is because they are formal and ongoing, participation often involves the adoption of regulation or other rules (for example the European Communities has adopted no fewer than 22 000 regulations)(11) and many cover a multitude of different policy fields which touch a broad spectrum of line ministries.
Can co-ordination occur without a designated co-ordinator? It seems that in general the answer is "no". In most OECD countries, the responsibility for ensuring internal co-ordination for external relations rests at the centre of government, sometimes within a special foreign policy unit under the Prime Minister's authority; such as French SGCI (a permanent General Secretariat of the Interministerial Committee for European Economic Co-ordination), and the United Kingdom's European Secretariat of the Cabinet Office. In Finland a new interministerial body, the Cabinet European Union Committee, has been formed within the Council of State, while Australia has instituted a special cabinet committee to deal with matters related to APEC.
On the other hand, Canada has eliminated its cabinet foreign policy committee, in recognition of the fact that the international dimension of substantive policy areas cannot be dealt with in isolation and should be managed in the context of substantive policy committees. Other countries have seen the development of greater flexibility in decision-making structures, with more recourse to ad hoc interministerial committees, for example. Clearly there are no models, which is an important message for non-Member countries who may want to draw on the experience of OECD governments.
Whatever the administrative arrangements, there is a need to improve the capacity of central support and advisory systems to manage the policy interconnections that result from globalisation. Among other things, this is to provide government leaders with a strategic perspective on the ramification of decisions both within and beyond national boundaries. The challenge for the centre of government is to ensure effective co-ordination without taking on the minutiae of issues that could be considered to have an international dimension. Attempting to control and centralise everything would be both unworkable and ineffective. Moreover, longer-term and more strategic planning by the centre would provide governments with a firmer basis to address co-ordination issues and to filter out issues where central direction is not needed.
Co-ordination and strategic direction &emdash; in search of influence
Even with well-functioning internal co-ordination strategies, assuming an effective role in international policy fora is not automatic. The flip side of some loss of direct control at the national level &emdash; because of the transferral of some policies to the international arena &emdash; is the new opportunities it provides for "influence" over polices in other countries. In a complex international environment, influence may be a much more powerful tool than control.
These opportunities for influence need to be exploited. But to achieve influence, to become a "policy maker" rather than a "policy taker", requires significant investment, including adequate involvement and representation at the international level, and regular involvement in policy deliberations. It may not be feasible &emdash; especially for small players &emdash; to be involved in everything every time. Some notion of which fora are relatively more important is also needed.
Governments therefore need to improve their capacities to set strategic goals and priorities in order to define the basis for participation in international fora and to help define the national interest in relation to international events. This capacity seems to be lacking in most OECD countries.(12) Credibility at the international level demands internal coherence and policy consistency. Other governments (and indeed, private investors) must trust that a government means what it says and has the authority to do what it promises. A government's ability to justify its position or actions on the basis of some set of principles or goals can strengthen its legitimacy and help to forge internal consensus. Such a framework(13) would define:
* the objectives of international action and policy making in each forum; * competences and limitations of the institutions and processes involved; * the means by which a national government will participate and will influence international decision making; * management of the continuing relationships among key parties, particularly the flow of information and dispute-resolution procedures (especially between ministries and the centre); * consistency with related national goals and policies; * legal and constitutional compatibility.
The international exchange of ideas and policy options
The worry-mongering associated with globalisation has overshadowed some of the other benefits it brings. For instance, very little has been said about the opportunities globalisation offers governments to share ideas and policy strategies. Yet increased contacts with foreign counterparts open up a wealth of experience and possibilities for addressing common policy dilemmas.
These relationships take a variety of forms, from the regular meetings with a group of counterparts &emdash; such as the regular meetings of consumer affairs, women's affairs and education and training officials respectively from Australia and New Zealand (which are often also paralleled at the ministerial level), and the long tradition of co-operation between Nordic counterparts in multiple policy areas &emdash; to the development of virtual networks using information technology. Canada, for example, is in the process of developing the "Innovation and Quality Exchange" (IQE) system; an Internet-based repository of information on best practices specific to government services and processes. The IQE is designed to identify "the best security administration in the world, the best statistical agency, the best tax collector, the best budget office, and why".(14) Leaving aside performance measurement difficulties, this provides an interesting example of how policies can be increasingly shared across national boundaries. International organisations such as the OECD &emdash; by providing both real and virtual fora for exchange &emdash; can also act as an important conduit in this process.
Developing a capacity to tap ideas and promising practice from other administrations, and to massage them to fit local conditions (as opposed to straight copy-catting), will be increasingly essential for international competitiveness. Nancy Adler describes this as creating a "global vision" or "constantly searching the world for state-of-the-art ideas, then aiming to exceed them".(15) Clearly, policies are already being transferred from one national administration to another. Public management reform provides a good example, as evidenced in the proliferation of autonomous government agencies, citizens' charters, new performance and accountability mechanisms, and even accrual accounting in the public sector.(16) The focus on ethics and curbing corruption in the public sector is another cross-border trend.(17) Globalisation means that governments can draw on experimentation in other countries in the process of defining their own policy responses.
Government officials are not the only interlocutors in this policy exchange process. International interest groups and the global news media also play an important role in bringing new ideas "home". A key question raised by the whole "policy trade process" is the extent to which policy convergence is occurring. A subsequent question is whether that policy convergence is to the lowest common denominator &emdash; for example, in squeezing social protection provisions to remain competitive &emdash; or the highest common denominator, as in importing state-of-the-art ideas or "best practice" from international counterparts. The jury is still out on this one, but it will be an issue to monitor over time.
Skills and competences for an interdependent world
Despite being a cliché, it is true to say that government's most important resource is its people. In this domain too, some adjustment is needed. A changed international policy environment requires a revamping of the skills and competences of the public service, especially amongst officials involved in external relations. A knowledge of international affairs and international law, cross-cultural sensitivities, and foreign language skills, will become increasingly important assets in international negotiations and in any fora requiring shared understandings of respective policy systems and frameworks.
Some governments have responded to this by creating opportunities for central policy staff to develop international competences; in France, the main public policy school (ENA) from where top public officials are recruited, systematically include international components; staff exchanges occur between central agencies in New Zealand, Australia and the United Kingdom. Other countries organise secondments for their officials in international organisations, as does Japan in the OECD. Staff development requires significant investment, which is often considered a luxury when resources are tight as is the case in most, if not all, OECD countries. Moreover, the trend in some countries towards individual and fixed-term contracts means that skill development is sometimes seen as an individual rather than a corporate responsibility. This is a trade-off that will become increasingly complex and will need to be carefully managed. |
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